(standing) Jack M. Whitney III and Hugh F. Owens; (seated) Byron D. Woodside, William L. Cary and Manuel F. Cohen
The Securities Acts Amendments of 1964, known as the Frear-Fulbright Bill after J. Allen Frear, Jr., a former Delaware Senator and SEC Commissioner, and Senate sponsor J. William Fulbright (D-AR), was the most significant securities legislation passed by Congress in the wake of the Special Study report.
The Senate sponsors were more enthusiastic about the bill than their House counterparts. Representative Oren Harris (D-AR), Chairman of the Committee on Interstate Commerce, resisted SEC calls for major reform. He expressed concern about how broad new powers sought by the SEC, including provisions that regulated over-the-counter trading of insurance company stock, might affect the securities markets. As Congress debated the new provisions, the SEC began to implement some of the less controversial recommendations of the Special Study through the use of its rule-making authority.
The tragic death of President Kennedy in November 1963 and the elevation of Vice President Lyndon B. Johnson to the Presidency fortuitously helped the SEC in its efforts. Johnson's early Congressional career had New Deal origins, and his attachment to his mentor, Congressman Sam Rayburn, who had sponsored much of the early New Deal securities regulation, made Johnson a strong proponent of SEC regulation.
President Johnson eventually called on Congress to pass Frear-Fulbright, couching it as part of a wider consumer protection effort. As the bill made its way through Congress, Cary announced he would return to teach at Columbia Law School, officially resigning as SEC Chairman the day President Johnson signed the Securities Acts Amendments of 1964.
While the SEC failed to get the broader reforms of the industry it had sought, the final bill did permit SEC regulation of over-the-counter stocks, implementing new rules for certain widely-held but unlisted stock, and extended the periodic disclosure requirements to many more companies.
