Opinion ID: 109975
Heading Depth: 2
Heading Rank: 2

Heading: SEC Interpretation

Text: The court below believed, and it now is argued to us, that almost from its inception the SEC has regarded pension plans as falling within the scope of the Securities Acts. We are asked to defer to what is seen as a longstanding interpretation of these statutes by the agency responsible for their administration. But there are limits, grounded in the language, purpose, and history of the particular statute, on how far an agency properly may go in its interpretative role. Although these limits are not always easy to discern, it is clear here that the SEC's position is neither longstanding nor even arguably within the outer limits of its authority to interpret these Acts. [20] As we have demonstrated above, the type of pension plan at issue in this case bears no resemblance to the kind of financial interests the Securities Acts were designed to regulate. Further, the SEC's present position is flatly contradicted by its past actions. Until the instant litigation arose, the public record reveals no evidence that the SEC had ever considered the Securities Acts to be applicable to noncontributory pension plans. In 1941, the SEC first articulated the position that voluntary, contributory plans had investment characteristics that rendered them securities under the Acts. At the same time, however, the SEC recognized that noncontributory plans were not covered by the Securities Acts because such plans did not involve a sale within the meaning of the statutes. Opinions of Assistant General Counsel, [1941-1944 Transfer Binder] CCH Fed. Sec. L. Serv. ¶ 75,195 (1941); Hearings before the House Committee on Interstate and Foreign Commerce on Proposed Amendments to the Securities Act of 1933 and to the Securities Exchange Act of 1934, 77th Cong., 1st Sess., 895, 896-897 (1941) (testimony of Commissioner Purcell). [21] In an attempt to reconcile these interpretations of the Securities Acts with its present stand, the SEC now augments its past position with two additional propositions. First, it is argued, noncontributory plans are securities even where a sale is not involved. Second, the previous concession that noncontributory plans do not involve a sale was meant to apply only to the registration and reporting requirements of the Securities Acts; for purposes of the antifraud provisions, a sale is involved. As for the first proposition, we observe that none of the SEC opinions, reports, or testimony cited to us address the question. As for the second, the record is unambiguously to the contrary. [22] Both in its 1941 statements and repeatedly since then, the SEC has declared that its no sale position applied to the Securities Acts as a whole. See opinions of Assistant General Counsel, [1941-1944 Transfer Binder] CCH Fed. Sec. L. Serv. ¶ 75,195, p. 75,387 (1941); Hearings before the House Committee on Interstate and Foreign Commerce, supra, at 888, 896-897; Institutional Investor Study Report of the Securities and Exchange Commission, H. R. Doc. No. 92-64, pt. 3, p. 996 (1971) ([T]he Securities Act does not apply . . .); Hearings before the Subcommittee on Welfare and Pension Funds of the Senate Committee on Labor and Public Welfare on Welfare and Pension Plans Investigation, 84th Cong., 1st Sess., pt. 3, pp. 943-946 (1955). Congress acted on this understanding when it proceeded to develop the legislation that became ERISA. See, e. g., Interim Report of Activities of the Private Welfare and Pension Plan Study, 1971, S. Rep. No. 92-634, p. 96 (1972) (Pension and profit-sharing plans are exempt from coverage under the Securities Act of 1933 . . . unless the plan is a voluntary contributory pension plan and invests in the securities of the employer company an amount greater than that paid into the plan by the employer) (emphasis added). As far as we are aware, at no time before this case arose did the SEC intimate that the antifraud provisions of the Securities Acts nevertheless applied to noncontributory pension plans.