« iepriekšējāTurpināt »
"Sale Hearing Raises Spy Questions—CIA and the Southern Airline,
article by Stephen M. Aug, Washington Star-News, August 31,
"Corporate Closeness-LILCO (Long Island Lighting Company) Is A
Case In Point,” article by Kenneth Crowe, Newsday, March 22,
Literature relating to modification of the "One Share, One Vote" rule in
corporation voting, a memorandum by Julius W. Allen, Congressional
INSTITUTIONAL INVESTORS' ROLE Congressional committees, Federal agencies and scholars
The role of institutional investors is of course not are considering substantive issues created by the dominant limited to the acquisition and sale of stock and the right, role of institutional investors-bank trust departments, in many cases, to vote it. Some institutional investors insurance companies, investment companies, pension make loans to companies in which they invest, or provide funds and others, such as foundations and universities, insurance coverage. Their representatives often sit on the in major corporations. At least 32 institutions are known companies' boards of directors. Sometimes institutional to manage investment portfolios in excess of $5 billion investors help facilitate or block mergers. each. (They are listed in the table below.)
The institutional investors' effect on medium-sized and Their decisions can alter the stability of the market smaller companies, and those companies' inability to and individual companies. To minimize impact on medium pierce through nominee accounts to communicate with and small companies, large institutional investors tend to
their own stockholders, was described to a Senate subconcentrate their investments in large companies. This
committee this summer by the chairman of the Committee has led to the two-tier market, in which stocks of the also president of McCulloch Oil Corporation. Speaking
of Publicly Owned Companies, C. V. Wood, Jr., who is largest companies trade at a considerably higher multiple for the leadership of 469 companies with $43 billion in of earnings than those of many medium and smaller com- assets, 1.8 million stockholders and 1.1 million employees, panies, which encounter difficulty in raising equity capital. he testified that the institutional investors have run up
32 INSTITUTIONAL INVESTORS WITH ASSETS UNDER
1. Morgan Guaranty Trust Company.
Fortune, July 1973.
INTENT OF FEDERAL REPORTS ACT
the price of the stock of the big companies with which they whatever data they deem appropriate to carry out their have personnel and business relationships. Trading in statutory responsibilities. stocks of smaller and medium-sized companies languishes; Agency requests for data have on occasion been denied, their stock prices sink to new lows despite good earnings. delayed or diluted by the Bureau of the Budget and its Because the market undervalues the stock, the smaller successor, the Office of Management and Budget. The companies cannot raise money in the market for replace- budget agency based its actions on the Federal Reports ment or expansion of facilities. So they have to borrow Act of 1942 (Title 44, U.S. Code, Sections 3501-3511) the capital they need, increasing their debt-equity ratio which authorized it to coordinate collection of information to dangerous highs. They borrow at escalated interest by agencies from 10 or more persons or firms. rates from the banks which are driving them deeper into debt. They cannot break through the maze of nominee accounts held by institutional investors to communicate directly with their beneficial shareholders. As a conse
The intent of that Act was to avoid unnecessary duplicaquence, Chairman Wood testified, the smaller and medium tion of questions and to minimize the burden on business, U.S. corporations have become prime targets of the foreign especially small business, and to maximize the usefulness of companies which have recently taken over U.S. companies information collected to other Federal agencies and the from bases in Italy, France, Switzerland, Germany, the public. The hearings preceding enactment of the Federal United Kingdom and Saudi Arabia.'
Advisory Committee Act (P.L. 92–463) ascertained that The multiple levers of corporate management available budget agency officials reviewed regulatory commissions' to institutional investors present fundamental questions requests for information in unpublicized meetings with regarding public policy. These matters cut across the con- advisory committees composed exclusively of representacerns of a number of different agencies and congressional tives of the industries concerned. This practice has tended committees. Together they present questions about the
to discourage agencies from attempting to collect informanature of our industrial society-how it will be directed tion that they, the Congress and the public need. This year and controlled.
the Congress, in approving S. 1081, the Alaska pipeline There is as yet no consensus regarding what additional bill, removed OMB control over the questionnaires of Government controls, if any, should be placed on institu- independent regulatory commissions, and directed the tional investors. Indeed, there is respectable opinion that GA0 to review commission requests for information. institutional controls produce beneficial effects, such as more rational and expert market analysis, and more
OWNERSHIP REPORTING REQUIREMENTS effective oversight of corporate management.
Commission requests for company ownership data vary.
(A recent General Accounting Office summary of reportCOMMITTEE RESPONSIBILITY
ing requirements with respect to stock ownership, control, However, it is clear that the Congress, the agencies and diversification, debt and officers, and an excerpt of pertithe public generally will not obtain answers to basic nent statutes prepared by our staff appear in Appendix A, questions-answers that will provide the framework for page 197.) In capsule, the ownership reporting requirereasoned public policy-without a more solid data base ments, by agency, are as follows: than is now available. The Committee on Government
The Federal Trade Commission collects no information Operations and our subcommittees have authority and on company ownership on a recurring basis. An FTC staff responsibility regarding the collection and dissemination study is seeking to develop data on ownership and other of such data. So do the Office of Management and Budget characteristics of the Nation's largest manufacturing and General Accounting Office under statutes subject to corporations. Government Operations Committee and subcommittee The Securities and Exchange Commission has different review.
levels of reporting minimum-holders of more than 1, This document describes corporate reporting require- 10 percent of the stock, or the 20 largest stockholders—for ments of Federal regulatory agencies regarding stock different types of companies. However, the SEC usually ownership, control, diversification, debts and officers. It asks for identification of the large "beneficial” owners. describes deficiencies in these requirements and the pro
They are the persons or institutions who receive the divicedures used to implement them as regards stock owner- dends, but not necessarily the same persons or institutions ship and control. It presents information heretofore empowered to vote the stock. unavailable, because of these reporting deficiencies, regarding concentration of stock holdings. And it presents
IDENTITY OF VOTERS SOUGHT recommendations for further inquiry and action.
Four of the commissions forthrightly ask for identifica
tion of security holders with the highest voting powers” COMMISSION AND OMB RESPONSIBILITIES
or similar phraseology-at least in some instances. The Six Federal commissions require companies subject to Federal Maritime Commission asks water carriers for the their regulation to submit information regarding their top 30 security holders and their voting powers. (However, ownership at least annually. Those commissions are the freight forwarders need report to the FMC only stockCivil Aeronautics Board, Federal Communications Com- holders who individually own or hold 5 percent or more mission, Federal Power Commission, Federal Maritime of the stock, and the beneficial owners of those holdings if Commission, Interstate Commerce Commission and the
other than the individual owner or listed holder.) Securities and Exchange Commission. Congress has
The Federal Communications Commission requests delegated to these commissions broad authority to collect reports on holders of 3 percent or more voting interest in
broadcast companies, and generally makes supplemental i Financial Markets, Hearings before Subcommittee on Financial Markets, Senate Finance Committee, on impact of institutional ? However, Congress has never acted on the Natural Gas Informainvestors in the stock market, 93d Congress, First Session. tion Act which the Federal Power Commission has regularly reJuly 24-26, 1973, Part I.
quested since the 1950's.