The Waterbury Democrat., 1937-05-25


 tie Between Administration
 and Wall Street.
 Washington, May 25-No year seems to be quite complete without B spectacular struggle in Congress between the administration and Wall Street. This year may be an exception, but the makings of a fracas are available and inevitbly will be dragged into the arena.
 The securities act, the stock
 market act and the holding com
 pany act have come along one by
 one. And last year Wall Street
 and the administration were busy
 with the election campaign.
 In each of these four conflicts word was spread rather vocifer- ously that an administration vic- tory would mean an end of the fine old American institutions and a new form of government, in which the worst features of bol- shevism and fascism would be 
 Efforts to curb financial racket
 ecring are more popular than
 some of the other New Deal re-
 eorm efforts, however, and it
 should not surprise anyone if the
 Chandler bill, the Barkley bill and
 the Lea bill went shooting
 through rather rapidly at this
 session, despite walls from the
 financial district.
 The Chandler bill aims to re- form corporation reorganization practices in the interest of he in- vestor. The Barkley bill attempts to make trustees of a bond issue actually an effective means Of for bond holders. The Lea bill undertakes to provide that protective committees func- tioning in cases of receivershlp shall actually function for the pro- lection of security holders.
 Coming and Going
 The three bills represent an ,n- tegrated program of legislation designated to eliminate the re- racket through which bankers, attorneys, promoters and others have gypped the investing public all over again after con- cerns have gone bankrupt, espe- cially during the depressiong
 Often the men who have
 wrecked corporations while profit
 ing largely have been able to con
 duet star chamber congratulations
 to their further profit, while sup
 pressing facts, revelation of which
 might send them to jail or make
 them Iiamlc for damage.
 Management and bankers have and controlled protec- tive committees. Or others have llorued in, not in the interests of security holders, but to reap fees, commissions, other emolumentS and future control of profits. In- siders have been able to make se- curtiy holders impotent by with holding lists of stock or bond holders and other vital informa- tion.
 OutgrOwth of Probe
 The legislative program is an of the monumental ln- vest.gation and study of corporate made by Securities Exchange Commissioner William O.. Duglas and Dr. Abe Fortas of Yaie. High spots of the three measures:
 CHANDLER BILL: Makes man. datory the appointment of diSin- terested trustees in receiverships and keeps debtors and bankers on the outside. Provides that attor- neys for trustees must be inde- pendent of any association with interested parties. Shifts finan- cial power yielded by bankers within control of the bankruptcy courts. Gives SEC the right to intervene in all reorganization and to submit aG- visory reports on reorganization plans prior to submission to se- curity holders. Legalizes the right of any creditor or stockholder to be given a hearing. Guarantees right of employees to be heard. (This extraordinary feature is es- pecially unpopular in Wall street. In general, it attempts to capture for the investor large gobs of ln- crement previously accruing from to those in strate- gic places of power.
 BARKLEY BILL: Will interest holders who bought bonds - later - after observing the name of some large, respected bank appearing as trustee for the issue, only to learn that contract terms obligated the trustee to dc nothing prior or subsequent to dc fault. Prohibits trustees iron, hacing interests conflicting with those of bond holders. Imposes active protective duties on trus- tees. Radically reduces possibll' ity of clauses which exculpate trustees from responsibility. Seeks to eliminate situations in which bond holders are unable to force trustees to action because of in- ability to recruit fixed percent age of holders to make demands.
 LEA BILL: Would make per- sons soliciting authority to repre- sent security holders furnish 2 prospectus telling all about them selves and giving other accurate essential information. Empowers SEC to eliminate from protective persons whose inter- ests palpably conflict with interests of security holders. Gives SEC general powers of supervision and action against racketeering as well as authority to render advisory re- ports on plans advanced by pro- tective committees.
 Copyright, 1887, NEA Service, Incl