We have here a bipartisan Commission. We have had a Commission which has had a record of competence in the handling of its job, a Commission with the desire to work with the securities business in this country to see that it develops on a sound and effective basis, and a Commission which, I think, does not shirk its responsibilities. To give it these powers under the safeguards that are set forth in the plan doesn't disturb me in the slightest.

How to do it otherwise is, I think, difficult. The president of the Boston Stock Exchange suggested that we might enumerate the things which the Commission could not delegate. If we included rulemaking, the term "rulemaking" would derive its meaning from the Administrative Procedure Act and it would encompass a great many things that should be delegated.

I think that broad language of this type is espeically necessary to the Securities and Exchange Commission. Apart from the ICC, I know few commissions that have so many different functions to perform. There are the functions under the Securities Act of 1933, under the Securities Exchange Act of 1934, under the Holding Company Act of 1935, under the Trust Indenture Act of 1937, and under the Investment Company Act of 1940. It is a busy Commission. I have practiced before it. I have served on it. In all these years in both capacities I have seen these men work overtime day after day and still be unable to keep up with the functions which they are supposed to perform. The importance of performing these functions quickly and efficiently, I should think, is something that the securities industry recognizes and has paid attention to in the effort to obtain more appropriations for the Commission. But appropriations would not alter the fact, that was recognized here this morning, that too much business accumulates at the top level.

As I look forward to the next few years, the Commission will have important problems in the field of policymaking, in the field of seeking out what the appropriate solution should be to increasing the flow of capital into equities as distinguished from fixed computations, and I would not like to see the Commisison required to deal with so many details that now involve their time.

I would like to comment on two questions that you asked, Senator Javits. The first question was whether with regard to the rulemaking proceeding there is an appeal or petition for review of an action. I think that a person who is a party to a rulemaking proceeding clearly is a party within the meaning of the Renegotiation Act. He is at least an intervenor, and as a party, an intervenor, he is entitled to file a petition for review.

The second question you asked assumed that an action was taken by a hearing examiner, a petition for review was filed and the Commission declined to review it. If such a case were taken to court and reversed, what would happen? Practically the same thing that happens today if a hearing examiner's decision is not accepted. It would be referred back to the Commission for proceedings in accordance with the court's opinion. Frankly I see no difficulty attending that particular problem.

Senator WILLIAMS. Senator Neuberger? Senator Javits?

Senator JAVITS. Dean Landis, first I would like to join the Chair in expressing my pleasure at having you before us, and second may I

ask by way of qualification have you gone into the Commission's business pretty thoroughly and do you feel that you are in your own judgment competent to speak to their problems as of today? Of course we all know the great reputation you have.

Mr. LANDIS. I think so, Senator. I have kept my contacts with the Commission over the years. Most of the Commissioners have been personal friends of mine. I have discussed with them problems of business that came before them, their own difficult personnel problems, and the like.

Senator JAVITS. Is this your plan?

Mr. LANDIS. I have worked on it.

Senator JAVITS. As I heard your initial statement you didn't deal with one particular thing, and that is, Does the Commission need this authority? For example, does it need the authority to delegate the rulemaking power?

Mr. LANDIS. I would say that the general rulemaking power-rules of consequence-it would not delegate. But in certain areas, what might be called the housekeeping area, I see no reason why it shouldn't do so.

Senator JAVITS. So what you really want us to do is to transfer the authority from us to them? In other words, we should let them decide when, and in what cases, they are going to delegate the rulemaking power, instead of reserving to ourselves the authority to decide when we are going to let them do it?

Mr. LANDIS. That is correct.

Senator JAVITS. That is really what it comes down to, is it not?
Mr. LANDIS. It does.

Senator JAVITS. I heard with interest, because it follows immediately from this point, your general comments on the words "routine," "noncontroversial," and "major," even rulemaking as including the size, the quality of the paper, and so on. The thrust of your testimony it seems to me is that we should let the Commission decide all those things in the first instance instead of our trying to screen these things out even an a generic basis. For example, the Supreme Court of the United States itself does many miniscule ministerial things, doesn't it, in your experience as a lawyer?

Mr. LANDIS. Oh, yes.

Senator JAVITS. It has to because by and large we can't break down these words "major" and "general" and "routine." We have to do it in some generic way. Why wouldn't it be fair to say we won't let them delegate the rulemaking power; even if the rulemaking power includes a lot of little rules about paper and quality and size, we will not let them delegate this. Would that be an unreasonable position for the Congress to take?

Mr. LANDIS. I think so. I think our entire experience in the field of the law has shown that when we transferred the rulemaking power to the courts and got the legislature out of writing those rules we got much better judicial administration.

Senator JAVITS. But isn't the point right there that the SEC has the rulemaking power and we want them to keep it. We are not letting the courts transfer the rulemaking power to the chief clerk. Why should we let the Commission transfer it to a section chief?

Mr. LANDIS. I don't see there is much possibility of any important rulemaking power being transferred.

Senator JAVITS. But the plan would leave that power to them? Mr. LANDIS. I agree.

Senator JAVITS. And you would say in all fairness-and I am not trying to drive you to some difference with your own creation—that this is something we really have to decide. This is in essence our decision. In all fairness we have to decide.

Mr. LANDIS. Oh, I think that is perfectly true. In other words, this does give the power to the agency, the Commission in this case, to determine the kind of things that it can delegate and to whom it should delegate.

Senator JAVITS. Including any part of rulemaking, whether major or minor, except that these Commissioners, the Commissioners for the time being, say they don't intend to transfer any major rulemaking power. That is really what it comes down to.

Mr. LANDIS. That's right.

Senator JAVITS. You also spoke of certain built-in safeguards, and you mentioned them as consisting of a notice of hearing, the original delegation to take place by a majority of the Commission, and the discretionary review. Of course we are very familiar with that, but that still does not meet these problems that I have just mentioned to you. One thing did interest me in that connection, and that is you said that an action may be reviewed if only one Commissioner thinks it should be reviewed. But that would depend, would it not, Dean Landis, on the volition of the Commission. It might be influenced by the fact that one of its members suggested a review. They could take any case they wanted really to take.

Mr. LANDIS. Yes, that is true. I understand, for example, that the practice in the Supreme Court of the United States is that if four Justices want a review a case will be reviewed, but on occasion a case may be reviewed even though only three Justices request it.

Senator JAVITS. I had that almost implicit in my thinking, you remember, when I asked Mr. Funston the question, because I know that to be the case. If one judge feels strongly about a case, the other Justices very likely will let him have his way, but this would not be as a right either here or in court.

What do you think about this personnel expansion idea that Mr. Funston and Mr. Besse spoke of? Do you think it is needed, too? Mr. LANDIS. I quite agree.

Senator JAVITS. You do?

Mr. LANDIS. Oh, yes, I agree.

Senator JAVITS. And also the policing problem. Do you think they need more people for that?

Mr. LANDIS. Yes, I do.

Senator JAVITS. What do you think of my idea of making people pay more fees in order to make this self-sustaining?

Mr. LANDIS. I think it is a good idea. I know ways you should collect them.

Senator JAVITS. I frankly was not impressed with the objection that the industry would bear too heavy a burden because I know it is passed on in the main to the people who buy.

Mr. LANDIS. There is one provision in the Securities Exchange Act which provides for the registration of brokers and dealers. In New York and New Jersey and Pennsylvania, in practically every State that I know of, an annual fee is charged for that registration. There is no charge in the exchange. There is no reason why there shouldn't be a reasonable charge for that service.

Senator JAVITS. Well, now what is the authority of the Commission to impose additional charges? Would they have to come to us for authority for additional charges?

Mr. LANDIS. The Commission has no authority to do this.
Senator JAVITS. The Commission has no such authority?

Mr. LANDIS. It would need legislation.

Senator JAVITS. Might such legislation conceivably be included in any package that we offered here in terms of this reorganization, assuming we had to go the direct legislation route?

Mr. LANDIS. Yes.

Senator JAVITS. Well, Dean Landis, as always, you are very frank and very direct, even where it might be slightly against your own point of view. I appreciate it very much. Thank you Mr. Chairman, for allowing me the opportunity to ask questions.

Senator WILLIAMS. Dean Landis, where an elected or appointed official in Government is charged with or has responsibility for decision and yet is faced with more work than he can handle, he has to be very careful and judicious in the delegation where he is charged with the final responsibility for the decision. Under this plan does the Commission escape responsibility for any of the decisionmaking that might be effected through delegation?

Mr. LANDIS. I think not. I would think the commission really has more responsibility than in many other cases where the type of delegation that you speak of takes place. For example, the Secretary of Agriculture has 60 or 70 regulatory statutes that he is supposed to handle. Of course he has to delegate matters like the Packers and Stockyards Act and the Commodity Exchange Act and the Agricultural Adjustment Act, and so forth. That is necessarily delegated. I am not critical of that.

But there is no prescribed method of reviewing the decison of a delegatee as there is in this plan. If anybody is disturbed, he has a right to go to the Commisison and say this is a matter of national importance, and if the Commission declines to review that is the action of the Commission direct.

Senator WILLIAMS. This is a fundamental safeguard?

Mr. LANDIS. I think so. Actually the proposal is modeled on the theory of reviewing judgments of State courts and of the courts of appeals and the Supreme Court of the United States. This should, of course, be implemented by rule comparable to rule 38, paragraph 5 of the Supreme Court rule indicating the types of cases in which they wil consider granting such a review. That rule doesn't cover every case in which they grant, but it tries to set forth the categories of cases they think are worthy of review. And of course a plan of this nature if it does delegate should indicate by rule the category of cases they would consider.

Senator JAVITS. I have just two other questions that are raised by what you have just been referring to. There is no analogy here with the court, is there, in view of the fact that in court procedure an appellate court would be reviewing the work of a lower court, which is tantamount to saying it would be reviewing the work of a body, a judicial body equivalent to a commission. The review in this case might easily be from a record which shows that there was a hearing examiner or other lower echelon action, and there may have been no application to the Commission to review or the Commission would refuse to review and then it would go to some appellate body.

Mr. LANDIS. I think there is an analogy between the court and the hearing examiner. The hearing examiner himself is a judge.

Senator JAVITS. That is only true of part of the proceedings before the Commission. It does not have a hearing examiner in many of these cases where the appellant may be dealing with a section chief or other official. When people don't like him they describe him as a bureaucrat.

Mr. LANDIS. I really think, Senator, that this plan, if it went into effect, would primarily affect the adjudicatory matters before the Commission and not the other matters.

Senator JAVITS. Yes, but it could affect a lot of other matters.

Mr. LANDIS. I think it would be utilized primarily in the matters presently referred to hearing examiners.

Senator JAVITS. The other thing I had in mind is that I expect you would not equate the requirement that the Commission hear and consider argument on a case with its procedure to decide whether it will or will not review a case? In other words, a case does not get the same scrutiny, the same consideration, on a petition for review that it does in a contested hearing?

Mr. LANDIS. Oh, no.

Senator JAVITS. So that you would say your statement as to “responsibility" must be taken within that context, must it not?

Mr. LANDIS. That's right, because you are simply considering the question whether a case is worthy of review at that point.

Senator JAVITS. And without the procedural concepts and procedural steps which come in an actual review, that is the argument, the briefs, the presentation, and so forth?

Mr. LANDIS. No. I mean if that were so, there would be no point to the delegation.

Senator JAVITS. And the request for review undoubtedly would be decided on written papers and very rarely on argument?

Mr. LANDIS. Very rarely.

Senator JAVITS. I thank you, Mr. Chairman.

Senator WILLIAMS. Thank you very much, Dean Landis.

Chairman Cary, would you prefer to have all of your Commissioners with you.

Mr. CARY. I would like very much to.

Senator WILLIAMS. Commissioner Frear and Commissioner Woodside, we are honored to have you.

Mr. Chairman, we have your prepared statement before us which deals with this question in depth. If you prefer to, you may file this for the record and then proceed in your own way.

Mr. CARY. I would be very happy to do so, sir.