Source: https://supreme.justia.com/cases/federal/us/346/521/case.html
Timestamp: 2017-05-28 12:27:38
Document Index: 363891411

Matched Legal Cases: ['§ 11', '§ 24', '§ 11', '§ 24', '§ 11', '§ 11', '§ 11', '§ 18', '§ 24', '§ 24', '§ 11', '§ 24', '§ 11', '§ 11', '§ 11', '§ 24', '§ 18', '§ 11', '§ 24', '§ 24']

General Protective Committee v. SEC (full text) :: 346 U.S. 521 (1954) :: Justia U.S. Supreme Court Center Log In
U.S. Supreme CourtGeneral Protective Committee v. SEC, 346 U.S. 521 (1954)General Protective Committee for the Holders of Option Warrantsof the United Corporation v. Securities and Exchange CommissionNo. 184Argued December 2, 1953Decided January 4, 1954346 U.S. 521CERTIORARI TO THE UNITED STATES COURT OF APPEALS
United controlled, directly or indirectly, various gas and electric utility companies in the east. It submitted a plan to the Commission which, it claimed, would complete its compliance with § 11(b). The Commission rejected United's plan. 13 S.E.C. 854, 898-899. The Commission, however, withheld issuance of a dissolution order so as to afford United an opportunity to comply with the Act by divesting itself of control over its subsidiaries and by transforming itself into an investment Page 346 U. S. 523 company. Id., p. 899. The Commission accordingly directed that United cease to be a holding company and limit its corporate structure to a single class of stock, namely, common stock. [Footnote 1]
First. The sale by United of all of its South Jersey common stock and of sufficient amounts of its stockholdings in the other utility companies so that, within one year, its resultant holdings would not exceed 4.9 percent of the voting stock of any of those companies. Page 346 U. S. 524
The Commission, in its order of approval, stated that the provisions of the plan relating to the cancellation of the warrants and the amendment of the charter and bylaws would not be operative "until an appropriate Page 346 U. S. 525 United States District Court shall, upon application thereto, enter an order enforcing said provisions." Holding Company Act Release No. 10643, p. 3. No such provision was made as respects the other provisions of the plan.
Some of the common stockholders thereupon filed a petition for review in the Court of Appeals for the District of Columbia under § 24(a) of the Act. [Footnote 2] They Page 346 U. S. 526 challenged the First and Second provisions of the plan, which we have described above. They also asked that the Third and Fourth provisions, the ones which were made subject to approval by the District Court, be approved by the Court of Appeals. The petitioner in this Court is a protective committee representing holders of the option warrants. It moved to intervene in the review proceedings in the Court of Appeals, claiming that forfeiture of the warrants was not justified. The Commission and United opposed the intervention on the ground that, by reason of the Commission's order and § 11(e) of the Act, [Footnote 3] only the District Court had jurisdiction to Page 346 U. S. 527 review the provisions of the plan respecting the elimination of the warrants and the amendments to the charter and bylaws.
The question is not whether there is judicial review of orders of the Commission. The question is which orders are reviewable in the District Court, which in the Court of Appeals. The first reading of the Act may leave the impression that there is conflict between § 24(a) and § 11(e). Section 24(a) gives review in the Court of Appeals of "an order" of the Commission, and grants the Page 346 U. S. 528 Court of Appeals "exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part." This is clearly broad enough to include an order of the Commission under § 11 respecting a plan of a holding company seeking compliance with § 11(b). Section 11(e), however, provides in some instances for review of such plans on application by the Commission to the District Court. Moreover, the Commission, by virtue of § 18(f), [Footnote 4] may apply to the District Court for enforcement of any of its orders where it appears that someone is about to commit a violation.
3. That a so-alled split review is permissible where, as here, the Commission has reserved for enforcement proceedings Page 346 U. S. 529 in the District Court only certain provisions of the plan, the Court of Appeals being restricted under § 24(a) to those not so reserved.
We turn, then, to problems involved in the efforts of registered holding companies voluntarily to meet the requirements of the Act. Page 346 U. S. 530
If, therefore, United had offered its common stockholders cash or portfolio securities for their common stock and had put the offer in a separate plan, not making it physically a part of a more comprehensive plan, and the Commission had approved the exchange, there can be no doubt that that plan could have been reviewed by the Court of Appeals under § 24(a). We are unable to see why the Page 346 U. S. 531 mere fact that the offer is not in isolation, but one of several proposals joined together for presentation to the Commission and approved by the Commission at the time it approves the other proposals, should make a difference for purposes of judicial review.
Mr. Justice Rutledge, writing for the Court in Securities & Exchange Commission v. Central-llinois Securities Corp., 338 U. S. 96, pointed out that the difference between § 11(e) and § 24(a) is not essentially in the scope of judicial review. Rather, it is in the function which the two systems of review perform. As he said, § 11(e) serves "to mobilize the judicial authority in carrying out the policies of the Act." Id. at 338 U. S. 125. The full import of that statement can be understood only if § 11(e) and the functions it performs are appreciated. Section 11(e) applies to a plan which a holding company submits to the Commission for purposes of complying with the Act. In other words, it applies to what traditionally has been known in the field of business and finance as voluntary reorganizations, that is to say, reorganizations designed by the management, not those imposed on a company from without. The holding company proposes the voluntary reorganization; the Commission, after hearing, approves, if it finds the plan "necessary to effectuate the provisions of subsection (b) and fair and equitable to the persons affected by such plan." If § 11(e) ended there, it would be plain that judicial review would be had either under § 24(a) on a petition by an "aggrieved" person or under § 18(f) if and when the Commission brought an action to enforce compliance with its order approving a plan. Section 11(e), however, has its own enforcement procedure, somewhat peculiarly worded. It gives a registered holding company the standing to ask that the enforcement machinery of the Act be placed behind its voluntary plan of reorganization. [Footnote 5] Page 346 U. S. 532 Section 11(e) provides,
The Commission may or may not accede to the company's suggestion. Section 11(e) does not make it mandatory for the Commission to do so. It only says that the Commission "may" do so. That implies the exercise of discretion. The company might request, as here, that only some of the terms and provisions of a plan Page 346 U. S. 533 be submitted to the enforcement proceedings of the Act; or it might ask that each and every proposal be so treated. The Commission might refuse the request, or it might grant it in whole or in part. The considerations governing the exercise of the Commission's discretion would embrace a variety of factors.
On the other hand, the holding company might conclude that market conditions were so favorable, its own financial situation so strong, the terms of the voluntary reorganization so attractive, that it would need no help from any source to effectuate the plan once the Commission approved. Page 346 U. S. 534
We have said enough to indicate some of the considerations confronting the Commission when it decides, in connection with a voluntary reorganization plan under § 11(e), whether it will "mobilize the judicial authority in carrying out the policies of the Act," to use the words of Mr. Justice Rutledge in the Central-llinois Securities Corp. case, supra. The Commission may send only one provision of a plan of voluntary reorganization into enforcement proceedings, and let all others go the route of § 24(a) should an aggrieved person desire to take them there. Here as in other fields (Phelps Dodge Corp. v. Labor Board, 313 U. S. 177, 313 U. S. 194) the relation of remedy to policy is peculiarly for the administrative agency. See American Power & Light Co. v. Securities & Exchange Commission, 329 U. S. 90, 329 U. S. 112. We cannot say that the Commission abused its discretion in the present case, for, as we have already observed, the amendments of the charter and bylaws and the fairness of the elimination of the option warrants have no apparent relevancy to the manner in which the common stockholders, who sought review in Page 346 U. S. 535 the Circuit Court under § 24(a), say they have been treated.
There is nothing strange or irrational in routing the common stockholders in this case to the Court of Appeals and the option warrant holders to the District Court. Each will have his day in court. Nothing that one court does will impinge on the other. Each court will be performing a different function. Whether a better procedure Page 346 U. S. 536 could be devised is not for us to determine. It is sufficient that the procedure indicated is permissible under the Act, and that the Commission, in selecting certain phases of a plan for submission to enforcement proceedings, did not, to borrow a phrase from the Court of Appeals for the Third Circuit, lose"sight of the law." [Footnote 6]