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Mr. HARRIS. I am sorry, Mr. Pecora, but I did not catch the first part of your question.

Mr. PECORA. The committee reporter will read it to you. [Which was done.]

Mr. HARRIS. No, sir; I would not say that.

Mr. PECORA. Well, then, let me refer you to the eighth paragraph of article 10 of the constitution, providing for the creation of a law committee, and defining its duties and powers, which paragraph says, in part, regarding the law committee:

It shall act in an advisory capacity to the president, when requested by him, and shall, in association with the president, represent the exchange in all matters affecting its general interests.

Doesn't that give the committee very, very broad powers, a very broad grant of power, to function for the exchange in all matters that might be deemed to affect the interests of the exchange?

Mr. HARRIS. Yes. But I believe that paragraph starts by saying it shall act in an advisory capacity.

Mr. PECORA. It starts out that way and then it says: and shall, in association with the President, represent the exchange in all matters affecting its general interests.

Mr. HARRIS. Well, that is true.

Mr. PECORA. Now, under that grant of authority, hasn't the law committee virtually assumed the functions covered by the grant of power to the governing committee?

Mr. HARRIS. I do not think so, because in section 3 of the constitution, at page 3, it says:

The governing committee shall determine the manner and form by which its proceedings shall be conducted; it shall appoint and may dissolve all standing and other committees except the nominating committee, define, alter, and regulate their jurisdiction as stated in this instrument, and have original and supervisory jurisdiction over any and all subjects and matters referred to said committees, and may direct and control their actions or proceedings at any stage thereof.

Mr. PECORA. Aren't the members of the law committee referred to, as a matter of fact, as being virtually the governing power of the exchange in association with the president, and thus more so than the governing committee?

Mr. HARRIS. I would not say that. Some of the older men, men who have been on the governing board for a long time, are on the law committee. But the exchange is governed by the governing committee, as a whole.

Mr. PECORA. Has the matter of the action to be taken by the exchange with respect to the bill now pending in Congress to regulate securities exchanges throughout the country been taken before the governing committee of the exchange?

Mr. HARRIS. No, sir; it has not.
Mr. PECORA. You say it has not?
Mr. HARRIS. No, sir.

Mr. PECORA. Has it been taken before the law committee of the exchange?

Mr. HARRIS. I don't know. I am not a member of the law committee.

Mr. PECORA. You haven't heard one way or other as to whether it has?

Mr. HARRIS. I imagine it would be discussed there. Mr. PECORA. The governing committee has not been called upon to consider the position or attitude of the New York Stock Exchange, that is, the position or attitude it should take with respect to the so-called Fletcher-Rayburn bill that is now awaiting action by Congress?

Mr. HARRIS. Yes, sir. There was a meeting of the governing committee called, in which the matter was brought up, and the president was to make an address and suggestions, and he asked for the approval of the governing committee.

Mr. PECORA. Mr. Committee Reporter, will you read back there and give me the answer that Mr. Harris first made in that respect

Mr. HARRIS. There was one place there where I realize the question was incorrect

Mr. Pecora (interposing). You mean that your answer to one of my questions was incorrect? Vr. HARRIS. Yes, sir; the answer given by me was incorrect.

Mr. PECORA. Well, let me hear the committee reporter read what the incorrect answer was that you made.

(Thereupon the committee reporter read, as follows:) Jír, PECORA. Has the matter of the action to be taken by the exchange with respect to the bill now pending in Congress to regulate securities exchanges throughout the country, been taken before the governing committee of the exchange? Mr. HARRIS. No, sir; it has not. Mr. PECORA. You say it has not? Mr. HARRIS. No, sir. Mr. HARRIS. I should like to correct that answer. Mr. PECORA. What is your answer to that question now? Mr. HARRIS. That it has, and I forgot this special meeting.

Mr. PECORA. You forgot the special meetings of the governing committee at which that subject was brought up? Mr. HARRIS. Yes, sir.

Mr. PECORA. Was not the business transacted at those special meetings of outstanding importance?

Mr. HARRIS. There are a good many meetings, Mr. Pecora. I did forget that particular meeting. I remember distinctly now,

Mr. PECORA. What took place at that meeting, at which that subject was considered?

Mr. HARRIS. The president asked for the approval of the governing committee of the stand he was going to take. Approval was granted. Mr. PECORA. What did he say was the stand he was going to take? Mr. HARRIS. Well, I cannot remember the details of it. Mr. PECORA. What was the substance of it? Mr. HARRIS. It was his suggestion—the suggestion, rather, that he made before the House committee here within 3 or 4 days—with regard to having an authority in charge of exchange matters, the authority to consist of two members appointed by the President, and so forth, as was described at that meeting.

Mr. PECORA. Is that all you can tell us about the substance of what took place at that meeting with respect to that subject?

Mr. HARRIS. The president outlined his plan-
Mr. PECORA. What was the plan that he outlined?

Mr. Harris. He outlined that in lieu of suggestions made, that a committee be appointed, 2 members to be appointed by the President of the United States, 1 member to be appointed by the Federal Reserve, 2 members of the Cabinet, 1 member to be appointed by the New York Stock Exchange, and 1 by the other exchanges throughout the country, they to be an authority to have control of the stock exchanges.

Mr. PECORA. You are stating now the substance of the suggestion that Mr. Whitney made to the governing committee with regard to the kind of legislation that should be asked of the Congress on this subject of regulation of securities exchanges.

Mr. HARRIS. True.

Mr. PECORA. What I am asking you to tell us is what attitude was suggested to the governing committee at that special meeting by Mr. Whitney should be the attitude taken by the stock exchange on the so-called “ Fletcher-Rayburn bill."

Mr. Harris. This attitude we have just been over.
Mr. PECORA. Is that all that was discussed at that meeting?

Mr. HARRIS. Yes. He asked for the approval of that matter, and it was granted.

Mr. PECORA. Did he report to the governing committee, so far as you know, his own views with regard to the Fletcher-Rayburn bill!

Mr. Harris. He reported to the entire membership.

Mr. PECORA. I am talking about this meeting of the governing committee, this special meeting, at which the subject of the attitude to be taken by the stock exchange on this bill was discussed.

Mr. HARRIS. No; not at that time.

Mr. Pecora. Did he at any other time, at any other meeting of the governing committee, enter into any such discussion?

Mr. HARRIS. No; he did not take that up, and I imagine due to the fact that he had already sent a letter to all members.

Mr. PECORA. What was the letter he sent to all the members, to which you refer? Have you a copy of it?

Mr. HARRIS. Yes; I have. Mr. PECORA. Will you produce it, please? (Mr. Harris produced a paper and handed the same to Mr. Pecora.)

The CHAIRMAN. Did Mr. Whitney take the position, before the governing committee, that there was need for some regulation of the stock exchange by some authority, when he recommended this commission that you mentioned?

Mr. HARRIS. He did not say that he thought there was any need of it, but he thought that if regulatory powers were going to be granted to some authority, the suggestion that he made would be a wise one.

Mr. PECORA. I offer for the record the copy of the letter produced by the witness. The CHAIRMAN. Let it be admitted.

(Copy of letter, Feb. 14, 1934, Whitney to stock exchange members, was received in evidence and marked “Committee's Exhibit No. 110", Feb. 26, 1934, and the same will be found at the conclusion of today's proceedings.)

Mr. PECORA. This letter is dated February 14, 1934, and is a printed form addressed to all members, signed by Richard Whitney, president.

Was this special meeting of the governing committee held prior to February 14, 1934

Mr. Harris. I do not remember the date, Mr. Pecora.

Mr. PECORA. At that meeting was this letter produced, or any copy thereof, for the consideration of the governing committee? Mr. HARRIS. It was not.

Mr. PECORA. Did the governing committee at any time pass specifically upon this letter and authorize its distribution?

Mr. HARRIS. No, sir. Mr. PECORA. Has the governing committee at any time taken any formal action with regard to the attitude to be taken by the New York Stock Exchange with respect to this Fletcher-Rayburn bill? Mr. HARRIS. That covers a long period of time. Mr. PECORA. No; it would not cover a longer period of time than that embraced by the time which has elapsed since the bill was introduced, less than 3 weeks ago, as I recall it.

Mr. HARRIS. No, it has not. I thought you meant since the investigation started.

Mr. PECORA. I am confining myself now to the bill. Has the governing committee taken any formal action with regard to determining the attitude of the stock exchange with reference to the FletcherRayburn bill?

Mr. HARRIS. None other than the one I have already told you about.

Mr. PECORA. What was the action it took then, at that special meeting you have referred to?

Mr. HARRIS. It granted its approval to the President. Mr. PECORA. Approval of what? Mr. HARRIS. Of his suggestion. Mr. PECORA. What was the suggestion ? Mr. Harris. The suggestion about an authority, a supreme command. I gave the details of that before. Do you want me to go over it again?

Mr. PECORA. Do you mean the suggestion Mr. Whitney gave expression to at the hearings held recently, I believe last week, before the House committee on this bill? Mr. HARRIS. That is the matter I refer to. Mr. PECORA. Is that the only action taken by the governing committee with respect to the position of the stock exchange with reference to this Fletcher-Rayburn bill?

Mr. HARRIS. Yes, sir. Mr. PECORA. Do you know what has been done by or on behalf of the New York Stock Exchange in lining up opposition to the bill ?

Mr. HARRIS. I know of no attempt on the part of the New York Stock Exchange to line up opposition to the bill.

Mr. PECORA. Do you know of a letter which was addressed by Mr. Whitney to the executive heads of several hundred corporations throughout the country whose securities are listed on the New York Stock Exchange?

Mr. HARRIS. I have seen the letter.

Mr. PECORA. Would you say that that letter was in pursuance of an attempt to line up opposition to the bill?

Mr. HARRIS. I would say that that letter was a statement of fact, as seen in the eyes of the exchange, by companies which have paid moneys to have their stocks listed.

Mr. PECORA. And designed to line up those companies in opposition to the bill?

Mr. HARRIS. I do not think that, Mr. Pecora.
Mr. PECORA. You would not say that?
Mr. Harri. I would say it was a statement-

Mr. PECORA. What was the statement sent out for, if it was not to arouse that opposition to the bill on the part of the executives of these corporations?

Mr. HARRIS. I think it was the duty of the New York Stock Exchange to point out to these various corporations that they might be greatly affected.

Mr. Pecora. The letter itself you have read, have you not?
Mr. HARRIS. Yes, sir.

Mr. Pecora. The letter points out certain alleged defects or shortcomings or weaknesses in the bill, does it not? Mr. HARRIS. It does.

Mr. PECORA. Would you not say that the letter was intended to line up opposition to the bill among the corporations or their executive officers?

Mr. HARRIS. No; I would not put it that way. I think it is merely pointing out facts to those corporations—the duty of the exchange.

Mr. PECORA. It pointed out facts that would prompt them to oppose the enactment of the bill, did it not?

Mr. HARRIS. That is quite likely.

Mr. PECORA. Was that sent out with the approval of the governing committee

Mr. HARRIS. No, sir.

The CHAIRMAN. What are the fees that these corporations have to pay for listing!

Mr. HARRIS. Mr. Chairman, I cannot tell you those offhand.

Mr. REDMOND. They vary, Mr. Chairman. Prior to about 1927 they used to be the equivalent of 1 cent per share, and I think now on new listings it is 1.2 cents per share on original listings, with lower fees in the case of a listing that grows out of a merger, consolidation, change of name, and other similar things, where it is not exactly a new issue being brought on the list. I can get you the exact charges and state them for the record, if you would like to have them.

The CHAIRMAN. I think we ought to have those. How do the fees run when there is an additional listing!

Mr. REDMOND. It depends upon the nature of the listing. If it grows out of a reorganization or consolidation, it may have a lower rate than an original listing.

Mr. PECORA. Mr. Harris, have you a copy of the letter which was addressed by Mr. Whitney to the executive heads of these corporations with respect to the Fletcher-Rayburn bill?

Mr. HARRIS. Yes, sir.

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