/

. 8 243 e:\

bbli NOMINATIONS OF MANUEL F. COHENNO.,:''N i

AND JACK M. WHITNEY II

GOVERNMENT 

Storage

HEARING

BEFORE THE

COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

EIGHTY-SEVENTH CONGRESS

FIRST SESSION

THE NOMINATIONS OF MANUEL F. COHEN AND JACK M.

WHITNEY II TO BE MEMBERS OF THE SECURITIES AND

EXCHANGE COMMISSION

SEPTEMBER 21, 1961

rinted for the use of the Committee on Banking and Currency

e* 

UN iltiett

*.

*) 

fr

%

*

•

7,

OCT 9 19611

4rrotrf 14`11.1

U.S. GOVERNMENT PRINTING OFFICE

75385 WASHINGTON : 1961
t=.44 t

COMMITTEE ON BANKING AND CURRENCY

A. WILLIS ROBERTSON, Virginia, Chairman

JOHN SPARKMAN, Alabama HOMER E. CAPEHART, Indiana

PAUL H. DOUGLAS, Illinois WALLACE F. BENNETT, Utah

JOSEPH S. CLARK, Pennsylvania PRESCOTT BUSH, Connecticut

WILLIAM PROXMIRE, Wisconsin J. GLENN BEALL, Maryland

HARRISON A. WILLIAMS, In., New Jersey JACOB K. JAVITS, New York

EDMUND S. MUSKIE, Maine JOHN G. TOWER, Texas

EDWARD V. LONG, Missouri

MAURINE B. NEUBERGER, Oregon

MATTHEW HALE, Chief of Staff

II
NOMINATIONS OF MANUEL F. COHEN AND

JACK M. WHITNEY II

THURSDAY, SEPTEMBER 21, 1961

U.S. SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met, pursuant to call of the chairman in room 5302,

New Senate Office Building, at 10:02 a.m., Senator A. Willis Robertson

(chairman) presiding.

Present: Senators Robertson, Sparkman, Proxmire, and Bennett.

The CHAIRMAN. The committee will please come to order.

We have before us for consideration today two nominations to the

Securities and Exchange Commission. One is Mr. Manuel Frederick

Cohen, of Maryland, for the remainder of the term expiring June 5,

1963, vice Mr. Gadsby, resigned; and the other is Mr. Jack Melville

Whitney II, of Illinois, for the remainder of the term expiring June 5,

1964, vice Mr. Hastings, resigned.

Without objection, we will insert in the record section 4 of the

Securities Exchange Act of 1934, which has to do with the duties and

obligations of the members of the Securities and Exchange Commission.

(The matter referred to follows:)

SECURITIES EXCHANGE ACT OF 1934

* * * * * *

SECURITIES AND EXCHANGE COMMISSION

SECTION 4. (a) There is hereby established a Securities and Exchange Commission (hereinafter referred to as the "Commission") to be composed of five commissioners to be appointed by the President by and with the advice and consent of the

Senate. Not more than three of such commissioners shall be members of the same

political party, and in making appointments members of different political parties

shall be appointed alternately as nearly as may be practicable. No commissioner

shall engage in any other business, vocation, or employment than that of serving

as commissioner, nor shall any commissioner participate, directly or indirectly, in

any stock-market operations or transactions of a character subject to regulation

by the Commission pursuant to this title. Each Commissioner shall receive a

salary at the rate of $20,000 a year, except that the chairman shall receive additional salary at the rate of $500 a year and shall hold office for a term of five years

and until his successor is appointed and has qualified, except that he shall not so

continue to serve beyond the expiration of the next session of Congress subsequent

to the expiration of said fixed term of office, and except (1) any Commissioner

appointed to fill a vacancy occurring prior to the expiration of the term for which

his predecessor was appointed shall be appointed for the remainder of such term,

and (2) the terms of office of the Commissioners first taking office after the enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at the end of two years, one at the end of

three years, one at the end of four years, and one at the end of five years, after the

date of the enactment of this title.

1
2 NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY II

(b) The Commission is authorized to appoint and fix the compensation of such officers, attorneys, examiners, and other experts as may be necessary for carrying

out its functions under this Act, without regard to the provisions of other laws applicable to the employment and compensation of officers and employees of the United States, and the Commission may, subject to the civil-service laws, appoint

such other officers and employees as are necessary in the execution of its functions

and fix their salaries in accordance with the Classification Act of 1923, as amended.

The CHAIRMAN. Mr. Cohen, will you please come forward?

Gentlemen of the committee, we are pleased to have with us today

Mr. Cohen, who has been nominated to be a member of the Securities

and Exchange Commission.

Without objection, I would like to insert in the record at this point

a brief biographical sketch of Mr. Cohen showing his past activities

as a member of the New York bar from 1937 to 1942 and his experience

with the Securities and Exchange Commission from that date. He

was a cum laude graduate of Brooklyn Law School, and has been

lecturer in law at George Washington University since 1958. He is a

member of the American Bar Association.

(The biographical sketch referred to follows:)

BIOGRAPHICAL SKETCH OF MANUEL FREDERICK COHEN

Resides at 6403 Marjory 

Lane' '

Bethesda Md.

Married to Pauline G. Cohen, teacher of Latin at Western Junior High School.

Daughter Susan, attending Smith College. Son Jonathan, attending junior high

school.

Born: Brooklyn, N.Y., October 9, 1912; attended schools New York City;

1933: B.S. in social science, Brooklyn College of the College of the City of New

York, Adam Smith Medalist in Economics; 1936: LL. B. cum laude, Brooklyn

Law School of St. Lawrence University, elected to Philonomic Council; 1937:

Admitted to the New York bar.

1933-34: Research associate, Twentieth Century Fund studies of the securities

markets. Results published in "Stock Market Control, 1934"; and "The Securities Markets, 1935."

1937-42: Private practice in New York, principally as house counsel engaged

in corporate and real estate practice.

1942 to date: Employed by the Securities and Exchange Commission

'

beginning as junior attorney and promoted to successively higher positions. 1952-59:

Chief Counsel, Division of Corporation Finance of the Commission; 1959-60:

Adviser to the Commission; and since July 17, 1960, Director, Division of Corporation Finance.

1961: Appointed a member of the council, Administrative Conference of the

United States.

1956: Awarded the Rockefeller public service award by trustees of Princeton

University. The award made possible 1 year's study of the capital markets and

the processes of capital formation and of government and other controls in the principal financial centers of Western Europe.

1961: Career senice award, National Civil Service League.

Since 1958, lecturer in law, the Law School, George Washington University,

securities law and regulation.

Member, American Bar Association; Federal Bar Association; and American

Society of International Law.

Publications include: "Rule 133 of the Securities and Exchange Commission,"

14 N.Y. Bar Record 162 (1959) ; "Federal Legislation Affecting the Public Offering

of Securities," 28 George Washington Law Review 119 (1959); "The SEC and

Proxy Contests," 20 Federal Bar Journal 91 (1960); "Investors' Protection in the

United States," January, April, October 1960 and April 1961, the Journal of Business Law (London, England).

Invited to testify in March 1961, before the Jenkins Committee (Royal Com- mission) of the Board of Trade of the United Kingdom now studying the reform of company law in Great Britain.
NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY II 3

The CHAIRMAN. Mr. Cohen, will you tell the committee some of

your activities that you feel would qualify you for service on the

Securities and Exchange Commission?

STATEMENT OF MANUEL F. COHEN

Mr. COHEN. Yes, sir. I have spent most of my adult life at the

Securities and Exchange Commission, having enjoyed the privilege

of participating in many of the activities of the Commission.

I have also had an opportunity to study comparable regulation in

securities markets abroad.

I think, in short, that about sums up my career.

The CHAIRMAN. In the opinion of the chairman, that is a mighty

good recommendation.

I have taken the position that I am not going to vote for confirmation of any more selections for the U.S. circuit court of appeals or

other U.S. courts who have had no judicial experience. I feel that

the current trend to promote career men in these quasi-judicial positions is a very wise one, assuming that their services have been

acceptable and that we are not giving an honorary position to what

might be called in slang a "flat tire."

We feel that your activities have been worth while; and, therefore,

I say the trend to promote career men in these quasi-judicial agencies

is, I think, quite proper and commendable in your case.

Do any members of the committee wish to inquire?

Senator SPARKMAN. Mr. Chairman?

The CHAIRMAN. The Senator from Alabama.

Senator SPARKMAN. I would like to endorse the statement you have

just made. I think that the Government could profit a great deal

by promoting some of their own people to these responsible positions.

I am very glad to see Mr. Cohen, who has worked some 19 years

in the Securities and Exchange Commission has been given this opportunity to help in the direction of that Commission. I think he will

make a very fine Commissioner. I have had some very fine recommendations of him.

Mr. COHEN. Thank you, sir.

Senator SPARKMAN. I am glad to support him.

The CHAIRMAN. The Senator from Wisconsin.

Senator PROXMIRE. Mr. Cohen, do you have any investments of

any kind, any common stock investments, that are listed?

Mr. COHEN. My wife owns 18 shares of a very old, established

•Wisconsin corporation.

Senator PROXMIRE. I am glad to hear that.

Mr. COHEN. It is a machine tool company. And, quite frankly,

we had planned to dispose of the shares, but she cannot find the

certificate.

As soon as she does, we will dispose of those shares.

Senator PROXMIRE. You have no other holdings that would be

under your jurisdiction in any way, shape, or form as a member of the

Securities and Exchange Commission?

Mr. COHEN. None at all.

Senator PROXMIRE. I too think you have a background which

eminently qualifies you. I am delighted to see this kind of promotion.

You obviously are thoroughly familiar with the Commission, having

worked with it for many years.

a-
4 NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY II

As I see from your biography here, you have written considerably.

Your views have become publicly known. That is always risky for

you. But it is also very comforting for the Members of the Senate to

know the views of people who are appointed to positions of trust and

importance and responsibility. I join with my colleagues in warm

approval of this nomination.

Mr. COHEN. Thank you, sir.

The CHAIRMAN. Mr. Cohen, are you a Democrat?

Mr. COHEN. Yes, sir.

The CHAIRMAN. All right.

Senator SPARKMAN. I like that emphasis.

The CHAIRMAN. I just asked, because I have a letter from Charles

Shipley, chairman of the Republican State Committee for the District

of Columbia, and he recommends you very highly.

So evidently this must be a pretty good nomination.

I will put that letter in the record.

Thank you very much, sir.

Mr. COHEN. Thank you.

(The letter referred to follows:)

REPUBLICAN STATE COMMITTEE

FOR THE DISTRICT OF COLUMBIA,

Washington, D.C., September 18, 1961.

Hon. A. WILLIS ROBERTSON,

U.S. Senate, Washington, D.C.

DEAR SENATOR ROBERTSON: It is my understanding that the President has

nominated Manuel F. Cohen to fill a vacancy on the Securities and Exchange

Commission. Mr. Cohen is well known to me personally and professionally, and

I can assure you that during his many years with the SEC he has established with

the securities industry a record of competence, fairness, and excellent administrative ability. The President has chosen wisely and well, and Mr. Cohen will

perform a valuable public service in this new responsibility. I hope he will be

speedily confirmed.

With warm good wishes, I am

Sincerely,

CARL L. SHIPLEY, Chairman.

The CHAIRMAN. Now we would be pleased to have Mr. Whitney

come up.

I want to say that our distinguished minority leader, Senator

Dirksen, has notified me that he fully approves of this nomination.

We also have the endorsement of Senator Douglas, so we again

have bipartisan approval of what should certainly be an impartial

jury on SEC cases.

Senator Dirksen had to be out of town today and could not be

present, but he did ask me to announce that and say that this recommendation has his full approval.

I ask unanimous consent to insert in the record a brief biographical

sketch of Mr. Whitney showing he is a Republican, a partner in a

law firm in Chicago, that he was at an early age indoctrinated at

Millsaps College at Jackson, Miss.

Mr. WHITNEY. Yes, sir.

The CHAIRMAN. That will not hurt you any with the chairman.

Mr. WHITNEY. Good. I would say that it would not hurt anyone,

sir—period.

(The biographical sketch referred to follows:)
NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY ir 5

BIOGRAPHICAL SKETCH-JACK MELVILLE WHITNEY II

Age: 39 (born May 16, 1922).

Religion: Protestant (Episcopal).

Politics: Republican.

Present position: Partner in the Chicago law firm of Bell, Boyd, Marshall &

Lloyd (joined its staff as an associate lawyer in 1949, became a partner in 1957).

Education: Millsaps College, Jackson, Miss., 1939-41. Northwestern University School of Commerce, Evanston, Ill., 1941-43 (graduating first in class,

with B.S. (commerce) degree). Northwestern University School of Law, Chicago,

Ill., 1946-49 (graduating in top 10 of class, with J.D. degree). Member, Beta

Gamma Sigma (commerce school honorary society) and Order of ICoif (law

school honorary society).

Maritial status: Married the former Dorothy Healy, of Chicago, in 1950.

Four children: Jack, David, Louise, and Mark.

Office: Bell, Boyd, Marshall & Lloyd, 135 South La Salle Street, Chicago, Ill.,

Andover 3-1131.

Home: 807 Linden Avenue, Wilmette, Ill., Alpine 1-9465.

Military service: Active duty U.S. Naval Reserve, 1943-46, achieving rank of

lieutenant (jg.), Supply Corps. Served as supply and disbursing officer, U.S.S.

John R. Pierce DD753, 1945-46.

The CHAIRMAN. You may make a statement about your interests

and knowledge of matters over which you will be called on to pass

judgment.

Mr. WHITNEY. Mr. Chairman, I was first hired by this law firm

with which I am now a partner in 1949 immediately upon my graduation from Northwestern School of Law.

I was assigned to a partner whose primary responsibility for the

firm was in the field of corporation finance. So I have spent the last

12 years largely concentrating my professional activities in matters

either directly involving the application of the statutes administered

by the Securities and Exchange Commission or very closely allied

thereto.

I have had the good fortune of working on the financing of American

businesses in something more than 2 dozen States, and this has been

most illuminating education.

The CHAIRMAN. The Senator from Alabama.

Senator SPARKMAN. Were you born in Mississippi?

Mr. WHITNEY. No, sir. I am a gypsy. I was born in California.

Senator SPARKMAN. I was wondering how you could be a Republican and be born in Mississippi. That is, unless you had been

converted after going north.

Mr. WHITNEY. No, sir. I had my first political lesson in 1932, my

first year in the public schools of Jackson, Miss. I was vocally for

Mr. Hoover, and I received numerous bloody noses in the course of

that school year.

Senator SPARKMAN. One other question that is really irrelevant,

but I notice you are an Episcopalian.

Mr. WHITNEY. Yes, sir.

Senator SPARKMAN. How did you happen to attend Millsaps?

That is a Baptist college; is it not?

Mr. WHITNEY. It is Methodist, sir.

Senator SPARKMAN. Methodist?

Mr. WHITNEY. Yes.

Senator SPARKMAN. Well, Methodists and Episcopalians are pretty

dose.

Mr. WHITNEY. This was not a matter of religious connection, sir;

it was a matter of economics. I took a statewide contest for a scholar-
6 NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY It

ship. They had a high school day at Millsaps every year for the

seniors. I won a 2-year scholarship, and I frankly could not afford to

turn it down, so I stayed and worked at home and went to school on

the scholarship.

Senator SPARKMAN. I think you are bettering your case all the time.

The CHAIRMAN. Does the Senator from Wisconsin wish to inquire?

Senator PROXMIRE. Yes.

It is obvious, Mr. Whitney, you have a very excellent education.

You distinguished yourself academically.

I grew up in Lake Forest, Ill.

Mr. WHITNEY. I was aware of that.

Senator PROXMIRE. I am very familiar with Bell, Boyd, Marshall

& Lloyd. It is one of the finest firms in the Nation.

Mr. WHITNEY. Thank you.

Senator PROXMIRE. It is a large firm, and it is one of the two or

three leading firms, certainly, in the city of Chicago.

So that I think your experience with that particular firm would

particularly qualify you.

Incidentally, who was the partner under whom you first worked?

Mr. WHITNEY. William G. Burns. Also Glen Lloyd. These

professional generations are shorter than human generations, so that

you might say that Mr. Burns was raised by Mr. Lloyd and Mr.

Whitney was raised by Mr. Burns.

Senator PROXMIRE. Do you have any stockholdings?

Mr. WHITNEY. I have a modest number of shares in three Midwestern industrial companies, all of which are traded in the over-thecounter market, each of which could be readily disposed of without

any difficulty at all.

Senator PROXMIRE. I see. Have you conferred with the Counsel

of the Securities and Exchange Commission with regard to this?

Mr. WHITNEY. I have not had an opportunity to do that. I

intend to do that while I am here.

Senator PROXMIRE. Mr. Chairman, it seems to me it has been the

custom of the committee to have the holdings of a nominee listed

with the committee.

Mr. WHITNEY. I have such a list.

The CHAIRMAN. It seems to be very modest. Even if he held on

to these shares I do not believe it would make very much difference.

But I think he ought to list them and say what he is going to do with

them.

Mr. WHITNEY. I will be glad to do that.

Senator SPARKMAN. By the way, that is with the understanding

that it becomes a confidential matter in our files?

Senator PROXMIRE. My understanding is that the name of the

particular stock held is public but the amount is confidential; is that

right?

The CHAIRMAN. No. Ordinarily the lists have been kept entirely

confidential, both as to the names of the corporations involved and

the number of shares of stock.

The Chair wants to concur in the opinion expressed by our colleague

from Alabama that this witness seems to be well qualified. He was

the No. 1 man at the School of Commerce at Northwestern University.

He was in the top 10 percent of his class in law. He has been a member of a fine law firm and has had experience in securities work.

We thank you very much.

co•

OCT
NOMINATIONS OF MANUEL F. COHEN AND JACK M. WHITNEY II 7

Mr. WHITNEY. Thank you, sir.

The CHAIRMAN. We would be glad to recognize our former colleague, the Honorable Allen Frear. If you want to make a speech,

it will be under the House rules.

STATEMENT OF J. ALLEN FREAR, MEMBER, SECURITIES AND

EXCHANGE COMMISSION

Mr. FREAR. Mr. Chairman, I am not accustomed to operating

under House rules, but, nevertheless I would like to take advantage

of this opportunity by saying that I know personally the first nominee

before you, Mr. Manny Cohen. I can highly recommend him.

I think he will be a great asset to the Commission and will perform

a wonderful job.

From the remarks that I have heard this morning and previous

to this morning about Mr. Whitney I believe by hearsay I can also

highly recommend him.

Thank you sir. It is a privilege to be able to appear even under

the House rules before such a distinguished group.

The CHAIRMAN. Thank you very much.

We have a statement from our colleague on this committee, Senator

Williams, endorsing the nomination of Mr. Cohen. Without objection

it will go in the record.

(The statement referred to follows:)

STATEMENT BY HARRISON A. WILLIAMS, JR., A U.S. SENATOR FROM THE

STATE OF NEW JERSEY

Mr. Chairman, I appreciate this opportunity to testify on behalf of the nomination of Manuel F. Cohen. Mr. Cohen is known to me, not only as a former

resident of New Jerseys but also as one of the most alert and knowledgeable

experts in the area of securities regulation and securities dealings.

On occasions when I, as chairman of the Senate Subcommittee on Securities

have met Mr. Cohen in the performance of his duties, I have found him to be

dedicated, informed, and perceptive. His testimony before the subcommittee has

been unfailingly direct and helpful. I believe that he has all the attributes and

knowledge required for membership in the Securities and Exchange Commission.

You have already studied, I am sure, Mr. Cohen's long record of experience as

an attorney and as a staff member of the SEC. I would like, therefore, to emphasize only two achievements indicating Mr. Cohen's special understanding of

the relationship of securities markets here with those abroad. In 1956, he devoted

1 year of study to the capital markets and the processes of capital formation and

other financial operations abroad. In March 1961, he testified before the Jenkins

Committee of the Board of Trade of the United Kingdom, which is studying the

reform of company law in Great Britain. This experience abroad, together with

his considerable understanding of securities law and regulation in this Nation,

make him an outstanding nominee.

The CHAIRMAN. We thank all the members of the Securities and

Exchange Commission who are here.

We feel very gratified, when we are moving into a period of rapidly

expanding business operations, where the estimated gross national

product may go up to $550 billion and more, when new companies

will be organized and there may be some little flimflam in the stock

market, that we have an agency that is going to protect the public

interest.

The committee will now go into executive session.

(At 10:17 a.m., the committee proceeded in executive session.)

0

19 61

<04.