Sidebilder
PDF
ePub

INVESTMENT COMPANY AMENDMENTS

ACT OF 1969

HEARINGS

BEFORE THE

COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

NINETY-FIRST CONGRESS

FIRST SESSION

ON

S. 34 and S. 296

BILLS TO AMEND THE INVESTMENT COMPANY ACT OF 1940
AND THE INVESTMENT ADVISERS ACT OF 1940 TO DEFINE
THE EQUITABLE STANDARDS GOVERNING RELATION-
SHIPS BETWEEN INVESTMENT COMPANIES AND THEIR
INVESTMENT ADVISERS AND PRINCIPAL UNDERWRITERS,

AND FOR OTHER PURPOSES

APRIL 15, 17, AND 18, 1969

Printed for the use of the Committee on Banking and Currency

U.S. GOVERNMENT PRINTING OFFICE

28-510

WASHINGTON : 1969

COMMITTEE ON BANKING AND CURRENCY

JOHN SPARKMAN, Alabama, Chairman WILLIAM PROXMIRE, Wisconsin

WALLACE F. BENNETT, Utah HARRISON A. WILLIAMS, JR., New Jersey JOHN G. TOWER, Texas EDMUND S. MUSKIE, Maine

EDWARD W. BROOKE, Massachusetts THOMAS J. MCINTYRE, New Hampshire . CHARLES H. PERCY, Illinois WALTER F. MONDALE, Minnesota

CHARLES E. GOODELL, New York ERNEST F. HOLLINGS, South Carolina ROBERT W. PACKWOOD, Oregon HAROLD E. HUGHES, Iowa ALAN CRANSTON, California

DUDLEY L. O'NEAL, Jr., Staff Director and General Counsel

JOHN R. EVANS, Minority Staff Director
STEPHEN J. PARADISE, Assistant Counsel

(II)

CONTENTS

CHRONOLOGICAL LIST OF WITNESSES

TUESDAY, APRIL 15

Hugh F. Owens, Commissioner, Securities and Exchange Commission,

accompanied by Philip A. Loomis, Jr., General Counsel.

5, 27

Paul W. Eggers, General Counsel, Department of the Treasury, accom-

panied by Dean E. Miller, Deputy Comptroller of the Currency--

41

Davidson Sommers, senior vice president and general counsel, Équitable

Life Assurance Society of the United States; accompanied by Richard J.

Congleton, senior vice president, Prudential Insurance Co. of America;

and Lawrence J. Latto, of Washington, D.C..

45

THURSDAY, APRIL 17

Paul A. Samuelson, economist, Massachusetts Institute of Technology. 53

Reese H. Harris, Jr., executive vice president, Manufacturers Hanover

Trust Co., New York City; accompanied by Leo Herzel, special counsel,

on behalf of the American Bankers Association --

69, 81

Robert L. Augenblick, president, Investment Company Institute---

87

J. Edward Day, John L. Schroeder, and Paul H. Baris, on behalf of Associa-

tion of Mutual Fund Plan Sponsors.---

121, 139

FRIDAY, APRIL 18

Henry C. Wallich, professor of economics, Yale University-

143

Ernest L. Folk III, professor of law, University of Virginia...

152, 160

Abraham L. Pomerantz, attorney, New York, N.Y.

167, 177

Robert M. Loeffler, Sr., vice president, Investors Diversified Securities--- 186, 194

Andrew J. Melton, Jr., first vice president, Investment Bankers Association

of America; accompanied by Gordon L. Calvert, general counsel of the

association; Franklin R. Johnson, a vice president of the Keystone Co.

of Boston

197, 202

Raymond W. Cocchi, chairman, Independent Broker Dealers' Trade

Association; accompanied by James C. Butterfield, treasurer.

208

ALPHABETICAL LIST OF WITNESSES

Augenblick, Robert L., president, Investment Co. Institute.--

87

Baris, Paul H., Association of Mutual Fund Plan Sponsors-

121

Butterfield, James C., treasurer, Independent Broker Dealers' Trade

Association.

208

Calvert Gordon L., general counsel, Investment Bankers Association of

America

197

Cocchi, Raymond W., chairman, Independent Broker Dealers' Trade

Association..

208

Congleton, Richard J., senior vice president, Prudential Insurance Com-

pany of America.

45

Day, J. Edward, Association of Mutual Fund Plan Sponsors.

121, 139

Eggers, Paul W., General Counsel, Department of the Treasury.

41

Folk, Érnest L., III, professor of law, University of Virginia -- 152, 160

(III)

[graphic]

Harris, Reese H., Jr., executive vice president, Manufacturers Hanover Page

Trust Co.----

69, 81

Herzel, Leo, special counsel, American Bankers Association -

69

Johnson, Franklin R., vice president, Keystone Co. of Boston.

197

Latto, Lawrence J., Washington, D.C.

Loeffler, Robert M., Sr., vice president, Investors Diversified Securities. 186, 194

Loomis, Philip A., Jr., General Counsel, Securities and Exchange Com-
mission..

5

Melton, Andrew J., Jr., first vice president, Smith, Barney & Co.--- 197, 202

Miller, Dean E., Deputy Comptroller of the Currency

41

Owens, Hugh F., Commissioner, Securities and Exchange Commission

Pomerantz, Abraham L., attorney, New York, N.Y.

167, 177

Samuelson, Paul A., economist, Massachusetts Institute of Technology -- 53

Schroeder, John L., Association of Mutual Fund Plan Sponsors.

121

Sommers, Davidson, senior vice president and general counsel, Equitable
Life Assurance Society of the United States

44

Wallich, Henry C., professor of economics, Yale University

143

ADDITIONAL STATEMENTS AND DATA

American Bankers Association:

Answers to questions of Senator Wallace F. Bennett..

85

Harris, Reese H., Jr., executive vice president, Manufacturers Hanover

Trust Co., prepared statement-

81

Supplementary statement relating to duties of bank employees.

Analysis of S. 296_

Association of Mutual Fund Plan Sponsors:

Day, J. Edward, prepared statement.--

121, 139

Roach, Cornelius, chairman, letter to Senator William Proxmire--- 131

Association of Stock Exchange Firms, letter to Senator John Sparkman,
from Henry W. Meers, chairman.

417

Charts:

Commissions (percent of gross sales).

95

Trend in total operating expenses and advisory fees as a percent of

assets

93

Committee of University Professors, statement of

427

Congressional Record, excerpts from.--

109

Equitable Life Assurance Society of the United States, statement of

Davidson Sommers, senior vice president and general counsel -

45

Federal Reserve System, letter to Senator John Sparkman, from Wm. McC.

Martin, Jr., regarding S. 34. -

288

Friendly, Judge Henry J., statement of_

418

Hartwell Management Co., Inc., letter to Senator John Sparkman, from

John M. Hartwell, president.

421

Independent Broker Dealers' Trade Association, statement of Raymond W.

Cocchi, chairman --

208

Investment Bankers Association of America:

Calvert, Gordon L., letter to Senator Thomas J. McIntyre.

207

Melton, Andrew J., Jr., first vice president, statement of..

202

Investment Company Institute:

Augenblick, Robert L., president, prepared statement..

87

Charts and tables submitted by --

93

Memorandum relating to sources of unaffiliated directors' statements

referred to during testimony-

109

Revised and updated portions of 1967 testimony-

98

Investors Diversified Securities, statement of Robert M. Loeffler.

194

Memorandum from Investment Company Institute relating to sources of

unaffiliated directors' statements -

109

National Association of Securities Dealers:

Reprint of tables, from manual of.

134

Statement of Richard B. Walbert, president--

425

National League of Insured Savings Associations, letter to Senator John
Sparkman, from William F. McKenna, general counsel -

424
Prudential Insurance Co. of America, statement of Richard J. Congleton,
senior vice president..

45
“Public Policy Implications of Investment Company Growth,” reprint of
excerpts from..

21
S. 296, analysis of -

4

QUALITY CONTROL MARK

Page

31

21

30 27

33

10

360

Securities and Exchange Commission:

Budge, Hamer H., chairman, letters to Senator John Sparkman.
Excerpts from report of, entitled, "Public Policy Implications of In-

vestment Company Growth”. Owens, Hugh F., Commissioner:

Letter to Senator John Sparkman.

Prepared statement...
Release No. 5628, reprint of, relating to certain separate accounts

of insurance companies---
Table showing advisory fee rates and expense ratios of externally

managed mutual funds... Stucky, W. S. (Bill), Representative in Congress from the State of Georgia,

material submitted for the record.-Tables:

Advisory fee rates and expense ratios of externally managed mutual

funds with June 30, 1968, net assets of $100 million and over--
Advisory fee rates of 25 mutual funds.--
Assets and operating earnings of the 25 largest banks, 1968.
Assets and operating earnings of the 25 largest stock life insurance

companies, 1968.-
Comparison of after tax return on investment in savings and loan

shares and face-amount certificates--
Comparison of various savings and investment methods-
Illustration of a 25-year contractual plan for investment.-
Investment performance of 222 mutual funds---
Mutual fund assets and earnings of management companies, 1968.
Mutual fund portfolio activity and investors purchases and redemp-

tions during periods of market decline ---
Payments experienced as of the end of 1961 for 2,000 Investors

Syndicate of America face-amount certificates.--
Treasury, Department of, statement of Paul W. Eggers, General Counsel.
U.S. Savings & Loan League, letter to Senator John Sparkman, from

Stephen Slipher, legislative director.

10 94 105

105

189

97 135

96 106

106

23 41

426

« ForrigeFortsett »