Securities and Exchange Commission Historical Society
Papers

"BE SURE BEFORE YOU ATTEMPT TO REGULATE"

Courtesy of the Library of Congress

"We believe that this is a particularly appropriate time for adoption of the suggested amendments. If the experience of World War I is any guide, many persons will be solicited when this war ends to buy corporate securities with their excess cash and with the proceeds of their matured or redeemed bonds. Moreover, a marked increase in securities trading by uninformed and inexperienced investors will probably occur. While we trust that investment advisers generally will offer a guiding and helpful hand to those novices, our experience warns us that some advisers may avail themselves of this opportunity for exploitation of the gullible."

- January 31, 1945 Protection of Clients' Securities and Funds in Custody of Investment Advisers

The museum adds papers on the investment company industry and mutual fund regulation as part of the development of the Gallery on investment company regulation, opening in 2017.

"My advice to you would be: 1) don't believe that all salesmen are dishonest and serve no useful function, 2) a man who is on commission and earns over 6% is not necessarily immoral; be sure before you attempt to regulate, 3) don't believe the average man will buy a no load fund as he must be sold on long term investing, 4) finally, before your spokesmen make announcements that appear negative towards funds, they [should] consider not only the need to let the public know the S.E.C. is at work but also what effect such an announcement has on investor reaction."

- June 2, 1973 Letter to Alan Rosenblat from Gerald McDonald on mutual fund regulation

Museum

SEC V. ELECTRIC BOND & SHARE

Yes, business is much greater than before March 1933!
December 8, 1935 Clifford Berryman cartoon (Courtesy of the Library of Congress)

"Ben spoke for 17 minutes. The room was electric. He was nervous, he was not in appearance prepossessing, but he rudely awakened the Court from its customary afternoon doldrums. The Justice relaxed with an almost beatific smile on his face; Black perched himself on the edge of his chair, cupped his face in his hands and didn't move while Ben spoke; Roberts simply glowered and looked away; Stone leaned back, put his head on his chair and stared at the ceiling; the Chief's eyes began to sparkle and he sat rigidly erect. I know how melodramatic this must sound, but no one who was there can deny that all of this is true."

-February 12, 1938 Letter to Felix Frankfurter from David Ginsburg on oral arguments in SEC v. Electric Bond & Share

Treasures from the Collection

During the year, the virtual museum and archive will highlight significant primary and original materials on financial regulation unique to its collection.

In 1938, the U.S. Supreme Court upheld the constitutionality of the Public Utility Holding Company Act in its decision in SEC v. Electric Bond & Share. The Act provided the U.S. Securities and Exchange Commission with power to limit the size and organization of utility holding companies. David Ginsburg, then with the National Power Policy Committee in Washington, wrote an eyewitness account of the oral arguments for Professor Felix Frankfurter at Harvard Law School, a year before Frankfurter was appointed a U.S Supreme Court Associate Justice.

Permission for Use

The virtual museum and archive is copyrighted by the SEC Historical Society. The Society reserves the right to restrict access to or use of the museum by any user at any time.

Users are prohibited from sharing or downloading any material for publication or commercial purposes without written permission from the Executive Director. Requests for permission must be submitted by email and specify the material requested and for what purpose.

Material used with the Society's permission should be credited to: www.sechistorical.org.