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"AWL F76

FOREIGN BANK SECRECY

HEARINGS

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

OF THE

COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

NINETY-FIRST CONGRESS

SECOND SESSION

ON

S. 3678 and H.R. 15073

BILLS TO AMEND THE FEDERAL DEPOSIT INSURANCE ACT
TO REQUIRE INSURED BANKS TO MAINTAIN TAI REC
ORDS, TO REQUIRE THAT CERTAIN TRANSACTIONS IN UNITED
STATES CURRENCY BE REPORTED TO THE DEPARTMENT OF

THE TREASURY, AND FOR OTHER PURPOSES

JUNE 8, 9, 10, AND 11, 1970

Printed for the use of the
Committee on Banking and Currency

1973

U.S. GOVERNMENT PRINTING OFFICE

46-824 0

WASHINGTON : 1970

COMMITTEE ON BANKING AND CURRENCY

JOHN SPARKMAN, Alabama, Chairman WILLIAM PROXMIRE, Wisconsin

WALLACE F. BENNETT, Utah HARRISON A. WILLIAMS, JR., New Jersey JOHN G. TOWER, Texas EDMUND S. MUSKIE, Maine

EDWARD W. BROOKE, Massachusetts THOMAS J. MCINTYRE, New Hampshire CHARLES H. PERCY, Illinois WALTER F. MONDALE, Minnesota

CHARLES E. GOODELL, New York ERNEST F. HOLLINGS, South Carolina ROBERT W. PACKWOOD, Oregon HAROLD HUGHES, Iowa ALAN CRANSTON, California

DUDLEY L. O'NEAL, Jr., Staff Director and General Counsel

JOHN R. EVANS, Minority Staff Director

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

WILLIAM PROXMIRE, Wisconsin, Chairman JOHN SPARKMAN, Alabama

WALLACE F. BENNETT, Utah HARRISON A. WILLIAMS, JR., New Jersey EDWARD W. BROOKE, Massachusetts EDMUND S. MUSKIE, Maine

CHARLES H. PERCY, Illinois THOMAS J. MCINTYRE, New Hampshire CHARLES E. GOODELL, New York WALTER F. MONDALE, Minnesota

KENNETH A. MCLEAN, Professional Staff Member

(II)

CONTENTS

Page

3

29

31

CHRONOLOGICAL LIST OF WITNESSES

MONDAY, JUNE 8

Will Wilson, Assistant Attorney General, Department of Justice,

accompanied by Whitney North Seymour, Jr., U.S. Attorney, Southern

District of New York, and Robert Rosthal, Deputy Chief, Government

Operations Section, Criminal Division...

Hamer H. Budge, Chairman, Securities and Exchange Commission,

accompanied by Irving M. Pollack, Director, Division of Trading and

Markets; Stanley Sporkin, Associate Director (Enforcement), Division

of Trading and Markets; Philip A. Loomis, Jr., general counsel, and

Ira H. Pearce, special counsel..

TUESDAY, JUNE 9

Eugene T. Rossides, Assistant Secretary for Enforcement and Operations,

Department of the Treasury, accompanied by Robert Cole,

Special Assistant for International Tax Affairs; William L. Dickey,

Deputy Assistant Secretary; Bernard Mehan, Special Assistant, Compli-

ance Staff, Internal Revenue Bureau; and Robert Rostahl, Deputy Chief,

Government Operations Section, Department of Justice

Carl W. Desch, senior vice president, First National City Bank, accom-

panied by Roy Haberkern, partner, Millbank, Tweed, Hadley & McCloy,

New York City; and John F. Lee, executive vice president, New York

Clearing House Association.

C. Coleman McGehee, president, First & Merchants National Bank,

Richmond, Va., accompanied by William Boyd, Jr., senior vice president

and manager, international banking, Pittsburgh National Bank, Pitts-

burgh, Pa...

WEDNESDAY, JUNE 10

Robert M. Morgenthau, New York, N.Y.

Pierre Leval, New York, N.Y---

Anatole G. Richman, Newark, N.J.

THURSDAY, JUNE 11

Robert W. Haack, president, New York Stock Exchange; accompanied by

Donald L. Calvin..

Frank J. Wilson, vice president and associate counsel, National Association

of Securities Dealers, Inc. on behalf of Henri L. Froy, chairman, Foreign

Committee, National

Association of Securities Dealers, Inc.-

Robert W. Wilson, Robert W. Wilson Investments, New York;

accompanied by Carl L. Shipley..

73

285

(III)

Cole, Robert, Special Assistant for International Affairs, Department of Page

the Treasury--

147

Desch, Carl W., senior vice president, First National City Bank

186

Dickey, William L., Deputy Assistant Secretary, Department of the

Treasury

147

Froy, Henri L., chairman, Foreign Committee, National Association of

Securities Dealers...

306

Haack, Robert W., president, New York Stock Exchange.

285

Haberkern, Roy, partner, Millbank, Tweed, Hadley & McCloy-

286

Lee, John F., executive vice president, New York Člearing House Associa-

tion.

186

Leval, Pierre

268
Loomis, Philip A. Jr., General Counsel, Securities and Exchange Com-
mission..

73

McGehee, C. Coleman, president, First and Merchants National Bank.. 227

Mehan, Bernard, Special Assistant, Compliance Staff, Internal Revenue
Bureau--

147

Morgenthau, Robert M.

244

Pearce, Ira H., Special Counsel, Securities and Exchange Commission-- 73

Pollack, Irving M., Director, Division of Trading and Markets, Securities

and Exchange Commission..

73

Richman, Anatole G-----

278

Rossides, Eugene T., Assistant Secretary for Enforcement and
Operations, Department of the Treasury-

147
Rosthal, Robert, Deputy Chief, Government Operations Section, Criminal
Division, Department of Justice --

56, 147

Seymour, Whitney North Jr., U.S. Attorney, Southern District of New

York..

59

Shipley, Carl L.---

310
Sporkin, Stanley, Associate Director, Enforcement, Division of Trading
and Markets, Securities and Exchange Commission..

73

Wilson, Frank J., vice president and associate counsel, National Association

of Sécurities Dealers

299

Wilson, Robert W., Robert W. Wilson Investments, New York.

310

Wilson, Will, Assistant Attorney General, Department of Justice

56

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346

329

329

330

National Association of Securities Dealers, Inc.:

Frank J. Wilson, vice president, statement of ..

Henri L. Froy, chairman, foreign committee:

Prepared statement...

Reprint of cablegram from...

National League for Privacy in Bank Accounts, letter to Senate Banking

Committee..

New York Clearing House:

Desch, Carl W., statement of...

Reprint of bill S. 3678 with suggested changes -

New York Stock Exchange:

Donald L. Calvin, vice president:

Letter to Senator Proxmire.

Rewrite of section 241.-

International transactions (table)--
Robert W. Haack, president, statement of..

Supplemental memorandum.-
Pittsburgh National Bank, Pittsburgh, Pa., statement of William Boyd,

Jr., senior vice president.--
Riseley, Jerry B., chairman, National League for Privacy in Bank Accounts,

letter to Senate Banking Committee..
Robert W. Wilson Investments:

Comparative financial statement—50 percent net long position with

maximum gross positions (table) --
Reprint of article from Businessweek magazine.
Reprint of articles from the New York Times:

Short Selling-Ban Is Urged.

To the Defense of Short Selling-

Wilson, Robert W.:

Statement of

Supplemental statement.--

S. 3678, reprint of, with suggested amendments submitted by the New

York Clearing House---

Securities and Exchange Commission:

Budge, Hamer H., Chairman, prepared statement.-

Investment company holdings of the Fund of Funds, Ltd. (table).

Management company holdings of the Fund of Funds, Ltd. (table) -

Reprint of advertisement from the Wall Street Journal..

Testimony before the House Banking and Currency Committee:

Bath Industries --

Combined holdings, FOF Prop. Funds, Ltd., ITT Fund, Fond-

italia, IOS Venture Fund of Canada, IOS International Ven-

tures Fund, and Regents Fund (table).

Commonwealth United Corp-

Investors Overseas Service.

Liquidonics

Madison Square Garden Corp--

Resorts International, Inc..

Tracy Investment Co..

Seymour, Whitney North, Jr., prepared statement-
Summers v. Surety Savings and Loan Association, opinion, Court of Appeals,

State of California.--.

Treasury, Department of:

Proposals for recordkeeping by banks and other financial institutions

of international transactions

Recommended amendments to S. 3678 and H.R. 15073_-

Rossides, Eugene T., Assistant Secretary, prepared statement.-

Transactions in U.S. corporate bonds and stocks reported by banks

and brokers in the United States, 1954-69 (table).

Wall Street Journal, reprint of advertisement from.-

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179
180
170

CHARTS AND TABLES

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Combined holdings, FOF Prop. Funds, Ltd., ITT Fund, Fonditalia, IOS

Venture Fund of Canada, IOS International Ventures Fund, and Regents
Fund..

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