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28 Geo. Wash. L. Rev. 86 (1959-1960)
Effect of Federal Regulation on Distribution of and Trading in Securities

handle is hein.journals/gwlr28 and id is 88 raw text is: EFFECT OF FEDERAL REGULATION ON
Thomas A. Halleraf  and Jobn N. Calderwood
Cravath, S'waine &      o.1'oore, New York
Prior to 1933, the regulation of securities markets -wvas left almost
entirely to the states. The state laws were, of course, not uniform and
in many cases were either non-existent or completely inadequate,
either because of limited scope or perfunctory enforcement.
The speculative excesses and market manipulation of the late 1920's,
followed by the great depression and the coming of the New Deal'
led to a new    series of investigations of the securities industry' and
ultimately to the enactment of the various federal statutes affecting
the securities markets directly or indirectly.' This article deals
* A.B., 1923, Amherst College; LL.B., 1931, Columbia Law School. Member
of the New York Bar.
** A.B., 1938, Grove City College; LL.B., 1941, Harvard Law School. Member
of the Pennsylvania and New York Bars
Coldly Pecora made his witnesses recollect the gilded past-the stupendous
bonuses they had received and the taxes they had avoided, the stock market
pools they had rigged, the holding companies they had launched, the bad in-
vestments they had palmed off on a trusting nation. From their reluctant
testimony emerged the portrait of a world of insiders where for years business-
men had greedily stuffed their own pockets at the expense of the innocent and
dumb American citizen. SCHLESINGER, THE COInNG OF THE NEW      DEAL 437
2 The securities markets had been subjected to governmental scrutiny prior to the
depression years. For a summary of the earlier and the New Deal investigations see
United States v. Morgan, 118 F. Supp. 621, 645-46 (S.D.N.Y. 1953).
3 Securities Act of 1933, 48 Stat. 74, as amended, 15 U.S.C. §§ 77a-aa (1958);
Banking Act of 1933, 48 Stat. 162 (codified in scattered sections of 12 U.S.C.);
Securities Exchange Act of 1934, 48 Stat. 881, as amended, 15 U.S.C. §§ 78a-jj
(1958) ; Public Utility Holding Company Act of 1935, 49 Stat. 803, as amended, 15
U.S.C. §§ 79-z-6 (1958); Trust Indenture Act of 1939, 53 Stat. 1149, as amended,
15 U.S.C. §§ 77aaa-bbbb (1958) ; Investment Company Act of 1940, 54 Stat. 789, as
amended, 15 U.S.C. §§ 80a-1 -80a-52 (1958); Investment Advisers Act of 1940, 54
Stat. 847, as amended, 15 U.S.C. §§ 80b-1-80b-21 (1958). The authors throughout
this article cite sections of the Securities Act of 1933 and the Securities Exchange
Act of 1934. The following are the parallel citations to the Statutes at Large and
the U. S. Code.
Securities Act of 1933:
Section 2, 48 Stat. 74, as amended, 15 U.S.C. § 77b (1958).
Section 4, 48 Stat. 77, as amended, 15 U.S.C. § 77d (1958).
Section 11, 48 Stat. 86, as amended, 15 U.S.C. S 77v (1958).
[86 1

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