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SECURITIES ACT OF 19 33 FILING FEES < t x

H E A R I N G

BEFO RE T H E

COMMITTEE ON

INTERS TAT E AND FOR EIGN COMMERCE 

HOUSE OE REPRESENTATIV ES

EIG HTY-NINT H CONG RESS

FIR ST SESSION

ON

H.R. 7169

A B IL L TO AM EN D T II E SEC U R IT IE S AC T OF 1933 W IT H 

R ESPEC T TO CER TA IN RE GIS TR ATI ON’ FEES

SEPTEMBER 14, 1965

Ser ial No. 89-24

P ri n te d fo r th e us e of th e 

Co mmitt ee oil In te rs ta te an d Fo re ig n Co mm erc e

53-816

U.S . GO VE RN MEN T PRIN TIN G OFFIC E 

WAS HI NG TO N : 1965
COM M IT TEE OX IN T E R S T A T E AND FO R EIG N COM M ERCE 

ORE N H AR R IS , Ark an sa s, Ch ai rm an

« nX. 

»

H A R L E Y O. STA G G ER S, W es t Vir gi nia

W A LT E R ROGERS, Te xa s

SA M U E L N. F R IE D E L , Maryla nd

T O R B E R T H. M AC DONAL D, M as sa ch us etts

JO HN JA RM AN , Oklah oma

LE O W. O’ BR IE N , New Yo rk

JO HN E. MOS S. Cal if or nia

JO HN D. D IN G E LL, Mich iga n

P A U L G. RO GER S, Flo rida

H O RACE IL K O R N EG AY, No rth Ca ro lin a

LIO N E L VAN D E E R LIN , Cal if or nia

J. J. P IC K L E , Te xa s

F R E D B. ROONEY, Pen nsy lv an ia

JO HN M. M U RPH Y. New Yo rk

D A V ID E. S A T T E R F IE L D II I, V ir gi nia

D A N IE L J . RO NA N, Il lin oi s

J. O LIV A HUOT, Ne w Ham ps hire

JA M E S A. M A CK A Y, Ge or gia

JO HN J. G IL L IG A N , Ohio

C H A R LE S P. F A R N SL E Y , Ken tu ck y 

JO H N B E L L W IL LIA M S, M iss iss ip pi

W IL LIA M L. SPR IN G E R , Il linoi s 

J. ARTH U R YO UNGER , Califo rn ia 

SA M U E L L. D E V IN E , Ohi o 

AN CH ER N ELSEN , M inne so ta 

H A ST IN G S K E IT H , M as sa ch us etts 

W IL LA R D S. CU RTI N , Pe nnsy lv an ia 

G LEN N CU NNIN GHAM , Neb ra sk a 

JA M ES T. B R O YH IL L, Nor th Ca ro lin a 

JA M ES H A R V E Y, M ichiga n 

A L B E R T W. W AT SO N, So ut h Ca ro lin a 

TI M LE E CA R TE R , Ken tu ck y

W, E. Wil li am so n, C le rk

K en net h J. P ain te r, A s s is ta n t C le rk

P ro fe s s io n a l S ta ff

Andrew Steve nson

K ur t Borc har dt

J am es M. Men ge r, Jr . 

William J. Dixon

ii
C O N T E N T S

m 4-

Page

Text of H .R. 7169________________________________________________ 1

Report of—

Bureau of th e Budge t_________________________________________

Securities and Exchange Commission___________________________

Treasury, Depar tment of the __________________________________

Statem ent of Hon. Manuel F. Cohen, Chairman, Securities and Exchange

Commission___________________________________________________ 5

Additional information sub mitted for the record by the Securities and 

Exchange Commission:

Appendix I—S tate ment of cost by organizatio n, fiscal year 1965____ 9

Appendix II —Statement of appropriations and fees collected, fiscal

years 1935 to 1965, inclusive_________________________________ 9

Letter to Hon. John W. McCormack, Speaker of th e House of Representatives, re fee legislation__________________________________ 2

h i

SECURITIES ACT OF 1933 FILING FEES

TU ESD AY , SE P T E M B E R 14, 19 65

H ouse of R epresen ta tiv es, 

Co m m it te e on I nterst ate and F orei gn C om m er c e,

Washington, D.C.

Th e committee met a t 1 :30 p.m ., p ur su an t to call , in room 2123, Ra ybu rn Building , li on . O ren H ar ris (cha irm an ) pre siding .

The Chairm \n. Th e com mittee will come to order.

The com mittee is ho lding heari ng s tod ay on a numb er of bills, includ ing one, H.R. 7161), which I introd uced at the requ est of the Securiti es and Ex change Commission, ha vin g to do with the amoun t 

of the tilin g fee required by the Secur itie s Act o f 1933.

From time to time ove r the year s since 1951 when the agencies were 

directed by the Congress un de r the Ind ependent Officers A pp ro pr ia ­

tio ns Act of 1952 to adop t fees to cover the cost of agen cy act ivities 

whe re fees were not fixed by sta tute, this committee has h ad occasion 

to con sider the fees set bv the Com mission, and in fact, by other commissions as well, to cover activities un de r the laws which it ad mi nisters.

Th e Commission again is giv ing considera tion to the fixing of fees. 

The 1933 act by statute esta blishes a fee app licabl e to the filing of 

registr ation statem ents. Th e Sec urities Ex change Act of 1934 also 

pro vides fo r ce rta in fees, as does the Tru st Ind en tu re Act.

Th e Commission in a pro posal made to the Congres s las t Ma rch , 

now w ould double the r eg istratio n fee u nd er the 1933 act. At th e same 

time it ind ica ted th at it believed the stat ut or y fees under the oth er 

acts sho uld be consid ered in the lig ht o f an overall stu dy it was m aking 

looking to wa rd su ggestions in other area s for leg islative c onsideration.

Our witn ess is Mr. Manuel Cohen, Ch air ma n of the Securiti es and 

Exchange Com mission. Bu t before he proc eeds it may be well to 

place in the record at th is point a copy of the Com mission’s l et te r of 

Marc h 26 to the Sp eaker, of the bill, and of the comm ents of vario us 

gov ernme ntal agencies on the bill.

(TT.R. 7169, le tte r to Hon. Jo hn W . M cCo rma ck, and agency rep orts 

fo llo w:)

[H.R. 7169, S9th Cong.. 1st sess.]

A BILL To amend the Securities Act of 1933 with respect to certain registratio n fees

Be it en ac ted by th e Senate an d Hou se o f R ep re se nta tive s of th e U nited Sta te s

of Am erica in Congres s as se mbl ed , T h at se ct io n 6 (b ) of th e Sec ur itie s Act of 

1933 (15 U.S.C. 7 7 (f )) is am en de d by st ri kin g out “o ne one- hu nd re dt h” and in ­

se rt in g in lie u th ere of “o ne -fiftiet h” , an d by st ri k in g out “$25,” an d in se rt in g in 

lieu ther eo f “$100.”

Sec. 2. The am en dm en ts m ad e by th e fi rs t se ct io n of th is Act sh al l ta k e effect 

Ju ly 1,1 965 .

1
2 SECURITIES ACT OF 19 33 FILING FEES

Secu rit ie s an d E xc ha nge Co m m is sio n ,

Washington, D.C ., March 26, 1965.

Re fee legislation.

Hon. John W. McCormack.

Speaker of the House of Representatives,

Washington, D.C.

Dear Mr. Speaker: I have the honor to transm it legislative proposals of the 

Securities and Exchange Commission with respect to fees charged for the tiling 

of registra tion stateme nts under the Securities Act of 1933.

In his budget message last month Presiden t Johnson sta ted: “Fairne ss to all 

taxpayers demands tha t those who enjoy special benefits should bear a greater 

share of the costs.” This Commission has given considerable thought to the 

application of this principle with respect to the laws it adm inisters and has 

concluded tha t it would be appropriate to amend section 6(b ) of the Securities 

Act of 1933 by increasing the fee paid in connection with registr ation state ments 

for securities from one one-humlredth of 1 percent of the maximum aggregate 

offering price and increasing the minimum fee from $25 to $100. A proposed bill 

that would effectuate these changes is attached.

In addition to the provision for fees for securities registratio ns, which in 

fiscal 1964 totaled $1,780,697, there are statutory provisions for an annual 

registration fee for national securities exchanges and for filing fees for applications for qualifications of tru st inde ntures relating to securities not required 

to he registered under the Securities Act of 1933. These are the only statutory 

provisions whereunder fees are collected in connection with the Federal securitie s laws, except for provisions p ermittin g the Commission to make reasonable 

charges for copies of information filed with it. The registratio n fee for national 

securities exchanges is provided for by section 31 of the Securities Exchange Act 

of 1934 and amounts to one five-hundredth of 1 percent of the aggregate dollar 

amount (2 cents per $1,000) of sales of securities on such exchanges in the preceding year. In fiscal 1964 these fees totaled $1,323,150. The filing fee with 

respect to trus t indentures is provided in section 307(b) of the Trust Inde nture 

Act of 1939 and the amount collected pursuant thereto in fiscal 1964 was $1,500. 

All fees collected pursuant to these sections are deposited into the general fund 

of the Treasu ry.

At the time of the passage of the first two securities acts there were indications that the registration fees provided therein were intended to cover the anticipated costs of administration. In fact, the amounts collected have fallen 

far short of this. There have been no amendments of the securities acts with 

respect to fees, except for the 1964 amendment to section 15 (b )(8) of the 

Securities Exchange Act relating to fees to defray the cost of exam inations and 

other expenses in regulating broker-dealers who are not members of a registered securities association.

Over the years there have been numerous suggestions or proposals for increased or additional fees. In 1951 title V of the Independent Offices Appropriation Act. 1952 ( 5 U.S.C. 140) authorized agencies to adopt fees to cover the cost 

of agency activities where fees were not fixed by statute. Pu rsua nt thereto 

in 1952 the Commission submitted for comment proposed rules which sought to 

impose substantial fees on various segments of the securities industry. These 

proposals resulted in considerable controversy and a subcommittee of the 

House Committee on I nte rstate and Foreign Commerce, which was studying the 

activ ities of this Commission, reported i ts view th at any fees in this are a should 

be "sitelled out in specific legislation which has been su bmitted to and passed by 

the Congress, rather than through any delegation of autho rity to any agency 

to pass upon the need for or amount thereof.” 1

 There after the Commission 

abandoned its proposal and has never since proposed fixing fees by rule.

In subsequent years the Commission has expressed the view th at any fair fee 

proi>osal should include an increase in at least one of the existing fees. Thus 

in 1957 we submitted to the House Committee on Interst ate and Foreign Commerce a legislative proposal that would have increased the stock exchange registrat ion fee from 2 cents per $1,000 of the aggregate dolla r amount of each 

transaction to 5 cents per $1,000 and would have imposed a sim ilar fee upon 

broker-dealers effecting transactio ns otherwise tha n on a national securities

1

 “ Rep ort of Committee on In te rs ta te and Foreign Commerce on Securiti es and Exchange 

Comm ission,” H. Rept. 2508, 82d Cong., 2d sess. (1952), p. 138.
SECURITIES ACT OF 19 33 FILING FEES 3

ex ch an ge . T hi s pr op os al re su lted in th e in tr oduct io n of hi lls in bo th th e H ou se 

and S e n a te 2 34 bu t, although th e Sen at e pa ss ed it s bill, no ac tion w as ta ken in 

th e Ho use. S ubst anti all y si m il ar bills w er e re in tr oduced bu t no t pas se d in 1959 

an d 1961 ? In 1962 a bi ll in cr ea si ng th e stoc k ex ch an ge re g is tr ati o n fee to 5 

ce nt s per $1,000, but cont ai nin g no pr ov isio n fo r ov er -the -c ou nt er tr an sa cti o n s 

w as in tr od uc ed but not pa ss ed ?

W hile we ha ve again co ns id er ed th e pos si bi lity of am en dm en ts su ch as th os e 

re fe rr ed abov e, we feel th a t th e pr op os al to in cr ea se th e Sec ur itie s Act re g is tr ation fee a t th is tim e wou ld l)e more su itab le . To in cr ea se th e co st of th e stoc k 

ex ch an ge fe es alon e w ithout as se ss in g a si m il ar fee w ith re sp ec t to ov er-th eco un te r tr ansa cti ons m ig ht be co ns id er ed unfa ir , p art ic u la rl y in th e ligh t of th e 

gr ow th of t he “t h ir d m ark et’’ fo r list ed se cu ri ties . On th e o th er ha nd , it ap pea rs 

to be m os t un tim el y to as se ss fees on ov er -the -c ou nt er tr ansa cti ons now. whe n 

th e NASD has re ce ntly in cr ea se d its fee as se ss m en t on ov er -the -c ou nt er dea le rs 

to defr ay co sts of th e ad dit io nal se lf -r eg ul at io n im po sed fo llo wing th e Commission ’s “ Sp ec ial Stu dy o f t he Sec ur itie s M ar ket s. ”

The Sec ur itie s Act re gis tr ati on fee is nec es sa rily pa ss ed on to in ve st or s. 

Sinc e th e in cr ea se w ou ld re su lt in dir ectl y in in ves to rs pa ying a la rg e r pr oportion of t he ov er al l co st of th is Co mm iss ion , which oper at es to pr ot ec t in ve st or s, it 

appea rs to us to be f a ir an d in ac co rd an ce w ith th e p rinci ple st ate d by th e P re siden t th at “t ho se wh o en joy * * * be ne fit s sh ou ld be ar a g re ate r sh are of th e 

co sts.” In th is co nn ec tio n, th e la rg er th e pu bl ic offerin g, an d he nc e th e fee, th e 

la rg er no rm al ly wou ld be th e se gm en t of th e in ves ting pu blic purc has in g th e 

re gi st er ed se cu rities .

D ur in g th e la st fis cal yea r, ha d th e pr op os ed fe e been in eff ect, th e Co mm issio n wo uld ha ve co lle cted ap pro xim at el y $3,561,400 und er th e Sec ur itie s Act. 

This, to get her w ith th e am oun ts co lle cted under th e stoc k ex ch an ge re g is tr ation fee an d tr u st in dentu re fee wou ld ha ve to ta le d $4,886,050. W hile th is is 

sl ig ht ly mor e th an th e to ta l co sts of th e Com m ission ’s D iv isions of C orp or at io n 

Fin an ce , and T ra din g an d M ar ke ts.5

 which pr oc es se d th e re g is tr ati o n s inv olved 

a su bst anti al po rtio n of th e work of oth er divi sion s, p art ic u la rl y th e Office o f 

Re co rds an d Se rv ice and th e Office of th e C hi ef Acc ou nt an t, w as also sp en t in 

co nn ec tio n w ith th e filings.

The B ure au of th e Bud ge t has ad vi se d us th a t th e d ra ft bil l su bm itte d her ew ith wou ld be c onsi st en t w ith th e ad m in is tr ati o n ’s objec tiv es .

By dir ec tion of th e C om m issi on :

Manuel F . Coi ien, Chairman.

Sta tem ent of cost hy organization, fiscal year 196-t

Office

Ex ecuti ve offices_______________________________________________ $341. 793

Office of P ro gra m P la nnin g_______________________________________ 179.3 37

Office of th e S ecre ta ry _____________________________________________ 73 ,17 8

Office of H eari ng E xam in ers ______________________________________ 173,0 06

Office of Opinion s and Rev ie w ____________________________________ 166. 942

Office of th e G en er al Cou ns el _____________________________________ 34 7,18 5

Office of th e Chief A cc ounta nt_____________________________________ 147, 095

Division of C or po ra tion Fin ance__________________________________ 2,9 42 ,0 84

Division of T ra din g and M ar ket s_________________________________ 1, 73 8, 22 4

Division of C or po ra te . R eg ula tion_________________________________ 1, 08 3, 68 2

Office of th e C om pt ro ller _________________________________________ 143, 914

Office of P ers onnel ________________________________________________ 130, 083

Office of R ec or ds and Ser vi ce _____________________________________ 739, 271

Subt ota l, d ep art m en ta l_____________________________________ 8. 205, 794

Reg iona l offices___________________________________________________ 5. 7 28,15 4

G ra nd to ta l_________________________________________________ 13. 933, 948

2

 S. 2520. 85th Cong., 1 st sess.: H.R. 7778, 8 5th Cong., 1st sess.

3

 S. 737, 86th Cong.. 1st s es s.; S. 755, 87th Cong., 1st sess. 4

 H.R. 10167, 87th Cong.. 2(1 sess.

6

 See “S tatement of Cost by Organization. Fiscal Year 1964.’’ attached hereto.
4 SECURITIES ACT OF 19 33 FILING FEES

[S ubm itte d d ra ft bill]

A BIL L To am en d se ctio n 6(b ) of th e Sec ur itie s Ac t of 1933

lie it enacted by the Sena te and the House of Representatives of the United

States of America in Congress assembled, Th at section 6(b ) of the Securities 

Act of 1933 is amended to read a s follows :

‘‘(b) At the time of filing a reg istr ation stateme nt the app lica nt shall pay 

to the Commission a fee of one-fiftieth of 1 per centum of the maximum aggregate 

prices at which such securities are proposed to be offered, but in no case shall 

such a fee be less than $100.”

Sec. 2. The effective date of section 6(b) of the Secu rities Act of 1933, as 

amended by th is Act, shall be July 1,1965.

Executive Office of the P resident,

Bureau of the Budget, 

Washington, D.C., September 13,1965.

Hon. Oren Harris,

Chairmun, Com mitte e on Interstate and Foreign Commerce,

House of Representatives, Washington, D.C.

Dear Mr. Chairman : This is in reply to your request for comments on II.IL 

7169. a bill to amend the Securities Act of 1933 with resi>ect to certain registration 

fees.

The purp ose of this bill is to increase the filing fees paid by new reg istr ants 

under the Secu ritie s Act of 1933 and to increase the minimum fee from $25 to 

$100. The increase d fees would more nea rly cover the cost of the services 

rendered. The Securities and Exchange Commission estimates th at it would 

receive approximately $5 million more in fees, on a full yea r basis, if II.IL 7169 

is enacted.

The Bureau of the Budget joins the Securities and Exchange Commission in 

favoring enactment of this bill. Enactment of the rate increase proposed would 

be consiste nt with the ad ministration’s objectives.

Sincerely yours,

Phillip S. Hughes,

Assista nt Director for Legisla tive Reference.

Securities and Exchange Commission,

Washington, D.C., April 19, 1965.

Re H.R. 7169.

Hon. Oren Harris.

Chairman. Committee on Inter sta te and, Foreign Commerce,

Ray burn House Office Building, Washington, D.C.

Dear Mr. Chairma n: This will acknowledge your letter of April 9, 1965, requesting a report w ith respect to the above bill.

II.It. 7169 was developed by the Commission in the ligh t of the stateme nt of 

principle by the President in his budget message that “fair ness to all taxp aye rs 

demands th at those who enjoy special benefits should pay a greater share of 

the costs.”

The background of the proposed legislation and certain circumstances considered by the Commission in its formulation, are outlined in the Commission’s 

lette r of March 26 to the Speaker of the House transm itting the proposals. 

We enclose copies of th at let ter for your ready reference.

A com panion bill, S. 1707, was introduced in the Senate by Senator Robertson 

on April 6, 1965. See the Congressional Record for that day. at pages 6809-6810.

The Commission believes that enactm ent of H.R. 7169 would be an appropriate 

response, in the areas of the Commission's jurisdiction, to the principle stated 

by the Pre sid ent in his budget message.

Sincerely yours,

Hugh F. Owens, Commissioner.
SECURITIES ACT OF 19 33 FILING FEE S O

General Counsel of the Treasury,

Washington, D.C., J une 25, 1965.

Hon. Oren Harris.

Chairman, Committee on Inter sta te and Foreign Commerce,

House of R epre sentatives, Washington, D.C.

Dear Mr. Chairman : Reference is made to your request for the views of this 

Department on H.R. 7169, to amend the Securities Act of 1933 with respect to 

certain re gistration fees.

The proposed legislation would increase the fee for filing a registr ation 

Statement of securities with the Secu rities Exchange Commission from one 

one-hundredth to one one-fiftieth of 1 perc ent of the maximum aggrega te price 

at which sucli secu ritie s are proposed to be offered, and would raise the minimum filing fee from $25 to $100.

The proposed legislation is not of prim ary int ere st to this Departm ent and 

the Dep artm ent has no comments to make as to its general merits.

The Department has been advised by the Bureau of the Budget that there 

is no objection from the standpoint of the adm inistration's program to the submission of this report to y our committee.

Sincerely yours,

Fred B. Smith.

Acting General Counsel.

The Chairman. Suffice it to say at this time that the Commission 

believes the statutory fees under other acts should be considered in the 

overall study.

The Commission proposed this program last March to double the 

registration fee under the 1933 act. So far as we have been able to 

discern, there has been no opposition to it.

So, Chairman Cohen, if you would extend your statement in the 

record at this point and just give us a brief summary of what you 

want, I think we can dispose of the matter rather expeditiously.

STATEMENT OF HON. MANUEL F. COHEN, CHAIRMAN, SECURITIES 

AND EXCHANGE COMMISSION

Mr. Cohen. Thank you, Mr. Chairman. I will be very glad to do 

just that.

The hill, as you have suggested, is a rath er simple one. It would 

have the effect of doubling the fee in connection with the registration of securities for the purpose of public offering. In fact, based 

upon last year's registration statement, it would produce an additional 

$1,790,000, approximately, which would go into the U.S. Treasury. 

It would make the Commission much more self-supporting in connection with the administration of that statute, not only in connection 

with registration but in related areas arising from that statute.

We have determined on this particular procedure after considering 

a number of alternatives, some of which have been presented to this 

committee at earlier times. We feel that this is the simplest approach. 

So far as we know, there is no controversy regarding the proposal, 

nor is there any opposition.

We think that the increased fee is justifiable, because in a real 

sense it will probably be passed on to those for whose benefit the statute was enacted.

We have appended to our statement an exhibit which indicates the 

amounts appropriated by the Congress, the fees we have collected 

since 1935, and the proportion of fees collected to the total appropriation.

I would only add one further thought, tha t this bill, I believe, is 

in line with the thoughts of the person whom we all look upon as the
6 SECURITIES ACT OF 193 3 FILIN G FEES

father of the Securities Act, former Speaker Rayburn, who in referring to this particular provision suggested to the Congress that 

it was hoped it would produce sufficient funds to make the operations of the Commission under this section self-supporting. This is 

the aim of the bill.

The Chairman. Of course, you do not anticipate that this action 

will make the Commission self-supporting.

Mr. Cohen. No, sir. It will increase from approximately 22 percent 

to approximately 33 percent the ratio of the fees collected by the Commission in the aggregate, including fees collected under the Exchange 

Act, to the appropriation awarded the Commission by the Congress.

The Chairman. Mr. Chairman, $15,442,000 was appropriated for 

the 1965 fiscal year.

Mr. Cohen. Yes, sir.

The Chairman. Was that sufficient to operate your Commission ?

Mr. Cohen. In our view, no, sir.

The Chairman. You did get along all right with that, didn’t 

you i

Mr. Cohen. Well, I think the Congress had in mind not reducing 

our appropriation but perhaps not meeting the full request we made.

The Chairman. What is the appropriation for this fiscal year we 

are in now ?

Mr. Cohen. It is exactly the same thing.

The Chairman. Fifteen point four forty-two?

Mr. Cohen. Yes, sir.

The Chairman. The three million three that you include here 

includes the other fees that you now collect?

Mr. Cohen. The three million three includes the fees we now collect under the present provisions of the 1933 act as well as fees we 

collect under the Exchange Act which are essentially the annual 

registration fees paid by the stock exchanges.

The Chairman. You would add to th at one million eight ?

Mr. Cohen. Yes, sir; for a total of approximately $5 million.

The Chairman. Mr. Rogers?

Mr. Rogers of Texas. No questions.

The Chairman. I)r. Carter?

Mr. Carter. No questions.

The Chairman. Mr. Van Deerlin?

Mr. Van Deerlin. No questions.

The Chairman. Mr. Murphy?

Mr. Murphy. No questions.

The Chairman. Mr. Huot ?

Mr. H i tot. No questions.

The Chairman. Thank you very much. I was going to ask you to 

provide this information tomorrow, but throu gh your excellent vision 

and your efficiency, we have the information that we would like to 

have.

Mr. Cohen. Thank you, Mr. Chairman. If we have beaten you 

to it—and I don’t l>elieve we have—it will be the first time in (he 

history of the Commission.

The Chairman. Thank you very much. Tha t is a good note on 

which to end your testimony.

Mr. Cohen. Thank you.
SECURITIES ACT OF 19 33 FILING FEE S 7

(Mr. Cohen's prepared statement follows:)

Statement of Manuel F. Cohen, Chairman, Securities and E xchange

Commission

Mr. Chairman and members of the committee, I am Manuel F. Cohen, Chairman of the Securities and E xchange Commission.

We are here today to testify on H.R. 7169. This bill, which has been proposed by the Commission, would amend section 6(b ) of the Secu rities Act of 

1933 by increasing the fee paid in connection with the tiling of reg istr ation 

statements for securities offerings from one one-hund redth of 1 percent to 

one-fiftieth of 1 perc ent of the maximum aggregate offering price of the securities to be offered and increasing the minimum fee from $25 to $100.

In fiscal 1965 fees paid to the Commission und er section 6(b) tota led 

$1,790,349. There are also sta tut ory provisions for an annual reg istration fee 

for national securities exchanges and for filing fees for applications for qualifications of trus t indenture s relating to securities not required to be registered 

under the Securities Act of 1933. The only other sta tut ory provisions whereund er fees are collected in connection with the Fed eral securities laws are a 

provision in the Secu rities Exchange Act, as amended in 1964, allowing charg es 

to be assessed aga inst broker-dealers who are not members of a registered 

secu ritie s association, and provisions permitting the Commission to make 

reasonable charges for copies of information. The reg istr ation fee for national 

secu ritie s exchanges is provided for by section 31 o f the Securities Exchange Act 

of 1934 and amounts to one five-hundredth of 1 percent of the aggrega te dollar 

amount (2 cents per $1,000) of sales of secu ritie s on such exchanges in the 

preceding year. In fiscal 1965 these fees totaled $1,506,353. The filing fee with 

respect to trus t indentures is provided in section 307(b) of the Tr ust Ind enture 

Act of 1939 and the amount collected pursu ant thereto in fiscal 1965 was 

$2,300. All fees collected pursu ant to these sections are deposited into the 

general fund of the Tre asury.

At the time of the passage of the first two securities acts there were indications that the reg istration fees provided therein were intend ed to cover the 

anticip ated costs of adm inistration. Thus, in the hearing s before thi s committee on H.R. 4314. 73d Congress, 1st session, page 21, the Honorable Huston 

Thompson sta ted with reg ard to the provision which was later enacted as 

section 6(b ) : “We have estimated * * * th at if we tak e one one-hundredth 

of 1 percent of the securities th at are sold * * * [the amount realized] 

should he enough to car ry on the proper a dm inistration of this a ct.” In fact, the 

amounts collected have fallen far short of this. At present, only about 20 

perc ent of the total costs incurre d by the Commission are recovered by fees. 

Of course, a considerable part of these costs is att rib utab le to enforcement 

activities which are probably not an appro priate basis for the imposition of 

fees. There have been no amendments of the securities acts with respect to 

fees, except for the 1964 amendment to section 15 (b )(8) of the Securities 

Exchange Act relating to fees to defray the cost of exam inations and other 

expenses in regulating brok er-dealers who are not members of a registered 

securities association.

Over the yea rs there have been numerous suggestions or proposals for 

increased or additio nal fees. In 1951 the Congress in tit le V of the Independ ent 

Offices Appropriation Act, 1952 (5 U.S.C. 140), stated th at “I t is the sense of 

the Congress th at any work, service [etc.] * * * provided * * * by any Federal 

agency * * * shall be self-s ustaining to the full exten t possible” and authorized 

agencies to adopt fees to cover the cost of agency activities where fees were not 

fixed by statute. Pu rsua nt to the sta tute in 1952 the Commission subm itted 

for comment proposed rules which sought to impose sub stantial fees on various 

segments of the secu ritie s industry. These proposals resulted in considerable 

controversy and a subcommittee of this committee, which was studying the 

activities of t he Commission, repo rted its view th at any fees in this are a should 

be “spelled out in specific legislation which has l>een submitted to and passed 

by the Congress, rather tha n through any delegation of autho rity to any agency 

to pass upon the need for or amount thereof” (Repo rt of Committee on In te rstate and Foreign Commerce on Secu rities and Exchange Commission, H. Rept. 

2508. 82d Cong., 2d sess. (1952), p. 138). Th ere after the Commission abandoned 

its proposal.

In subsequent years the Commission has expressed the view that any fair 

fee proposal should include an increase in a t lea st one of the existing fees. Thu s
8 SECURITIES ACT OF 19 33 FILING FEES

in 1957 we submitted to this committee a legislative proposal that would have 

increased the stock exchange registr ation fee from 2 cents per $1,000 of the aggregate dollar amount of each transa ction to 5 cents per $1,000 and would have imposed a sim ilar fee upon broker-dealers effecting tran sac tions otherwise than on 

a national securities exchange. This proposal resulted in the introduction of bills 

in both the House and Senate (S. 2520, 85th Cong.. 1st sess.; II.It. 7778, 85tli Cong.. 

1st sess.) hut, althou gh the Senate passed its bill, no action was taken in the 

House. Sub stan tially sim ilar bills were reintroduced but not passed in 1959 

and 1961 (S. 737. 86th Cong., 1st sess.; S. 755, 87tli Cong., 1st sess.). In 1962. 

a bill increasing the stock exchange registr ation fee to 5 cents per $1,000, but containing no provision for over-the-counter transactions, was intro duce d but not 

IKissed (II.It. 10167, 87th Cong., 2d sess.).

We have carefully reconsidered these proposals, and other possible bases for 

fees, and have concluded that the proposal to in crease the Secu ritie s Act reg istration fee is, at this time, the simplest and fairest. To raise the stock exchange 

fees alone, at the present time, witho ut assessing any fee for over-the-counter 

tran sac tions might appear inequitable, partic ularly in view of the growth of the 

so-called third market, that is, over-the-counter tra din g in listed securities. On 

the other hand, we believe it would be untimely to establish now a fee for overthe-counter transactio ns because of t he f act that the National Association of Securities Dealers has subtsantially increased the assessments which it levies on 

the over-the-counter dealers in order to cover the cost of the increased self-regulator y act ivity unde rtaken by the association following the Commission’s “Special Study of the Securities Markets.” Thus, the expenses of t he association increased from approximately $1,600,000 in its fiscal year 1960 to approximately 

$2,700,000 in its fiscal year 1964, or an increase of approximate ly 40 percent. 

Comparable charges are expected to be assessed by the Commission against, 

broker-dealers who are not members of the NASD, under autho rity gran ted by 

the Securities Acts Amendments of 1964.

The Secu rities Act registr ation fee is simple and fam iliar, and it is in most 

insta nces only a relatively insignifican t part of the total cost of floating an issue 

of secu rities. Thus, in the case of an offering of $2 million, enactme nt of this 

bill would increase the registratio n fee from $200 to $400. while the tota l expenses of such an issue, exclusive of underwritin g discounts or commissions, but 

including such items as legal and accounting fees and printing costs, would probably be $30,000 or more, and und erw riting discounts and commissions would 

probably exceed that figure.

As a practic al matter, the Secu rities Act r egistration fee is probably passed on 

to investors. Since the increase would result indirectly in investors paying a 

larg er proportion of the overall cost of the Commission, which operates to protect investors, it appears to us to be fa ir and in accordance with the principle 

stated by Presiden t Johnson in bis budget message in January of this year t h a t: 

“F airnes s to all taxpayers demands th at those who enjoy special benefits should 

bear a g rea ter share of th e costs.”

If the proposed increased registratio n fee had lieen in effect during the fiscal 

year which ended Jun e 30, 1965, the Commission would have collected approximately $3,580,700 under the Securities Act. This amount, plus the tru st indentur e fees of $2,300 collected in fiscal 1965. would have produced a tota l of $3,583.- 

000. The direct cost of operating our Division of Corporation Finance, the Division which is chiefly involved in processing registr ation statements and tru st 

indentures, was $3,129,589 for fiscal 1965. While thi s figure is less tha n the 

tota l fees which would have been collected had the increased registr ation fee been 

in effect during 1965, and this Division also processes materi al filed under the 

Secu rities Exchange Act of 1934, it must be remembered th at sub stan tial work 

effort of other divisions and offices of the Commission is concerned from time to 

time w ith registration stateme nts and other matter s rela ting to issuers which file 

such stat ements w ith the Commission. It may accordingly lie said th at the total 

amount which would be paid und er the proposed bill would by no means exceed 

the Commission’s entire costs involved in administering those provisions of the 

Fed eral securities laws which are relate d to the registratio n of securities under 

the 1933 act.

I am attachin g to this stateme nt and su bmitting for the record a cost statemen t 

for fiscal 1965 itemized by offices and divisions of the Commission and a table setting forth comparative figures over th e years on amounts ap propria ted by Congress 

for the Commission, total fees collected, and the ratio of fees to appropriations.
SECU RI TIES ACT OF 1933 FIL ING FE ES 9

A pp endix I

Sta tem ent of cost by organisation, fiscal year 1965

Office

Ex ecuti ve offices_____________ _________________________________ $408, 427

Office of Prog ram Pl an ning ____________________________________ 197, 271

Office of the Se cretary_________________________________________ 80, 490

Office of He aring Ex am iners___________________________________ 208, 523

Office of Opinions an d Revie w_________________________________ 175, 289

Office of th e Ge neral Couns el__________________________________ 382, 000

Office of the Chi ef Accou nta nt_________________________________ 154, 450

Div isio n of Co rporation Fi na nc e________________________________ 3,12 9, 589

Div ision of Tr ad ing and M arke ts_______________________________ 1, 906, 648

Div isio n of Co rporate Re gu lat ion _______________________________ 1,2 09,387

Office of the Co mp tro lle r_______________________________________ 151,110

Office of Pe rson nel_____________________________________ ________ 130, 587

Office of Records an d Service___________________________________ 776, 234

Subto tal, de pa rtm en tal____________________________________ 8, 916, 017

Regional offices------------------------------------------------------------------------- 0, 534, 1H >0

Grand to ta l-------------------------------------------------------------------- 15, 451, 577

Appen d ix II

Sta tem ent of appropriations and fees collected, fiscal years 1985 to 1965, inclusive

Fis ca l ye ar

1935-

1936.

1937.

1938. 

1939-

1940.

1941.

1942.

1943.

1944.

1945.

1946.

1947.

1948. 

1949

1950.

1951.

1952

1953

1954.

1955. 

1956

1957.

1958.

1959.

1960.

1961. 

1962

1963.

1964.

1965.

T o ta l.

A m o u n t 

ap p ro p ri ate d 

b y Con gr es s

T o ta l fees 

co llec te d

P erc en t 

of fees 

co llec te d to 

to ta l ap pro ­

pri ati on

$1,5 45,3 37 $227,699 14.7

3,0 29, 494 90 0,4(M) 29. 7

4,245, 000 1,103, 780 26 .0

3,8 95,00 0 716,456 18.4

4,8 72,00 0 575,399 11.8

5,4 70,00 0 492,640 9.0

5,40 0,0 00 517, 772 9.6

5,440,000 312,922 5. 8

4,91 0,0 00 193,366 3.9

4,60 2,5 00 407,645 8.8

4,696,704 654,176 13.7

4,694,20 0 1,093,432 23 .2

5,533, 700 1,111,416 20 .0

5,7 38, 700 946,295 16.5

6,121,140 787,545 12.8

5,87 8,2 50 790,043 13.4

6,23 0,0 90 1,08 7,02 2 17.4

5,813,480 1,36 4,44 7 23 .5

5,245,08 0 1,199,370 22 .8

5,000,00 0 1,215,7 49 24 .3

4,843, 180 1, 703,290 35 .2

5,278, 000 2,07 4,21 1 39 .3

5,749, 000 2,243,58 0 39 .0

6,935. 000 2,334,37 0 33 .6

7, 705,000 2,407,70 6 31 .2

8,100,000 2,631, 498 32 .5

9, 517, 500 2,927,40 7 30. 7

11,412,500 3,422,40 3 29 .9

13,261,700 2, 533,986 19. 1

13,937,500 3,106, 213 22 .3

15,442,000 > 3 ,300,1 65 • 21 .4

200,514,965 44,382 ,403 22.13

i H a d th e pr op os ed fee bee n in effect i n fiscal 1965, t h e Com m is si on w ould have co lle ct ed ap p ro x im ate ly 

$1,790,000 ad dit io nal, for a to ta l of $5,090,165, re pre se nting 33 perc en t of th e to ta l ap pro pri at io ns for th a t 

yea r.

The Chairman. Is there anyone who would like to interpose an 

objection to this proposal tha t is being heard today?

Is there anyone else who desires to be heard? If not, this will 

conclude the hearings on this bill, II.R. 7169.

(Whereupon, at 1:50 p.m., the hearing was concluded.)