Evening star., 1940-03-19
investment Bankers
Launch Fight for
Probe Of 5. {. {.
Revision Of Federal
Securities Statutes
Will Be Sought
BY FREDERICK GARDNER,

NEW YORK, March 19.-WhAt
some investment bankers called
their battle cry" stirred financial
circles today in an organized cam
paign for a congressional investi-
cation of the Securities and Ex-
change Commission and for revision
of the Federal securities laws.
Taking a simmering feud over s.
E. G. regulation of security under
writing and distribution into the
open. the Investment Bankers As
sociation of America mapped Ma
tion-wide program to present its
case to the public and to Congress.
A spokesman for investment
bankers groups studying the plan
of campaign charged the S. E. c.
had blocked opportunity for the in
vestment banking field to present
its side of the controversy fully in
the Monopoly Committee hearings
on the functioning of the financial
machine in relation to big business
and monopolistic combines.
Assume Offensive.
Assuming the offensive aggres-
sively for the first time since the
passage of the Securities Act in
1888, investment bankers yesterday
addressed a 66-page letter, the So
called battle cry" to Jerome N.
Frank, chairman of the Securities
Commission, charging the commits
sion had exceeded it's statutory au-
thority in certain aspects Of its
regulatory activities
The letter urged the commission
to Immediately recommend" to
Congress amendment of the laws
administered by the commission 80
as to remove deterrents unnecessary
for the protection of investors or the
public which now impede the oper-
alton of our economy"
Emphasizing the letter as aimed
to get a public hearing of Wall
Street complaints against the S. E..
c., some investment bankers de-
scrlbed it today as the opening gun
in what may become the most in
tense controversy between the
financial community and the COM
mission since the passage of the trio
OF 5. E. c. acts from 1888 to 1895.
A number of influential Wall
Streeters. one informed source said.
were opposed to starting a fight
Tor a. airing OF the financial dis
'ricts complaints now. They hold,
1t was said. current movement in
Congress for curbing the interpre-
tive power of Federal regula tory
agencies might prevent the S. E. c.
from extending its authority, any,
how. and that this movement might
be impaired by the new fight.
Delay Is Opposed.
Banking circles long have charged
S. E. c. legislation, particularly a
rule requiring 20-day interval be-
tween registration and sale of a new
security issue, hindered the normal
flow of capital to industry and
slowed business revival.
A spirit Of revolt against S. E. c.
rule has f1ared several times in
Wall Street the last few years. not
ably when stock exchange groups in
lS3. tried unsuccessfully to drum
up support in Washington for an
overhauling of securities exchange
regulation.
Irritation over S. E. C. rules ap-
peared to have been aggravated
lately by incidents in the admins
tratlnn Of the 1885 utility holding
company act. giving the commits
sion wide power over financing by
big electric power systems.
The Investment Bankers Associ-
alton of America has a membership
of approximately TAO large ano
small underwriting firms and secur.
ity dealers throughout the country
The president is Emmett F.. Con.
nelly of the First of Michigan Corp.
Detroit. He has been in New York
this week working on the associa-
tion's plans for the Forthcoming
campaign to state the bankers case
against the S. E. G. and for revision
of legislation it administers.
Hearing Desired.
The lengthy letter to Frank
largely discussed the issue arising
out of the arms length" bargain
ing rule of the commission and the
question of competitive bidding fol
new issues.
But some leading bankers stressed
the recommendation for a hearing
before "disinterested public body
at which all persons interested will
have ample opportunity to present
their views"
The aim, it was explained, wa.
for a congressional inquiry, if moi
at this session then by the next
Congress, of the commissions han.
ding of the acts and proposals fol