Task: sc_authoritydecision

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Justice Stevens
delivered the opinion of the Court.
In 1956 Congress enacted the Bank Holding Company-Act to control the future expansion of bank holding companies and to require divestment of their nonbanking interests. The Act, however, authorizes the Federal Reserve Board (Board) to allow holding companies to acquire or retain ownership in companies whose activities are “so closely related to banking or managing or controlling banks as to be a proper incident thereto.” In 1972 the Board amended its regulations to enlarge the category of activities that it would regard as “closely related to banking” and therefore permissible for bank holding companies and their nonbanking subsidiaries. Specifically, the Board determined that the services of an investment adviser to a closed-end investment company may be such a permissible activity. The question presented by this case is whether the Board had the statutory authority to make that determination.
The Board’s determination, which was implemented by an amendment to its “Regulation Y,” permits bank holding companies and their nonbanking subsidiaries to act as an investment adviser as that term is defined by the Investment Company Act of 1940. Although the statutory definition is a detailed one, the typical relationship between an investment adviser and an investment company can be briefly described. Investment companies, by pooling the resources of small investors under the guidance of one manager, provide those investors with diversification and expert management. Investment advisers generally organize and manage investment companies pursuant to a contractual arrangement with the company. In return for a management fee, the adviser selects the company’s investment portfolio and supervises most aspects of its business.
The Board issued an interpretive ruling in connection with its amendment to Regulation Y. That ruling distinguished “open-end” investment companies (commonly referred to as “mutual funds”) from “closed-end” investment companies. The ruling explained that “a mutual fund is an investment company, which, typically, is continuously engaged in the issuance of its shares and stands ready a.t any time to redeem the securities as to which it is the issuer; a closed-end investment company typically does not issue shares after its initial organization except at infrequent intervals and does not stand ready to redeem its shares.” Because open-end investment companies will redeem their shares, they must constantly issue securities to prevent shrinkage of assets. In contrast, the capital structure of a closed-end company is similar to that of other corporations; if its shareholders wish to sell, they must do so in the marketplace. Without any obligation to redeem, closed-end companies need not continuously seek new capital.
The Board's interpretive ruling expressed the opinion that a bank holding company may not lawfully sponsor, organize, or control an open-end investment company, but the Board perceived no objection to sponsorship of a closed-end investment company provided that certain restrictions are observed. Among those restrictions is a requirement that the investment company may not primarily or frequently engage in the issuance, sale, and distribution of securities; a requirement that the investment adviser may not have any ownership interest in the investment company, or extend credit to it; and a requirement that the adviser may not underwrite or otherwise participate in the sale or distribution of the investment company’s securities.
Respondent Investment Company Institute, a trade association of open-end investment companies, commenced this litigation challenging as in excess of the Board’s statutory authority the determination that investment adviser services are “closely related” to banking. Both in proceedings before the Board and in a direct review proceeding in the United States Court of Appeals for the District of Columbia Circuit, respondent based this challenge on the Banking Act of 1933, commonly known as the Glass-Steagall Act, in which Congress placed restrictions on the securities-related business of banks in order to protect their depositors.
The Court of Appeals rejected respondent’s argument that Regulation Y, as amended, violated the Glass-Steagall Act, relying on the fact that the prohibitions of §§16 and 21 of that Act apply only to banks rather than to bank holding companies or their nonbanking subsidiaries. 196 U. S. App. D. C. 97, 606 F. 2d 1004. The court nevertheless concluded that § 4 (c) (8) of the Bank Holding Company Act did not authorize the regulation. The court reasoned that the legislative history of the Act demonstrates that Congress did not intend the Bank Holding Company Act to restrict the scope of the Glass-Steagall Act. Because the court read the legislative history to indicate that Congress perceived the Glass-Steagall Act as an effort to effect as complete a separation as possible between the securities business and the commercial banking business, the court read a similar intent into the Bank Holding Company Act. The Court of Appeals believed that activities permitted by the challenged regulation were not consistent with the congressional intent to effect this separation.
We granted certiorari because of the importance of the Court of Appeals holding. 444 U. S. 1070. We are persuaded that the language of both the Bank Holding Company Act and the Glass-Steagall Act, as well as our interpretation of the Glass-Steagall Act in Investment Company Institute v. Camp, 401 U. S. 617 (1971), supports the Board. Moreover, contrary to the view of the Court of Appeals, we are persuaded that the regulation is consistent with the legislative history of both statutes.
I
The services of an investment adviser are not significantly different from the traditional fiduciary functions of banks. The principal activity of an investment adviser is to manage the investment portfolio of its advisee — to invest and reinvest the funds of the client. Banks have engaged in that sort of activity for decades. As executor, trustee, or managing agent of funds committed to its custody, a bank regularly buys and sells securities for its customers. Bank trust, departments manage employee benefits trusts, institutional and corporate agency accounts, and personal trust and agency accounts. Moreover, for over 50 years banks have performed these tasks for trust funds consisting of commingled funds of customers. These common trust funds administered by banks would be regulated as investment companies by the Investment Company Act of 1940 were they not exempted from the Act’s coverage. The Board’s conclusion that the services performed by an investment adviser are “so closely related to banking... as to be a proper incident thereto” is therefore supported by banking practice and by a normal reading of the language of § 4 (c)(8).'
The Board’s determination of what activities are “closely related” to banking is entitled to the greatest deference. Such deference is particularly appropriate in this case because the regulation under attack is merely a general determination that investment advisory services which otherwise satisfy the restrictions imposed by the Board’s interpretive ruling constitute an activity that is so closely related to banking as to be a proper incident thereto. Because the authority for any specific investment advisory relationship must be preceded by a further determination by the Board that the relationship can be expected to provide benefits for the public, the Board will have the opportunity to ensure that no bank holding company exceeds the bounds of a bank’s traditional fiduciary function of managing customers’ accounts. Thus unless the Glass-Steagall Act requires a contrary conclusion, the Board’s interpretation of the plain language of the Bank Company Holding Act must be upheld.
II
Respondent’s principal attack on the Board’s general determination that investment adviser services are so closely related as to be a proper incident to banking proceeds from the premise that if such services were performed by a bank, the bank would violate §§16 and 21 of the Glass-Steagall Act. Respondent therefore argues that such services may never be regarded as a “proper incident” that could be performed by a bank affiliate. We reject both the premise and the conclusion of this argument. The performance of investment advisory services by a bank would not necessarily violate § 16 or § 21 of the Glass-Steagall Act. Moreover, bank affiliates may be authorized to engage in certain activities that are prohibited to banks themselves.
It is familiar history that the Glass-Steagall Act was enacted in 1933 to protect bank depositors from any repetition of the widespread bank closings that occurred during the Great Depression. Congress was persuaded that speculative activities, partially attributable to the connection between commercial banking and investment banking, had contributed to the rash of bank failures. The legislative history reveals that securities firms affiliated with banks had engaged in perilous underwriting operations, stock speculation, and maintaining a market for the bank’s own stock, often with the bank’s resources. Congress sought to separate national banks, as completely as possible, from affiliates engaged in such activities.
Sections 16 and 21 of the Glass-Steagall Act approach the legislative goal of separating the securities business from the banking business from different directions. The former places a limit on the power of a bank to engage in securities transactions; the latter prohibits a securities firm from engaging in the banking business. Section 16 expressly prohibits a bank from “underwriting” any issue of a security or purchasing any security for its own account. The Board’s interpretive ruling here expressly prohibits a bank holding company or its subsidiaries from participating in the “sale or distribution” of securities of any investment company for which it acts as investment adviser. 12 CFR § 225.125 (h) (1980). The ruling also prohibits bank holding companies and their subsidiaries from purchasing securities of the investment company for which it acts as investment adviser. § 225.125 (g). Therefore, if the restrictions imposed by the Board’s interpretive ruling are followed, investment advisory services — even if performed by a bank — would not violate the requirements of § 16.
We are also satisfied that a bank’s performance of such services would not necessarily violate § 21. In contrast to § 16, § 21 prohibits certain kinds of securities firms from engaging in banking. The § 21 prohibition applies to any organization “engaged in the business of issuing, underwriting, selling, or distributing” securities. Such a securities firm may not engage at the same time “to any extent whatever in the business of receiving deposits.” The management of a customer’s investment portfolio — even when the manager has the power to sell securities owned by the customer — is not the kind of selling activity that Congress contemplated when it enacted § 21. If it were, the statute would prohibit banks from continuing to manage investment accounts in a fiduciary capacity or as an agent for an individual. We do not believe Congress intended that such a reading be given § 21. Rather, § 21 presented the converse situation of § 16 and was intended to require securities firms such as underwriters or brokerage houses to sever their banking connections. It surely was not intended to require banks to abandon an accepted banking practice that was subjected to regulation under § 16.
Even if we were to assume that a bank would violate the Glass-Steagall Act by engaging in certain investment advisory services, it would not follow that a bank holding company could never perform such services. In both the Glass-Steagall Act itself and in the Bank Holding Company Act, Congress indicated that a bank affiliate may engage in activities that would be impermissible for the bank itself. Thus, § 21 of Glass-Steagall entirely prohibits the same firm from engaging in banking and in the underwriting business, whereas § 20 does not prohibit bank affiliation with a securities firm unless that firm is “engaged principally” in activities such as underwriting. Further, §4(c)(7)of the Bank Holding Company Act, which authorizes holding companies to purchase and own shares of investment companies, permits investment activity by a holding company that is impermissible for a bank itself. Finally, inasmuch as the Bank Holding Company Act requires divestment only of nonbanking interests, the §4(c)(8) exception would be unnecessary if it applied only to services that a bank could legally perform. Thus even if the Glass-Steagall Act did prohibit banks from acting as investment advisers, that prohibition would not necessarily preclude the Board from determining that such adviser services would be permissible under §4 (c)(8).
In all events, because all that is presently at issue is the Board’s preliminary authorization of such services, rather than approval of any specific advisory relationship, speculation about possible conflicts with the Glass-Steagall Act is plainly not a sufficient basis for totally rejecting the Board’s carefully considered determination.
Ill
Our conclusions with respect to the Glass-Steagall Act are in no way altered by consideration of our decision in Invest ment Company Institute v. Camp, 401 U. S. 617 (1971). The Court there held that a regulation issued by the Comptroller of the Currency purporting to authorize banks to operate mutual funds violated §§16 and 21 of the Glass-Steagall Act. The mutual fund under review in that case was the functional equivalent of an open-end investment company. Because the authorization at issue in this case is expressly limited to closed-end investment companies, the holding in Camp is clearly not dispositive. Respondent argues, however, that both the Court’s reasoning in Camp and its description of the “more subtle hazards” created by the performance of investment advisory services by a bank are inconsistent with the Board’s action. We disagree.
In Camp the Court relied squarely on the literal language of §§ 16 and 21 of the Glass-Steagall Act. After noting that § 16 prohibited the underwriting by a national bank of any issue of securities and the purchase for its own account of shares of stock of any corporation, and that § 21 prohibited corporations from both receiving deposits and engaging in issuing, underwriting, selling, or distributing securities, the Court recognized that the statutory language plainly applied to a bank’s sale of redeemable and transferable “units of participation” in a common investment fund operated by the bank. 401 U. S., at 634. Because the Court held that the bank was the underwriter of the fund’s units of participation within the meaning of the Investment Company Act of 1940, id., at 622-623, the Comptroller attempted to avoid the reach of § 16 by arguing that the units of participation were not “securities” within the meaning of the Glass-Steagall Act. The Court’s contrary determination led inexorably to the conclusion that § 16 had been violated.
This case presents an entirely different issue. No one could dispute the fact that the shares in a closed-end investment company are securities. But as we have indicated, such securities are not issued, sold, or underwritten by the investment adviser. In contrast to the bank’s activities in issuing, underwriting, selling, and redeeming the units of participation in the Camp case, in this case the Board’s interpretive ruling expressly prohibits such activity.
The Court in Camp recognized that in enacting the Glass-Steagall Act, Congress contemplated other hazards in addition to the danger of banks using bank assets in imprudent securities investments. But none of these “more subtle hazards” would be present were a bank to act as an investment adviser to á closed-end investment company subject to the restrictions imposed by the Board. Those restrictions would prevent the bank from extending credit to the investment company and would also preclude the promotional pressures that are inherent in the investment banking business. In addition to the fact that the bank could not underwrite or sell the stock of the closed-end investment company, that company, unlike a mutual fund, would not be constantly involved in the search for new capital to cover the redemption of other stock. The advisory fee earned by the bank would provide little incentive to the bank or its holding company to engage in promotional activities.
Our obligation to accord deference to the Board’s interpretive ruling provides added support to our conclusion that the Board’s regulation avoids the potential hazards involved in any association between a bank affiliate and a closed-end investment company. In Camp the Court emphasized that the Comptroller of the Currency had provided no guidance as to the effect of the Glass-Steagall Act on the proposed activity. Whereas in Camp the Court was deprived of administrative “expertise that can enlighten and rationalize the search for the meaning and intent of Congress,” 401 U. S., at 628, in this case the regulatory action by the Board recognized and addressed the concerns that led to the enactment of the Glass-Steagall Act. Contrary to respondent’s argument, the Camp decision therefore affirmatively supports the Board’s action in this case.
IV
The Court of Appeals rested its conclusion that the Board had exceeded its statutory authority on a review of the legislative history of §4 (c)(8). As originally enacted in 1966 the section referred to activities “closely related to the business of banking.” In 1970, when the Act was amended to extend its coverage to holding companies controlling just one bank, the words “business of” were deleted from §4 (c)(8), thereby making the section refer merely to activities “closely related to banking.” The conclusion of the Court of Appeals did not, however, place special reliance on this modest change. Rather, the Court of Appeals was persuaded that in 1956 Congress believed that the Glass-Steagall Act had been enacted in 1933 to “divorc[e] investment from commercial banking” and that the 1970 amendment to § 4 (c) (8) did not alter the intent expressed by the 1956 Congress. 196 U. S. App. D. C., at 110, 606 F. 2d, at 1017.
Congress did intend the Bank Holding Company Act to maintain and even to strengthen Glass-Steagall’s restrictions on the relationship between commercial and investment banking. Part of the motivation underlying the requirement that bank holding companies divest themselves of nonbanking interests was the desire to provide a measure of regulation missing from the Glass-Steagall Act. In 1956, the only provision of the Glass-Steagall Act which regulated bank holding companies was § 19 (e) of the Act, which provided that a bank holding company could not obtain a permit from the Federal Reserve Board entitling it to vote the shares of a bank subsidiary unless it agreed to divest itself within five years of any interest in a company formed for the purpose of, or “engaged principally” in, the issuance or underwriting of securities. This provision was largely ineffectual, because bank holding companies were not subject to the divestiture requirement as long as they did not vote their bank subsidiary shares. Thus bank holding companies were able to avoid Glass-SteagalPs general purpose of separating as completely as possible commercial from investment banking in a way not available to other bank affiliates or banks themselves. The inadequacy of § 19 (e) therefore lay not in the type of affiliation with securities-related firms permitted to bank holding companies but in the ability of holding companies to avoid any restrictions on affiliation by simply not voting their shares. To the extent that Congress strengthened the Glass-Steagall Act, it did so by closing this loophole rather than by imposing further restrictions on the permissible securities-related business of bank affiliates. The clear evidence of a congressional purpose in 1956 to remedy the inadequacy of § 19 (e) of the 1933 Act does not support the conclusion that Congress also intended §4 (c)(8) to be read as totally prohibiting bank holding companies from being “engaged” in any securities-related activities; on the contrary it is more accurately read as merely completing the job of severing the connection between bank holding companies and affiliates “principally engaged” in the securities business.
To invalidate the Board’s regulation, the Court of Appeals had to assume that the activity of managing investments for a customer had been regarded by Congress as an aspect of investment banking rather than an aspect of commercial banking. But the Congress that enacted the Glass-Steagall Act did not take such an expansive viewr of investment banking. Investment advisers and closed-end investment companies are not “principally engaged” in the issuance or the underwriting of securities within the meaning of the Glass-Steagall Act, even if they are so engaged within the meaning of §§16 and 21. Nothing in the legislative history of the Bank Holding Company Act persuades us that Congress in 1956 intended to effect a more complete separation between commercial and investment banking than the separation that the Glass-Steagall Act had achieved with respect to banks in §§16 and 21 and had sought unsuccessfully to achieve with respect to bank holding companies in § 19 (e).
A review of the 1970 Amendments to the Bank Holding Company Act only strengthens this conclusion. On its face the 1970 amendment to § 4 (c) (8) would appear to have broadened the Board’s authority to determine when an activity is sufficiently related to banking to be permissible for a nonbanking subsidiary of a bank holding company. The initial versions of both the House and the Senate bills changed the “closely related” test of § 4 (c) (8) to a “functionally related” test. The Conference Committee’s final version of the bill, however, retained the “closely related” language of the 1956 Act. Whether this indicated that §4 (c)(8) was to have the same scope as it did under the 1956 Act is difficult to discern. For purposes of this case, however, we need not reconcile the conflicting views as to whether the 1970 amendment expanded the scope of § 4 (c)(8), because no one disputes that the Board’s discretion is at least as broad under the 1970 Amendments as it was under the 1956 Act. Therefore, our conclusion that nothing in the 1956 Act or its legislative history indicates that Congress intended to prohibit bank holding companies from acting as investment advisers to closed-end investment companies should also apply to the 1970 Amendments unless Congress specifically indicated that such services should not be authorized by the Board. Not only is there no such specific, evidence, there is affirmative evidence to the contrary.
The legislative history of the 1970 Amendments indicates that Congress did not intend the 1970 Amendments to have any effect on the prohibitions of the Glass-Steagall Act. The Senate chairman of the Conference Committee assured his fellow Senators that the conference bill was intended neither to enlarge nor to restrict the prohibitions contained in the Glass-Steagall Act. Moreover, the Senate Report refers to investment services but declines to state that the Board could not approve under § 4 (c) (8) “bank sponsored mutual funds.” The House’s version of the bill rigidly confined the Board’s discretion in certain areas by including a “laundry list” of activities which the Board could not approve. Included in this list was a prohibition of bank holding company acquisition of shares of any company engaged in “the issue, flotation, underwriting, public sale, or distribution,” of securities, “whether or not any such interests are redeemable.” The Conference Committee deleted this list. This deletion indicates a rejection of the House’s restrictive approach in favor of the Senate’s more flexible attitude toward the Board’s exercise of its discretion. Thus as we read the legislative history of the 1970 Amendments, Congress did not intend the Bank Holding Company Act to limit the Board’s discretion to approve securities-related activity as closely related to banking beyond the prohibitions already contained in the Glass-Steagall Act. This case is therefore one that is best resolved by deferring to the Board’s expertise in determining what activities are encompassed within the plain language of the statute.
Because we have concluded that the Board’s decision to permit bank holding companies to act as investment advisers for closed-end investment companies is consistent with the language of the Bank Holding Company Act, and because such services are not prohibited by the Glass-Steagall Act, we hold that the amendment to Regulation Y does not exceed the Board’s statutory authority. The judgment of the Court of Appeals is
Reversed.
Justice Stewart and Justice Rehnquist took no part in the consideration or decision of this case. Justice Powell took no part in the decision of this case.
The stated purpose of the Bank Holding Company Act of 1956 was “[t]o define bank holding companies, control their future expansion, and require divestment of their nonbanking interests.” 70 Stat. 133.
Section 4 of the statute, as originally enacted, provided in pertinent part:
“(a) Except as otherwise provided in this Act, no bank holding company shall—
“(1) after the date of enactment of this Act acquire direct or indirect ownership or control of any voting shares of any company which is not a bank....
“(c) The prohibitions in this section shall not apply—
“(6) to shares of any company all the activities of which are of a financial, fiduciary, or insurance nature and which the Board after due notice and hearing, and on the basis of the record made at such hearing, by order has determined to be so closely related to the business of banking or of managing or controlling banks as to be a proper incident thereto and as to make it unnecessary for the prohibitions of this section to apply in order to carry out the purposes of this Act....” 70 Stat. 135-137.
The relevant exemption is now found in § 4 (c) (8) which allows holding company ownership of:
“(8) shares of any company the activities of which the Board after due notice and opportunity for hearing has determined (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In determining whether a particular activity is a proper incident to banking or managing or controlling banks the Board shall consider whether its performance by an affiliate of a holding company can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. In orders and regulations under this subsection, the Board may differentiate between activities commenced de novo and activities commenced by the acquisition, in whole or in part, of a going concern.” 12 U. S. C. § 1843 (c)(8).
See 36 Fed. Reg. 16695, 17514 (1971); 37 Fed. Reg. 1463 (1972); 12 CFR § 225.4 (a) (5) (ii) (1980). The 1972 amendment to Regulation Y made the following addition to the list of permissible activities:
“ (ii) serving as investment adviser, as defined in section 2 (a) (20) of the Investment Company Act of 1940, to an investment company registered under that Act.”
The definition of an investment adviser in § (2) (a) (20) of the Investment Company Act of 1940 reads as follows:
“(20) 'Investment adviser’ of an investment company means (A) any person (other than a bona fide officer, director, trustee, member of an advisory board, or employee of such company, as such) who pursuant to contract with such company regularly furnishes advice to such company with respect to the desirability of investing in, purchasing or selling securities or other property, or is empowered to determine what securities or other property shall be purchased or sold by such company, and (B) any other person who pursuant to contract with a person described in clause (A) of this paragraph regularly performs substantially all of the duties undertaken by such person described in said clause (A); but does not include (i) a person whose advice is furnished solely through uniform publications distributed to subscribers thereto, (ii) a person who furnishes only statistical and other factual information, advice regarding economic factors and trends, or advice as to occasional transactions in specific securities, but without generally furnishing advice or making recommendations regarding the purchase or sale of securities, (iii) a company furnishing such services at cost to one or more investment companies, insurance companies, or other financial institutions, (iv) any person the character and amount of whose compensation for such services must be approved by a court, or (v) such other persons as the Commission may by rules and regulations or order determine not to be within the intent of this definition.” 15 U. S. C. § 80a-2 (20).
1 T. Frankel, The Regulation of Money Managers, I-A, § 2, p. 6 (1978).
Id., at I-B, § 4, pp. 9-10; see Wharton School Study of Mutual Funds, H. R. Rep. No. 2274, 87th Cong., 2d Sess., 467-477 (1962) (hereinafter Wharton School Study); Burks v. Lasker, 441 U. S. 471, 480-481 (1979).
Securities and Exchange Commission Report on the Public Policy Implications of Investment Company Growth, H. R. Rep. No. 2337, 89th Cong., 2d Sess., 8 (1966).
12 CFR §225.125 (c) (1980).
Hearings on S. 3580 before a Senate Subcommittee on Banking and Currency, 76th Cong., 3d Sess., 43 (1940) (hereinafter 1940 Senate Hearings) (statement of Robert E. Healy). As the SEC Report on the Public Policy Implications of Investment Company Growth recognized with respect to open-end funds:
“Since there will always be some shareholders who want to sell, an open-end company must comply with continuous demands for cash from selling stockholders. To offset the resulting cash outflow and because of the strong incentives for growth created by the structure of the industry, the managers of virtually all open-end companies vigorously promote sales of new shares at all times.” H. R. Rep. No. 2337, supra, at 42-43.
Id., at 42.
The ruling would apparently permit a bank holding company to provide investment advice to an open-end investment company if the holding company does not have the authority to make investment decisions or otherwise to control investments of such an advisee. Respondent has not specifically challenged the legality of a relationship that is purely advisory in character.
“(f) In the Board’s opinion, the Glass-Steagall Act provisions, as interpreted by the U. S. Supreme Court, forbid a bank holding company to sponsor, organize or control a mutual fund. However, the Board does not believe that such restrictions apply to closed-end investment companies as long as such companies are not primarily or frequently engaged in the issuance, sale and distribution of securities.” 12 CFR § 225.125 (f) (1980).
Pertinent parts of the interpretive ruling read as follows:
“In no case, however, should a bank holding company act as investment adviser to an investment company which has a name that is similar to, or a variation of, the name of the holding company or any of its subsidiary banks.
“(g) In view of the potential conflicts of interests that may exist, a bank holding company and its bank and nonbank subsidiaries should not (1) purchase for their own account securities of any investment company for which the bank holding company acts as investment adviser; (2) purchase in their sole discretion, any such securities in a fiduciary capacity (including as managing agent); (3) extend credit to any such investment company; or (4) accept the securities of any such investment company as collateral for a loan which is for the purpose of purchasing securities of the investment company.
“ (h) A bank holding company should not engage, directly or indirectly, in the sale or distribution of securities of any investment company for which it acts as investment adviser. Prospectuses or sales literature should not be distributed by the holding company, nor should any literature be made available to the public at any offices of the holding company. In addition, officers and employees of bank subsidiaries should be instructed not to express any opinion with respect to advisability of purchase of securities of any investment company for which the bank holding company acts as investment adviser. Customers of banks in a bank holding company system who request information on an unsolicited basis regarding any investment company for which the bank holding company acts as investment adviser may be furnished the name and address of the fund and its underwriter or distributing company, but the names of bank customers should not be furnished by the bank holding company to the fund or its distributor. Further, a bank holding company should not act as investment adviser to a mutual fund which has offices in any building which is likely to be identified in the public’s mind with the bank holding company.” 12 CFR §§225.125 (f), (g), (h) (1980).
The stated purpose of the 1933 Act was “[t]o provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.” 48 Stat. 162.
Section 16, as originally enacted, provided in pertinent part:
“The business of dealing in investment securities by [a national bank] shall be limited to purchasing and selling such securities without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and [a national bank] shall not underwrite any issue of securities: Provided, That [a national bank] may purchase for its own account investment securities under such limitations and restrictions as the Comptroller of the Currency may by regulation prescribe 48 Stat. 184.
Section 16, as amended, is now codified at 12 U. S. C. § 24 (Seventh).
Section 21, provides, in pertinent part, that it is unlawful
“[f]or any person, firm, corporation, association, business trust, or other similar organization, engaged in the business of issuing, underwriting, selling, or distributing, at wholesale or retail, or through syndicate participation, stocks, bonds, debentures, notes, or other securities, to engage at the same time to any extent whatever in the business of receiving deposits subject to check or to repayment upon presentation of a passbook,, certificate of deposit, or other evidence of debt, or upon request of the depositor...." 48 Stat. 189, 12 U. S. C. § 378.
A memorandum submitted to the Board on behalf of the American Bankers Association states, in part: “For well over a century, banks and trust companies in every state have managed and administered customers’ investment funds in the form of trusts, estates and agency accounts.” App. 20. The accuracy of that statement is not challenged.
See Securities Exchange Commission Institutional Investor Study Report Summary, H. R. Doc. No. 92-64, pt. 8, pp. 34-35 (1971).
As we recognized in Investment Company Institute v. Camp, 401 ü. S. 617 (1971):
“National banks were granted trust powers in 1913. Federal Reserve Act, § 11, 38 Stat. 261. The first common trust fund was organized in 1927, and such funds were expressly authorized by the Federal Reserve Board by Regulation F promulgated in 1937. Report on Commingled or Common Trust Funds Administered by Banks and Trust Companies, H. R. Doe. No. 476, 76th Cong., 2d Sess., 4r-5 (1939). For at least a generation, therefore, there has been no reason to doubt that a national bank can, consistently with the banking laws, commingle trust funds on the one hand, and act as a managing agent on the other. No provision of the banking law suggests that it is improper for a national bank to pool trust assets, or to act as a managing agent for individual customers, or to purchase stock for the account of its customers.” Id., at 624^625.
See also Mullane v. Central Hanover Bank & Trust Co., 339 U. S. 306, 307-308 (1950).
See 15 U. S. C. § 80a-3 (c) (3). As David Schenker, an attorney for the SEC, explained at the 1940 Senate Hearings: “We have exempted any common trust fund.... Those common trust funds are a sort of investment trust in which trustees can participate, and they are managed by banks and trust companies.” 1940 Senate Hearings, at 181.

Question: What is the basis of the Supreme Court's decision?
A. judicial review (national level)
B. judicial review (state level)
C. Supreme Court supervision of lower federal or state courts or original jurisdiction
D. statutory construction
E. interpretation of administrative regulation or rule, or executive order
F. diversity jurisdiction
G. federal common law
Answer:

Answer: D