= se Committee on Interstate and Foreign Commerce and Congress justly proud. These statutes have gone a long way in the mitigaand elimination of undesirable practices in the securities field, in restoration of confidence in the securities markets, and in the proon of the investing public. perience in the administration of these acts, however, naturally given rise over the years to various suggestions as to their imvement and their workability, which obviously could not all be ipated at the time of their original enactment. A program for sion in the light of such experience was interrupted by the war. the instance of the House Committee on Interstate and Foreign merce, the Commission renewed discussions with industry relating revision program, and from time to time since has presented the ...of such discussions to the committee for consideration. addition to the responsibilities and duties with which the SEC rged relating to disclosure of information about listed securities Pegulating practices in exchange and over-the-counter operations, ecurities Exchange Act of 1934, as amended, imposed certain duand responsibilities upon national securities exchanges and upon al securities associations. That act requires that both the exre and the over-the-counter markets should be governed by cermiles for the protection of the public in the conduct of their oper That legislation when enacted not only provided for certain which should be contained in their rules but also directed the ission to make a study of the rules and report to the Congress ults of its investigation together with its recommendations. t study, together with the Commission's hearings into the diffiof Richard Whitney & Co., led to a program of reforms drafted he cooperation of the Commission, which was approved by the York Stock Exchange in October 1938. In view of the more 0 years which have elapsed since that time and the experience necessarily grows out of the administration of such programs the statutes, and in view of the comments which recently and ly have been made as to today's market conditions, it has to us that it is now highly appropriate again to review these overning the activities of the various securities markets to see r they are adequate to protect investors, to determine just how e being administered by the exchanges and the over-the-counciations, and whether changes, modifications, or expansions of sor statutes are desirable now in the public interest. our feeling that the SEC properly, as an arm of the Congress, uld bring up to date and enlarge upon the study which it was ed to make some 26 years ago. For this purpose, I have in1 House Joint Resolution 438, which would authorize to be iated the sum of $750,000 for the Commission to make such d investigation and report to the Congress by January 3, results of its study together with its recommendations. rst witness this morning is William Cary, Chairman of the s and Exchange Commission. nan Cary, I believe this is your first appearance before our ittee and I wish to welcome you here as well as to express d to your fellow Commissioners the continuing interest which ommittee has in the successful and effective administration f the various statutes which have been entrusted to you. I Additional information submitted for the record by-Continued Total number of "hot issues" and questionnaires investigated for the period of 1956 through March 1961, table. New York Stock Exchange, disciplinary procedures.. Securities and Exchange Commission: Estimated cost of proposed organization of Division of Securities Proposed organization, Division of Securities Markets, chart. Studies conducted.. 30 20 8 SECURITIES MARKETS INVESTIGATION TUESDAY, JUNE 27, 1961 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE AND FINANCE OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 10 a.m., pursuant to call, in room 1334, House Office Building, Hon. Peter F. Mack (chairman of the subcommittee) presiding. Mr. MACK. The subcommittee will be in order. The Subcommittee on Commerce and Finance of the House Committee on Interstate and Foreign Commerce today is beginning hearing on House Joint Resolution 438, a joint resolution directing the Securities and Exchange Commission to make a study and investigation of the adequacy for the protection of investors, of the rules of the stock exchanges and of the National Association of Securities. Dealers. (H. J. Res. 138 follows:) [H.J. Res. 438, 87th Cong., 1st sess.] JOINT RESOLUTION To amend the Securities Exchange Act of 1934 so as to authorize and direct the Securities and Exchange Commission to conduct a study and investigation of the adequacy, for the protection of investors, of the rules of national securities: exchanges and national securities associations Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That section 19 of the Securities Exchange Act of 1934 is amended by adding at the end thereof a new subsection as follows: "(d) The Commission is authorized and directed to make a study and investigation of the adequacy, for the protection of investors, of the rules of national securities exchanges and national securities associations, including rules for the expulsion, suspension, or disciplining of a member for conduct inconsistent with just and equitable principles of trade. The Commission shall report to the Congress on or before January 3, 1963, the results of its study and investigation, together with its recommendations, including such recommendations for legislation as it deems advisable. To carry out such study and investigation there is hereby authorized to be appropriated the sum of $750,000.” Mr. MACK. I have been alarmed by recent developments in the securities markets and it appears that others share my concern. In the past few weeks the president of the New York Stock Exchange has issued two very firm warnings against speculation in the stock market. The Securities and Exchange Commission has initiated an investigation of the American Stock Exchange to determine whether additional rules or laws are required to insure proper operation of the exchange. A few weeks ago, the Commission disclosed that they had more manipulation cases in various stages of administrative and criminal proceedings than ever before. The Chairman of the Commission 1 |