Document: 472 U.S. 181 105 S.Ct. 2557 86 L.Ed.2d 130 Christopher L. LOWE, et al., Petitionersv.SECURITIES AND EXCHANGE COMMISSION No. 83-1911. Argued Jan. 7, 1985. Decided June 10, Syllabus Petitioner Lowe is the president and principal shareholder of a corporation (also petitioner) that was registered as an investment adviser under Investment Advisers Act 1940 (Act). Because convicted various offenses involving investments, Securities Exchange Commission (SEC), after hearing, ordered corporation's registration be revoked not associate with any adviser. Thereafter, SEC brought action in Federal District Court, alleging Lowe, corporation, two other unregistered corporations petitioners) were violating Act, SEC's order, by publishing, for paid subscribers, purportedly semimonthly newsletters containing advice commentary. After determining petitioners' publications protected First Amendment, denying most part requested injunctive relief, held must construed to allow publisher who willing comply Act's reporting disclosure requirements register limited purpose publishing such material engage publishing. The Court Appeals reversed, holding does distinguish between person-to-person impersonal given publications, petitioners engaged business "investment advisers" within meaning exclusion § 202(a)(11)(D) from definition covered "the bona fide newspaper, news magazine, or financial publication general regular circulation" did apply petitioners. Rejecting constitutional claim, court further Lowe's history criminal conduct justified characterization "as potentially deceptive commercial speech." Held: Petitioners' fall statutory none adviser" defined therefore neither status nor order against provides justification restraining future their newsletters. Pp. 190-211. (a) legislative plainly demonstrates Congress primarily interested regulating rendering personalized advice, including activities are normal incident thereto. On hand, Congress, sensitive Amendment concerns, wanted make clear it seek regulate press through licensing nonpersonalized activities. 203-204. (b) content completely disinterested because they offered public on schedule, described plain language 202(a)(11)(D)'s exclusion. mere fact contains comment about specific securities give character identifies professional Thus, do fit central offer individualized attuned portfolio client's particular needs. contrary, circulate sale free, open market. unsavory prevent being "bona fide" In light history, term translates best "genuine"; meet this definition. Moreover, "of circulation." Although have been published basis advertised thus "regular" sense consistent circulation, important 204-209. 725 F.2d 892 (CA2 1984), reversed. Michael E. Schoeman, New York City, Sol. Gen. Rex Lee, Washington, D.C., respondent. Justice STEVENS delivered opinion Court. 1 question whether may permanently enjoined commentary advisers 203(c) (Act), 54 Stat. 850, 15 U.S.C. 80b-3(c). 2 Management Corporation. From 1974 until 1981, Act.1 During period misappropriating funds client, engaging without filing application York's Department Law, tampering evidence cover up fraud stealing bank.2 Consequently, May 11, (Commission), full hearing before Administrative Law Judge, entered revoking Corporation, ordering thereafter 3 fashioning its remedy, took into account "are now solely advisory publications." noted unless revoked, would "free all aspects business" even afforded them "opportunities dishonesty self-dealing."3 4 A little over year later, commenced complaint United States Eastern York, corporations,4 Commission's order. charge three (petitioners) soliciting subscriptions stock-chart service. alleged that, those advising others advisability investing in, purchasing, selling . issuing reports concerning securities."5 exempt use mails connection allegedly violated 203(a) Act. prayed permanent injunction distribution publications; enforcing compliance 1981; relief.6 5 involved litigation, only one need described. typical issue Financial Letter contained bullion markets, reviews market indicators strategies, recommendations buying, selling, stocks bullion. newsletter "telephone hotline" which subscribers could call get current information. number ranged 3,000 19,000. It publication, but eight issues months entry 1981 order.7 6 Subscribers testified at trial criticized lack regularity publication,8 no adverse quality offered. There convictions related publications;9 had trading activity subject contention information services false materially misleading.10 7 For part, denied relief requested. 556 F.Supp. 1359, 1371 (EDNY 1983). enjoin giving telephone, individual letter, person, refused continuing require disgorge earnings publications.11 acknowledged face statute differentiate persons whose "publication suggestions, analyses," rendered concluded considerations suggested distinction.12 existing publishing.13 8 splintered panel Second Circuit (1984). majority first printed publications.14 Rather, view, key 202(a)(11)(D), 80b-2(a)(11)(D), applied Relying decision v. Wall Street Transcript Corp., 422 (CA2), cert. denied, 398 958, 90 2170, 26 542 (1970), inapplicable.15 9 Next, rejected reasoning case involves "precisely kind regulation permissible Amendment."16 while acting his speech."17 reasoned ruling "may sell views purchase, sale, certain different saying disbarred lawyer legal advice."18 Finally, prohibition clients securities.19 apparently assumed continue if modified exclude securities.20 10 One judge concurred separately, although acknowledging agreement court's opinion.21 dissenting agreed hold himself out fraudulent authorized invalid prior restraint constitutionally speech. To avoid question, he adopted Court's construction Act.22 11 * We granted certiorari consider prohibited Amendment. 469 816, 81, 83 29 (1984).23 Petitioners contend strikes very foundation freedom subjecting license censorship, see, e.g., Lovell City Griffin, 303 444, 451, 58 666, 668-69, 82 L.Ed. 949 (1938). Brief 15-19. response argues abuses industry amply Congress' advisers, activities, and, regulation, prohibit unqualified business. Respondent 10; cf. Konigsberg State Bar California, 366 36, 50-51, 81 997, 1006-1007, (1961). reply, acknowledge communication setting subjected impermissible forum, Ohralik Ohio Assn., 436 447, 455, 98 1912, 1918, 56 444 (1978), regulated class—investment so broadly encompass Reply 1-4. 12 evaluate parties' arguments, obviously necessary understand, precisely possible, extent intended reasons motivated authorize regulation. view we should "not decide there some ground upon dispose case,"24 both believed decided grounds, careful study either eliminate, narrowly limit, confront. begin review background focus describing profession regulate. II 13 As observed Capital Gains Research Bureau, Inc., "Investment last series acts designed eliminate industry, found contributed stock crash 1929 depression 1930's."25 genesis Public Utility Holding Company 1935, "authorized directed" "to functions trusts companies report results January 4, 1937."26 Pursuant instruction, transmitted counsel, management, supervisory, services.27 Report focused "some more problems these counsel organizations";28 significantly, stated "was person organization furnishing analysis, opinion, distributed list furnish client respect securities."29 14 traced growth noting emerge World War I.30 1920's "a distinct class themselves service"; rapid began 1929, markedly increased mid-1930's demands public, required supervision security investments experience during years."31 Regarding counselors, "[s]ome representatives firms urged primary function counselors 'to render clients, personal basis, competent, unbiased, continuous regarding sound management investments.' "32 Nevertheless, counselor conceded: 16 "[Y]ou gradation individuals professed tipsters pretense anything else, way scale type individual, who, you say, desires impartial scientific trying plan economic situation accomplishing results, making provision old age, education, forth. However, can readily see significant problem, far concerned, possibly vital one, is, shall fringes. ."33 17 Representatives viewed slightly differently, concluding serve "individuals institutions substantial program entire needs."34 Turning fell categories: "(a) problem distinguishing 'tipster' organizations; operation institutions."35 18 work "culminated preparation introduction Senator Wagner bill which, changes, became 1940."36 Wagner's bill, S. 3580, Titles; first, companies, adviser,"37 second, not. Senate Subcommittee lengthy hearings numerous statements adviserswere received.38 witness investment-counsel businesses, explained: 19 "It personal-service depends success close confidential relationship firm client. requires frequent contact nature us our clients. 20 21 "We establish each trust confidence i time forces slowly. Business cycles years plans similarly long-range. No long remain real benefit except long-term associations. 22 ". Judgment circumstances soundness objectives risks assume. root branch decisions recommend changes holdings. If profession, it, judgment supporting information, bought almost bookstore. 23 "Furthermore, unsophisticated matters. They resourceful men women means critical examination performance. disapprove cancel contracts us, eliminates source income. 24 25 quite clearly 'hit run' tipsters, deal arms' length advertising columns newspapers mails; fact, regard major defeat unable associates dependents. publish statistical service compendium observations recommendations. hackneyed phrase, 'tailor-made.' "39 David Schenker, Chief Counsel Trust Study, summarized proposed legislation: "If crime, cannot perpetrate fraud," Hearings 996. Schenker provided report40 prepared Illinois Legislative Council. Ibid. Referring possible Illinois, part: 27 "Regulatory statutes appear provisions remuneration valuable consideration, thought impracticable gratuitous services. Newspapers journals generally also seem excluded explicitly statutes, exemption based principles. 28 "A defining law arises existence publications. Insofar specialized might regulatory measure adopted. arises, however, same circular actually counseling feasible. 30 "These sent rather than present several difficulties generally. place, large agencies facts interpretations well known, administrative staff enforce detailed registration. Secondly, supplied accepted rights due process perhaps types advertisements occasionally exaggerate value factual supplied. That guarantee liberty applicable types, newspapers, has indicated Supreme [citing [58 949] (1938) ]. 31 32 "To formulating reasonable practicable regulations must, accordingly, added inherent attempted functioning circulars volumes. absolute right, feasible, assuming sort desirable. Such probably legally take form prohibiting Regulation conform requirements, confined punishing, civil penalties, attempt frauds declared contrary law. 33 34 desirable specifically publishers generalized along This done carefully 'investment counselor' 'any engages securities, organizations relating purchase securities.' " 41 35 meetings attended investment-adviser firms, voluntary association Commission, revised 4108, reported Committee Banking Currency. accompanying Currency wrote: 36 "Not misrepresentations unscrupulous touts, safeguarded stigma individuals. Virtually limitations restrictions exist honesty integrity solicit controlled, managed, supervised. Persons courts perpetration able assume role advisers. 37 38 "Title recognizes consequence, factor considered enforcement bill." 42 39 4108 introduced House H.R. 10065.43 additional hearings,44 Interstate Foreign Commerce wrote bill: 40 "The essential Title protect touts safeguard honest practices unlawful. title especial care taken drafting clients."45 (Emphasis added.) included when passed, 848-849, relevant respects identical today.46 III basic reads follows: 'Investment adviser' compensation, others, directly writings, compensation business, promulgates analyses securities. ."47 43 "for contain "analyses securities." face, applies definition, absolute. excludes categories adviser, lists registered, authorizes "such person" designate rule order.48 44 exclusions magazine circulation."49 text defines precise scope exclusion, points tolerably clear. intend servicing 45 undoubtedly aware cases enactment Near Minnesota ex rel. Olson, 283 697, 51 625, 75 1357 (1931), established "liberty press, speech, clause Fourteenth invasion state action." Id., 707, S.Ct., 627-628. Near, emphatically "chief purpose" previous restraints publication," id., 713, nuisance unconstitutional publication. 46 Almost seven (1938), expressly hearings. striking down ordinance literature city permit, 47 think face. Whatever motive induced adoption, censorship. struggle directed power licensor. John Milton assault 'Appeal Liberty Unlicensed Printing.' And initially right 'without what formerly one.' While regarded exhausting guaranty liberty, prevention leading adoption provision. 48 periodicals. necessarily embraces pamphlets leaflets. These indeed historic weapons defense Thomas Paine own abundantly attest. connotation comprehends every affords vehicle opinion. What recent occasion say importance protecting infringement repeated. Minnesota. ." 451-452, 668-669 (emphasis original) (footnote omitted). 49 Lovell, particularly since cited supports broad reading publishers.50 itself uses extremely encompasses conditions met. fide," Neither defined, qualifications "hit run tipsters" "touts" genuine publishers. Presumably analysis opposed promotional disseminated "tout." "general regular" circulation include "people send bulletins buying stocks," 10065, 87, tipsters."51 disinterested, 50 relied 958 requirement. Transcript, "phrase 'bona fide' deviate customary newspaper likelihood wrongdoing occurred." fits depend purely formal 'indicia newspaper' exhibits size subscription list." F.2d, 1377. expressed concern "might choose [information clients] guise traditional format." 1378. citing interpreted "only where, content, material, readership factors, distributing advice."52 formulations recast capturing thrust mentioning apparent intent keep free infirmities.53 investment-advisory profession—those provide written verbal communication.54 market—a forum typically anyone express views. 52 read literally, seems describe "publishers publication." modifier arguably disqualify words fide." Notably, publisher; hence phrase definition: communications masquerading clothing magazines, suggestion misleading tout interest. Further, circulation."55 market: indication timed activity, events affecting having ability affect industry.56 dangers fraud, deception, overreaching replicated sold market.57 chart past transactions trends, conditions, doubt communications,58 matter concerned drafted. audience reveal limits entirely develop fiduciary, relationships discussed characteristic adviser-client relationships, believe are, least presumptively, Act.59 53 conclude follows status, barring associating address decide. 55 ordered. POWELL case. 57 WHITE, whom THE CHIEF JUSTICE REHNQUIST join, concurring result. invoke remedies §§ 80b-1 80b-21, tailored needs holds petitioner (hereafter him follow, I disagree improvident statute. my sanction concur judgment, inconsistent 59 A. 60 quarrel principle adjudication avoided where fairly negating Congress. Due Branch exercise strike enactments sparingly. reason, "[w]hen validity act drawn serious constitutionality raised, cardinal will ascertain avoided." Crowell Benson, 285 22, 62, 285, 296-297, 76 598 (1932). 61 But duty questions unlimited: condition "fairly possible." Taft warned, "amendment substituted construction, save conflict limitation." Yu Cong Eng Trinidad, 271 500, 518, 619, 623, 70 1059 (1926). Brandeis, Ashwander TVA, 297 288, 341-356, 466, 480-87, 80 688 (1936), frequently definitive statement "constitutional avoidance," cautioned: not, unconstitutional, engraft exception resolve doubt." supra, 76-77, 302 (dissenting opinion). Adoption ruling, Brandeis stated, appropriate "where equally susceptible constructions, valid unconstitutional." U.S., 76, 302. 62 flow policy avoidance itself: deference legislature's assigned system. See Rescue Army Municipal 331 549, 571, 67 1409, 1421, 91 1666 (1947). task weighing relative merits alternative reaching belongs legislature. lightly path chosen one; redraft schemes ways anticipated difficulties. latter course times drastic imposition authority former. When choice facing finding adopting avoids difficulty deviates frustrates applications, preferable. 63 With guidelines mind, turn consideration proper hand. B 64 1940, 847, amended, seq., doing (with exceptions) SEC. 80b-3(a). sets forth substantive grounds denial revocation adviser's 80b-3(e). unlawful suspended, practice trade; so, 80b-17, injunction, 80b-9(e). addition penalizing registering, Most notable among prohibitions 80b-5, recordkeeping 80b-4, "fraudulent, deceptive, manipulative" conduct, 80b-6. 65 petitioner's bring adviser," subjects (and, presumably, penalties) persists raised faced. 66 starting point, then, securities; (D) 80b-2(a)(11). 68 direct them, undeniably "engages securities" "issues falls outside qualifies publications" carried offering subscribers. 69 hardly crystal how supposed mesh, has, inception, petitioner. At conclusion operation, approximately 750 registering "165 consisted uniform Seventh Annual Fiscal Year Ended 30, 1941, p. (1942).1 Since time, appears consistently routinely advice. See, 375 180, 84 275, 237 (1963); re Todd, S.E.C. (1960); Lovitch, 1940—Who Is Adviser"?, Kan.L.Rev. (1975).2 longstanding position purposes reflects "applicable readership, advice." Applicability Certain Publications, Release IA-563, Fed.Reg. 2953 (1977), codified CFR 276 (1984); Suter, 732 1294 (CA7 1984); (1970). An agency's legislation charged entitled weight, contemporaneous Skidmore Swift & Co., 323 134, 140, 161, 164, 89 124 (1944). considered, decisive. Clark, 445 23, 33, n. 100 895, 903, 171 (1980). therefore, guides determine available category thereby avoided. 71 Any expands beyond bounds set SEC, poses great expanded just vehicles difficult imagine workable sweep personally Indeed, adopts.3 expansive renders superfluous passages adviser": "either writings Had why spoken disjunctive analyses, reports. Nor adjective look exception.4 offers conflicts fundamental axiom interpretation effect language. Connecticut Dept. Income Maintenance Heckler, 471 524, 530, 15, 2210, 2214, 85 577 (1985); Reiter Sonotone 442 330, 339, 99 2326, 2331, 931 (1979). 72 Nothing discussion issue, legislation, Study architects explained used "encompasses ranging people stratum population extreme, running tipster organizations, sending letters." 3580 Currency, 76th Cong., 3d Sess., (1940) Hearings). later hearings, James White, representative Boston spokesmen cooperated stages final form: includes stocks, tips cheap goes undertake constant advise tax matters essentially investments."5 10065 Commerce, 87 (1940). Later testimony, White Representative Boren furnished excepted 90-91.6 Reports main silent operating governed sine qua non statute: states "recognizes clients." S.Rep. 1775, added).7 73 subsequent testifies belief enacted counseling. 1960, substantially penalties manipulative Pub.L. 86-750, 74 885. "[t]hose range brokers incidental houses sheets others." 1760, 86th 2d (1960), U.S.Code Cong. Admin.News pp. 3502, 3503 added). 1970, again 91-547, 1430 (1970); again, "regulates receive 91-184, (1969), 4897, 4939 runs counter statute's language, preventing legitimate applications publishers—specifically, "scalping," whereby associated "purchas[es] shares shortly recommending then immediately sell[s] profit rise price following recommendation." 181, 277, (1963). issued 1963 emphasized dangerous "advisory sizable circulation"—that publication—whose recommendation "could short-term stock's price." Special Markets H.R.Doc. 95, 88th 1st pt. 1, 372 scalping industry. 371-373. antifraud invoked scalping, frank recommendations." 197, 285-86. like provisions, effectively overrules manipulation. disclose Zauderer Office Disciplinary Counsel, 626, 651, 2265, 2282, 652 Village Schaumburg Citizens Better Environment, 620, 637-638, 826, 836-37, (1980); Schneider State, 308 147, 146, 152, 155 (1939).8 Accordingly, zeal narrow presented leads adopt wholly unnecessarily, prevents Act—a result odds construing exemptions effectuate remedial purposes. Tcherepnin Knight, 389 332, 336, 88 548, 553, 564 (1967).9 ironic policies name avoidance. closely realize thinly disguised conviction hand discusses (1931). decisions, forbade forms enact implication violate principles Near; know law, ante, 205, 50, concludes 77 begs question. called Lovell. purporting bases assumption already knew answer enacted. attributes clairvoyance Solicitor General lack—that predict holdings advance declining reach them. amounts preference implicitly deciding explaining reasoning, consequence disruptive framework presented, underlying ill-served. statute, advisor" petitioner, Cardozo: 78 "[A]voidance pressed point disingenuous evasion. Here intention revealed too distinctly permit ignore misgivings power. faced answered." George Moore Ice Cream Co. Rose, 289 373, 379, 622, 1265 (1933). 79 Petitioner, seeks terms permits Government collision government pursue vocation speech guaranteed determined ago "[i]t citizen follow lawful calling, choose, arbitrary deprivation permitted failure imposed protection society." Dent West Virginia, 129 114, 121-122, 231, 233, 623 (1889). Regulations matter, "have rational applicant's fitness capacity practice" profession. Schware Board Examiners, 353 232, 239, 752, 756, 796 (1957). professions lost whenever entails Giboney Empire Storage 336 490, 502, 684, 690-691, 93 834 (1949): "it never deemed abridgment illegal merely initiated, evidenced, spoken, written, printed." Perhaps obvious example "speaking profession" governmental lawyer's devoted communicative isolation, Amendment's protection, doubted "[a] high standards qualification, good moral proficiency admits applicant bar. 756. rationale Frankfurter: "One inhale self-adulatory bombast after-dinner speeches affirm interests man comprised guarantees 'life, property' keeping lawyers. fair responsibility society stands 'as shield,' quote Devlin, J., ward off wrong. responsibilities exacted qualities truth-speaking, honor, granite discretion, strictest observance fiduciary responsibility, have, throughout centuries, compendiously 'moral character.' 247, 760-761 (concurring Government's support legitimacy conducted client-adviser relationships. Clients life safekeeping accumulation property. Bad stock-market manipulations bilk adviser; worse, lead ruinous losses investors, insists, lawyers, evince responsibility. restrict vocations extended per se press. Collins, 516, 315, 430 (1945); (1938); (1939); (1931); Cantwell Connecticut, 310 296, 900, 1213 (1940); Jamison Texas, 318 413, 669, 869 (1943). longer press; survive level scrutiny demanded submits location effects otherwise expression) becomes left case, argues, advisers—including petitioner—are fiduciaries limit ensure suitable fulfill accept sufficient objection. restrains ourselves perform reviewing conformity Constitution. province judicial department is." Marbury Madison, Cranch 137, 177, (1803). congressional come presumption favor validity, Rostker Goldberg, 453 57, 64, 101 2646, 2651, 478 (1981), decisive issue. Trop Dulles, 356 86, 94-104, 590, 594-600, 630 (1958) (plurality Warren, C.J.); Buckley Valeo, 424 14-24, 96 612, 632, 637, 659 (1976) (per curiam). Surely said, example, declare editorial writers readers scheme "unqualified" forbidden publish, powerless find operates conduct. Jackson wrestled 544-548, 329-331. His instructive: "[A] rough distinction always exists, think, illustrated explained. forbid vocation, stop unlicensed labor, hearers organize Likewise, pursuit medicine occupation license, crime publicly privately speak urging reject school medical thought. So makes livelihood memberships unions. salaried labor leader, meeting workmen, telling sees unite join union." 544-545, 329-330. "associat[ed] whole official control." 547, 330. "in proven one," concluded, stand. ideas help locate leaves begin. takes affairs purports behalf properly Just acceptance regulable transaction contract, professional's enacts limiting said limitation scrutiny.10 Where nexus exist, speaker purport exercising acquainted, ceases impact speech; speaking such, command "Congress abridging press."11 92 providing speech—it attack state-imposed medicine. searching recognition end inquiry. Not impermissible. contends "expression audience," Central Hudson Gas Electric Corp. Service Comm'n 447 557, 561, 2343, 2348-49, 341 (1980), reduced "commercial (1985). Under doctrine, interest upheld. 638, ----. suggests, restriction, advances goal 94 echoing dissent below, expression propose audience. Virginia Pharmacy Consumer Council, 425 748, 762, 1817, 1825-1826, 346 (1976). concedes relates subjects, reason stripped fully 531, 323. upheld show serving compelling interest." Consolidated Edison 541, 319 95 resolution ban extends legitimate, fraudulent, manipulative. flat presumptively sustained extraordinary circumstances. Times States, 403 2140, 822 (1971); understand argue justify remotely speech" here certainly legitimate: wants investors falling hands scoundrels swindlers. chosen, extreme. Based misconduct, fears misleading; regardless objectionable. Our proposition possibility fraudulent. Zauderer, supra; R.M.J., 455 191, 203, 102 929, 937, (1982); Bates Arizona, 433 350, 97 2691, 810 (1977). here. plausibly maintained indicates unreliable inherently deceptive,12 am convinced less outright suppression (for provisions) achieve asserted investors. altogether, blunt instrument observation well: "Frauds denounced punished efficient convenient bestowal police authorities impart empower [government] abridge press." emphasize narrowness infirmity foreclose of, (registered unregistered) suggest (including revoked) holding, unlike treating purposes, reversal Appeals. [1981 Transfer Binder] CCH Fed.Sec.L.Rep. ¶ 82,873, 84,321. 84,321-84,323. punish respondents but, egregious harm hands. evaluating respondents' still And, Judge noted, afford 'opportunities self-dealing.' "Under circumstances, registrant's registration, bar adviser." 84,324. Publishing Corporation Stock Chart Service, Inc. App. 18. 23-26. 32, 78-85. Advisory 278 four March 1982. analyzed commented lower-priced stocks. advised periodic letters updated telephone hotline. 1361 weekly charts listed American Exchanges, 1,200 actively traded over-the-counter gold silver prices indicators. Unlike published. Ibid.; 32. rate $325 $900 year. 38, 42, 46, 58. 1977 1978 gave 1982, counts theft deception issuance worthless checks. 74-76. F.Supp., 1361-1362. claim promulgated rules requiring disclosure. 1371. 1365. 1369. "When sanctions complies record, allowed publish." 896-897. 898. 900. additionally violates equal newsletters, regulation." 5. 901. 902. "Finally, note entail. stating interest, otherwise, war, trend rates, next election Anti-Dumping smokestack foreign competition likely. He circulation. somebody else's employee, editor, writer. purchasing appended footnote: leave another day dealing groups (e.g., air transport, beverages-brewers, mobile homes) barred case." 902, 7. explain unwillingness grant modification omitting 902-903. 903. submission challenge Section 203(e) 80b-3(e), revoke finds, notice opportunity committed crimes. 203(f), 80b-3(f), operate "hot line" desiring Escambia County, Florida McMillan, 466 48, 51, 104 1577, 1579, (1984) curiam); Atkins Parker, 115, 123, 2520, 2526, 347, 483, (1936) (Brandeis, concurring). 186, 280, (1963) 837. Trusts Companies, Management, Supervisory, Services, 477, Sess. (1939) (hereinafter Report). III. 1. 3. detailing geographic distribution, forms, sizes affiliations firms. "[a]ll restricted accounts 11. Of surveyed, 5% manuals periodicals; 80% investment-company posited periodicals attributable research uncommon businesses." 12. clients: powers company discretionary advisory. Discretionary imply vesting control funds, ultimate determination portfolio. contrast, rests 13. Approximately one-third surveyed powers, ibid.; rarely "custody clients," 15. 23. 25. pointed difference companies: [T]he ordinary gives holder diversification, small investor obtain capital. management. cognizance—the cognizance total money him, distinguished whatever. "Q. Now, true conceive counselor, individual? "A. Yes. element manages basis? right. 'Impersonal' try common denominator, envision stockholders' be, cross-section peculiar, particular, hopes accomplish, purpose. Might add least, Mr. Dunn yesterday, managers repository individual's doesn't peculiarities needs, complete program." 26-27 (testimony N. Scudder, Stevens Clark) 27. "felt function—furnishing investments—unless removed." 28. Report, near conclusion, summarized: unanimous salutary purpose, cope elemental industry—the 'fringe' incompetent unethical represent counselors. membership, voluntarily submitting policing." 34. 189, 281. (A) bank; (B) lawyer, accountant, engineer, teacher performance profession; (C) newsmagazine circulation; persons, paragraph, order." (Senate noteworthy draft 43, infra. Douglas T. Johnston, Vice President Association America, spite exclusions, covers methods operation. Moody's, Poor's, forth; Babson's, Standard Statistics, send, nominal price, sure go up; banking brokerage maintain departments charges rendered; finally recognized counsel. "Just above with, by, know. "I mentioned exceptions advisers'; Probably aggregate lawyers combined. want strictly know, courses curriculum, passing examinations pass test investment." 711-712. 713-716 Charles M. O'Hearn) added); 719 ("The confidence. counselor's sole manner needs") (statement Alexander Standish); 724 (the "function clients—on personal, basis—competent, steady growth") Dwight C. President, America); ("Investment sprung handling relationship") Rudolf P. Berle, America). submitted April 26, weeks quoted post, 219. Contrary WHITE's suggestion, nothing indicate report's subscribers" "clients." undisputed broadened report. 37, 1007-1009 added) (footnotes 21-22 definitions (investment companies) advisers). read, 45. Whereas "business financial" supra. testimony investment-counseling emphasized: committee it. reasons: First, original confusion trusts. felt commodity incorporated separate acts. relationship. "Following subcommittee, conferences objections satisfactorily adjusted. America unqualifiedly endorses representing N.Y.). H.R.Rep. 2639, counsel," counselor" interchangeably history. understood share demonstrated Schenker. initial "we learned 394 counselors." 48. page advisers." 49. 221-223, correctly observes "adviser" qualify "continuous funds. 80b-2(a)(13) WHITE assume, customers. repeated "client" 54, infra, contradicts nonfraudulent regularly scheduled periodical According "specifically Act." Post, 220 original). incorrect. asked I, companies. response, wrong definition; II, answered Titles. colloquy "Mr. Boren. correctly, exempted. "Now, exempted puts monthly that? White. Will enough reading? Well, 154. 12, bill. numbers Healy. second company, II. see. [reading bill] Then separation sections clarifies me, Chairman. thank you. Cole. all, Thank you." 90-91 item 1775. 221. context followed 1775 accompanied version passage. unambiguously: 80b-2(a)(11)(F), 80b-3(b), 80b-6a. 80b-2(a)(11)(D). elected representatives, citizens, law." Cannon University Chicago, 441 677, 696-697, 1946, 1957-58, 560 "[i]n areas intrude guarantees, sworn Constitution, err side liberties implicates liberties." Regan Time, 468 641, 3262, 3292, 487 (STEVENS, part). "tipsters" supra—persons "who up." imagine" "that 216. wrote, episodic "tout" issues, up" purchasers, 563, 2953, (1977) (codified (1984)). reformulation drafted 1977—37 passage Act—and Sloan, 103, 117, 1702, 1711, 148 (1978). attaches significance 165 215. advantageous demonstrate so. represents dramatic departure objective criteria itself. publication" requirement 215-216, instead, emphasizes breadth 216-219, admittedly together place drew line; words, word repeatedly refers "clients," "subscribers." 80b-1(1), 80b-3(b)(1), 80b-3(b)(2), 80b-3(b)(3), 80b-3(c)(1)(E), 80b-6(1), 80b-6(2), 80b-6(3). relies 219-220. stocks." Tipsters presumably satisfy agree equated distributors "tout sheets," 217, Additionally, doubtful "tipsheet" sheet" i.e., genuine, benefits Without "supposed mesh" 215, requirement, narrow, content-based, preserve 224. course, circulation—perhaps columnist Cf. Zweig Hearst 594 1261 (CA9 1979). incorrect mail-fraud many violations, recently using Rule 10b-5 publisher. Blavin, 557 1304 (ED Mich.1983), aff'd, 760 706 (CA6 1985). subscribers; delegated decisionmaking handle subscribers' portfolios accounts; individualized, investment-related interactions squarely product loudspeaker Bose Consumers Union 485, 513, 1949, 1966, 502 (1984), marketable protected. suggests provide, form, developments, tailoring advising. 34, 44. "practice" here; thus, concern. significance, proves advantage register. matter-of-fact announcement establishes something else: beginning, 1963, coverage (or individuals) fee desirability groups: Those clients' portfolios." Doc. 146 sufficiently disinterested. Both suggestions implausible. evident adopts publication: intentions enough. "tipster" promised intervals, he, truly run" practitioner—one "engag[e] others. 1A-563, unfounded: nowhere addition, suggesting determines exception, "objective" criteria, eschew content-based 207-208, 53. another, 207-209, 55. hard prefers SEC's, much simpler practice: device reading, force compare self-defeating, disclosures Circuit's explication "Section 202(a)(11) examples entities special, unregulated, standards. list, occurred. 1371, 1377, diversified discussions topics. aim manipulation Viewed target measures: treat impose liability presents diverse likely abusive practices. logical classification Individual publication's covered. 67, 94, 222 (1975) (noting staff's columnists Schenker's made inclusion record raise problems. neglects White's postdated amendment form. drafters changed inception hearings: "send time" "regularity" exception. loose belies argument: himself, best, sends "from time." timeliness qualify. exchange loss contention. colloquy, reprinted unambiguously reading. dispensed pointing premise incorrect: correct publishers, Boren's remark me"—indicates point. opposite hodgepodge materials irrelevant reflect approaches framers notes impetus attention counsel"—that maintaining (1939). imputing mistake, counsel." 208(c) counsel" consists supervisory services" 202(a)(13) client." clearer: Report's reliance self-serving misplaced. Act—far import reputable federal (unlike "touts unanimously reviled). Second, fear dealt insertion 210(c), "[n]o subchapter require, identity, insofar proceeding investigation object subchapter." 80b-10(c). references "care [that] 19, refer confidentiality restricting Reports' 210(c) referring services"—that client"—makes errs relying notion 197-199. bear weight places buried document placed hearings—contains mention potential Still definite rejection recommended solution counselors" "carefully defin[e] econonic Hearings, 1009. approach, "generally [SEC] organizations." publications—it Similarly, concerns. inhibit speaking, settled "[t]he ends evil outlawed purposes." Oklahoma Press Walling, 327 193, 494, 497-98, 614 (1946). Branzburg Hayes, 408 665, 626 (1972), produce subpoena. brushes aside remedies—specifically, 10b-5—may available. nondisclosure duty, Chiarella 222, 1108, 348 doubt. Mich. SD 1983), 1985), defendant's [an he] figures printing them." 1314. (and Blavin) supply requisite duty. hypothesizes constitute mail aware, certainty remedy remains, persuasive supplemented aid uncovering scalping. By taking tools deceit. beliefs political violation. 720, 632-33, (1931) ("Characterizing nuisance, immunity restraint"). defamatory unprotected speech—could matter. Here, nondeceptive (that protected)

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