INVESTIGATION OF BUSINESS, FINANCIAL CONDITIONS, ETC., OF COMPANIES (b) The Commission upon its own motion or at the request of a State commission may investigate, or obtain any information regarding the business, financial condition, or practices of any registered holding company or subsidiary company thereof or facts, conditions, practices, or matters affecting the relations between any such company and any other company or companies in the same holding-company system. ADMINISTERING OATHS; SUBPENAS; EXAMINING WITNESSES (c) For the purpose of any investigation or any other proceeding under this chapter, any member of the Commission, or any officer thereof designated by it, is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in any State or in any Territory or other place subject to the jurisdiction of the United States at any designated place of hearing. COURT AID TO COMPEL GIVING TESTIMONY; PENALTY FOR REFUSAL TO TESTIFY (d) In case of contumacy by, or refusal to obey a subpena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoranda, contracts, agreements, and other records. And such court may issue an order requiring such person to appear before the Commission or member or officer designated by the Commission, there to produce records, if so ordered, or to give testimony touching the matter under investigation or in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found. Any person who, without just cause, shall fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, corrrespondence, memoranda, contracts, agreements, or other records, if in his or its power so to do, in obedience to the subpena of the Commission, shall be guilty of a misdemeanor and, upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year, or both. (e) Repealed. Pub. L. 91-452, Title II, § 214, Oct. 15, 1970, 84 Stat. 929. INJUNCTIONS TO RESTRAIN VIOLATIONS; PROSECUTIONS (f) Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this chapter, or of any rule, regulation, or order thereunder, it may in its discretion bring an action in the proper district court of the United States, or the United States courts of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this chapter or any rule, regulation, or order thereunder, and upon a proper showing a permanent or temporary inJunction or decree or restraining order shall be granted without bond. The Commission may tansmit such evidence as may be available concerning such acts or practices to the Attorney General, who, in his discretion, may institute the appropriate criminal proceedings under this chapter. MANDAMUS TO COMPEL COMPLIANCE WITH LAW (g) Upon application of the Commission, the district courts of the United States, and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this chapter or any rule, regulation, or order of the Commission thereunder. Aug. 26, 1935, c. 687, Title I, § 18, 49 Stat. 831; June 25, 1936, c. 804, 49 Stat. 1921; June 25, 1948, c. 646, § 32(b), 62 Stat. 991; May 24, 1949, c. 139, § 127, 63 Stat. 107; Oct. 15, 1970, Pub. L. 91-452, Title II, § 214, 84 Stat. 929. HISTORICAL NOTE Codification.—As originally enacted subsecs. (f) and (g) contained references to the Supreme Court of the District of Columbia. Act June 25, 1936, substituted "the district court of the United States for the District of Columbia" for "the Supreme Court of the District of Columbia", and act June 25, 1948, as amended by act May 24, 1949, substituted "United States District Court for the District of Columbia" for "district court of the United States for the District of Columbia". However, the words "United States District Court for the District of Columbia" have now been deleted entirely as superfluous in view of section 132 (a) of Title 28, Judiciary and Judicial Procedure, which states that "There shall be in each judicial district a district court which shall be a court of record known as the United States District Court for the district", and section 88 of Title 28 which states that "the District of Columbia constitutes one judicial district". 1970 Amendment.-Subsec. (e). Pub.L. 91-452 struck out subsec. (e) which related to the immunity from prosecution of any individual compelled to testify or produce evidence, documentary or otherwise, after claiming his privilege against self-incrimination. Effective Date of 1970 Amendment.—Amendment by Pub. L. 91-452 effective on the sixieth day following the date of enactment of Pub. L. 91-452, which was approved Oct. 15, 1970, see section 260 of Pub.L. 91-452, set out as a note under section 6001 of Title 18, Crimes and Criminal Procedure. Savings Provision.—Amendment of this section by Pub. L. 91-452 not to affect any immunity to which any individual is entitled under this section by reason of any testimony given before the sixtieth day following Oct. 15, 1970, see section 260 of Pub. L. 91-452, set out as a note under section 6001 of Title 18, Crimes and Criminal Procedure. Transfer of Functions.-All executive and administrative functions of the Securities and Exchange Commission were, with certain exceptions, transferred to the Chairman of such Commission, with authority vested in him to authorize their performance by any officer, employee, or administrative unit under his jurisdiction, by 1950 Reorg. Plan No. 10, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out as a note under section 78d of this title. Legislative History.-For legislative history and purpose of Act May 24, 1949, see 1949 U.S. Code Cong. Service, p. 1248. See, also, Pub. L. 91-452, 1970 U.S. Code Cong. and Adm. News., p. 1073. 20. Section 19 of the Public Utility Holding Act of 1935, 15 U.S.C.A. 798, with Historical Note § 79s. Hearings before Commission Hearings may be public and may be held before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept. In any proceeding before the Commission, the Commission, in accordance with such rules and regulations as it may prescribe, shall admit as a party any interested State, State commission, State securities commission, municipality, or other political subdivision of a State, and may admit as a party any representative of interested consumers or security holders, or any other person whose participation in the proceedings may be in the public interest or for the protection of investors or consumers. Aug. 26, 1935, c. 687, Title I, § 19, 49 Stat. 832. HISTORICAL NOTE Transfer of Functions.-All executive and administrative functions of the Securities and Exchange Commission were, with certain exceptions, transferred to the Chairman of such Commission, with authority vested in him to authorize their performance by any officer, employee, or administrative unit under his jurisdiction, by 1950 Reorg. Plan No. 10, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out as a note under section 78d of this title. 21. Section 22 of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. 79v, with Historical Note § 79v. Access of public to information filed with Commission: unlawful disclosure or use of information (a) When in the judgment of the Commission the disclosure of such information would be in the public interest or the interest of investors or consumers, the information contained in any statement, application, declaration, report, or other document filed with the Commission shall be available to the public, and copies thereof may be furnished to any person at such reasonable charge and under such reasonable limitations as the Commission may prescribe: Porvided, however, That nothing in this chapter shall be construed to require, or to authorize the Commission to require, the revealing of trade secrets or processes in any application, declaration, report, or document filed with the Commission under this chapter. (b) Any person filing such application, declaration, report, or document may make written objection to the public disclosure of information contained therein, stating the grounds for such objection, and the Commission is authorized to hear objections in any such case where it finds it advisable. (c) It shall be unlawful for any member, officer, or employee of the Commission to disclose to any person other than a member, officer, or employee of the Commission, or to use for personal benefit, any information contained in any application, declaration, report, or document filed with the Commission which is not made available to the public pursuant to this section. Aug. 26, 1935, c. 687, Title I, § 22, 49 Stat. 834. HISTORICAL NOTE Transfer of Functions.-All executive and administrative functions of the Securities and Exchange Commission were, with certain exceptions, transferred to the Chairman of such Commission, with authority vested in him to authorize their performance by any officer, employee, or administrative unit under his jurisdiction, by 1950 Reorg. Plan No. 10, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out as a note under section 78d of this title. B. LETTER DATED NOV. 3, 1971, FROM SENATOR NELSON, CHAIRMAN, SUBCOMMITTEE ON MONOPOLY, ΤΟ WILLIAM J. CASEY, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION, WITH ENCLOSURES Hon. WILLIAM J. CASEY, U.S. SENATE, SELECT COMMITTEE ON SMALL BUSINESS, Chairman, Securities and Exchange Commission, DEAR MR. CHAIRMAN: The Senate Small Business Committee's Subcommittee on Monopoly will open hearings on Corporate Secrecy on November 9. A press release from my office dated October 22 and a Notice of Hearings from the Congressional Record of October 15 are enclosed for your information. Also enclosed are a list of "Sixteen Major Questions To Be Considered By the Subcommittee" and "Working Paper A-The Nature and Dimensions of Corporate Secrecy," which contains a discussion by subcommittee counsel and myself of the first three of the 16 major questions. "Working Paper A" contains four subordinate questions to our Major Question No. 2 and ten subordinate questions to our Major Question No. 3. While all of these questions-both major and subordinate-are within the jurisdictional concerns of the Securities and Exchange Commission, it is respectfully suggested that Major Questions 4 through 16 and subordinate questions 2-2 through 3-10 inclusive are within its particular competence and concern. Questions 3-1 through 3-3 relate to the SEC's Form 10-K. Questions 3-4 through 3-8 relate to problems that arise in using the Directory of Companies Filing Annual Reports With the Securities and Exchange Commission Under the Securities Exchange Act of 1934, Alphabetically and By Industry Groups as a guide to the placement of company data in the Quarterly Financial Report for Manufacturing Corporations. 92-578 - 735(2B) This is to invite and urge the Commission to provide its written answers to or comments on each of the enclosed major and subordinate questions, but especially those identified in the preceding paragraph, for inclusion in the record of the hearings. The deadline for inclusion in the next part of the printed record would be December 6, 1971. It is our present plan to invite you and your fellow Commissioners to appear before the Subcommittee for an oral discussion of our questions and your written answers sometime around March of 1972; however, if you wish to appear at an earlier time, we shall be happy to try to find a mutually convenient date. In this connection, it would also be most welcome and helpful to the Subcommittee to have, for study and inclusion in our record, a report recently prepared by your Commission's staff on the subject of disclosure by registrants involved in defense contracts. We understand the report was prepared following a series of public hearings on this subject before an assistant general counsel of the Commission. We should like very much to have at least two-up to tencopies of the staff report at the earliest possible time. With best wishes, Very truly yours, GAYLORD NELSON, Chairman, Subcommittee on Monopoly. Enclosures. [Enclosure: Press release of Senator Gaylord Nelson, Friday, Oct. 22, 1971] WASHINGTON, D.C.-Gaylord Nelson today announced that Ralph Nader and four eminent professors-Walter Adams, John Kenneth Galbraith, Willard F. Mueller and Donald F. Turner-will be the initial witnesses at hearings he will conduct on the subject of corporate secrecy. Nader, the consumer advocate, will testify on November 9. The four professors, all of whom have also held Federal government positions in the past, will appear together for a panel discussion on Nov. 12. Each session will begin at 10 A.M. in Room 318 of the Old Senate Office Building. The hearings are part of a continuing study of the power and influence of giant corporations, in which Nelson's Senate Small Business Subcommittee on Monopoly has been engaged since 1967. Nelson said it was especially appropriate to begin this phase of the hearings with testimony from these witnesses. A 1967 panel discussion by the same four professors launched the subcommittee's study of corporate giantism, the Wisconsin Senator pointed out, while testimony by Nader in 1968 had emphasized the key role of secrecy in the maintenance and enhancement of giant corporate power. Nader is expected to address himself to most or all of the 16 major questions Nelson has previously said the subcommittee will be seeking to answer in the corporate secrecy hearings. One of the most sensitive of the 16 pertains to the strict secrecy afforded by government to tax and informational returns filed by giant corporations. That policy, while honored by time and protected by statute, will be up for re-examination in these hearings, Nelson said. He suggested that a policy of "graduated information disclosure" might follow sensibly and logically from the policy of a graduated income tax. The four professors, in addition to discussing policy on corporate secrecy, are expected to study the nature and direction of American industrial civilization. Galbraith, who is Warburg Professor of Law at Harvard and a former U.S. Ambassador to India, has long maintained that giant corporations are inevitable and necessary but should be subject to government controls over their wages and prices. He has also urged that giant defense corporations be nationalized. Adams, a former consultant to both the Senate and House Small Business Committees, heads the Economics Department at Michigan State University. In 1969 he served as the interim president of MSU. Mueller, who has served as the director of the Federal Trade Commission's Bureau of Economics and in other Federal offices, is now Vilas Research Professor at the University of Wisconsin. Turner, who holds a doctorate in economics but thinks of himself primarily as a lawyer, is Professor of Law at Harvard. He served as Assistant Attorney General in charge of the Justic Department's Antitrust Division in the Johnson Administration. [Enclosure: Notice of Hearings-From the Congressional Record, Oct. 15, 1971] NOTICE OF HEARINGS ON CORPORATE SECRECY Mr. NELSON. Mr. President, the Subcommittee on Monopoly of the Senate Select Small Business Committee held hearings in 1969 on "The Role of Giant Corporations in the American and World Economies-Part 1-Automobile Industry." Those hearings explored such industrial giants as General Motors and their effect on the world market. The next round of hearings-"Part 2-Corporate Secrecy"-which begins November 9, will again look at GM and other massive conglomerates. It is not surprising that the giant American corporations, operating within tight, highly organized and structured conglomerates with extensive holdings throughout the world, are called "private governments." It is not surprising, because these American industrial giants profoundly affect the standard of living and the quality of life in the countries in which they operate. And to small businesses, dependent on the giants as suppliers, customers, competitors, or all three, the decisions and actions of these "private governments," often carry more force and have more influence than the directives of public governments. The decisions reached in the guarded boardrooms of the corporations determine whether there will be new jobs in Milwaukee, Wis. or in Frankfurt, Germany, or in Hong Kong. They make the decisions on pay and working conditions and directly establish the standards of living for the countries in which they operate. In fact, few governments can claim as much influence on the economic structure of a country and its standard of living. The power of giant corporations is well known to environmentalists who have watched with pained frustration as the corporate decision is the final and often only one on whether a virgin forest will be felled this year or next; whether a river or lake will be clean or polluted, or whether the air will be healthy and clean, or foul-tasting and poisonous to all living creatures. In the cities, they decide which neighborhoods shall live or die and who shall benefit from the services and priorities the corporation decides it needs. The pervasiveness of the power of giant corporations is also very real to the farmer. The decisions of agribusiness conglomerates determine not only which farm products will be bought, where, and at which prices, but even whether family farming will or will not remain economically feasible in certain regions and in certain crops. In 1968 I chaired hearings on the question of corporate farming and will renew that study during this phase of hearings on November 16 and 17.1 The Federal Trade Commission's Bureau of Economics' Economic Report on Corporate Mergers reported that by the beginning of 1969, 87 corporations, each with assets of $1 billion or more, accounted for 46 percent of all assets owned by corporations primarily engaged in manufacturing. The same report also points out: Although the number of corporations of every size has expanded substantially during the past decade, only those in the $1 billion and over class have enlarged their share of total assets-from 26 to 46 percent. Despite an increase of over 40,000 in the number of corporations with assets under $10 million during the past decade, their share of the total assets fell from 20 percent to 14. Even greater than the largest corporations' share of assets is their share of profits. By 1969, the 87 largest corporations received a share of the net profits of all manufacturing corporations equal to that of the over 194,000 other manufacturing corporations. The 2,593 corporations with assets of $10 million or more represented less than 1 percent of all manufacturing businesses, but they held 86 percent of the total assets and received 88 percent of the net profits of all manufacturing corporations. To repeat, less than 1 percent of the manufacturing businesses in the country have 86 percent of the assets and 88 percent of the net profits. 1 The hearings referred to were subsequently begun on Nov. 23 and Dec. 1, 1971, rather than Nov. 16 and 17, and completed on March 1 and 2, 1972. The record of those hearings will be printed as part 3 of the present series on "Giant Corporations."-Committee editor. |