A-62959, JULY 27, 1935, 15 COMP. GEN. 81

A-62959: Jul 27, 1935

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IS AVAILABLE FOR PAYING THE FEES OF REFEREES OR SPECIAL MASTERS TO WHOM THE MATTER WAS REFERRED BY THE COURT. IF AND WHEN SUCH FEES HAVE BEEN APPROVED. 1935: THERE WAS RECEIVED YOUR LETTER OF JUNE 17. THE REFEREE IS. AN OFFICER OF THE COURT AND I AM ADVISED BY COUNSEL THAT IT IS WITHIN THE DISCRETION OF THE COURT TO REFER SUCH A CASE AS THIS TO SUCH AN OFFICER FOR HEARING. UNDER THESE CIRCUMSTANCES IT WOULD APPEAR THAT THE COMMISSIONS OF THE REFEREE ARE A PROPER COST OF SUCH PROCEEDINGS AUTHORIZED TO BE INSTITUTED BY THE COMMISSION PURSUANT TO SECTION 20 (B) OF THE SECURITIES ACT OF 1933. IT IS THE DUTY OF THE COMMISSION TO INSTITUTE INJUNCTION PROCEEDINGS WHERE IT APPEARS THAT ANY PERSONS ARE "ENGAGED OR ABOUT TO ENGAGE IN ANY ACTS OR PRACTICES WHICH CONSTITUTE OR WILL CONSTITUTE A VIOLATION OF THE PROVISIONS OF" TITLE 1 OF THE SECURITIES ACT OF 1933.

A-62959, JULY 27, 1935, 15 COMP. GEN. 81

SECURITIES AND EXCHANGE COMMISSION - INJUNCTIONS - COURT COSTS IN COURT ACTIONS FOR INJUNCTIONS BROUGHT BY THE SECURITIES AND EXCHANGE COMMISSION IN CASES WHERE THE DEPARTMENT OF JUSTICE HAD NO CONTROL OVER THE INSTITUTION OF THE PROCEEDINGS OR THE AMOUNT OF THE EXPENSES INVOLVED THE APPROPRIATION FOR ALL "* * * AUTHORIZED EXPENDITURES OF THE SECURITIES AND EXCHANGE COMMISSION IN PERFORMING THE DUTIES IMPOSED BY LAW OR IN PURSUANCE OF LAW * * *," ACT OF FEBRUARY 2, 1935, 49 STAT. 14, IS AVAILABLE FOR PAYING THE FEES OF REFEREES OR SPECIAL MASTERS TO WHOM THE MATTER WAS REFERRED BY THE COURT, IF AND WHEN SUCH FEES HAVE BEEN APPROVED, ALLOWED, AND ORDERED PAID BY THE COURT.

COMPTROLLER GENERAL MCCARL TO THE CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION, JULY 27, 1935:

THERE WAS RECEIVED YOUR LETTER OF JUNE 17, 1935, AS FOLLOWS:

PURSUANT TO THE PROVISIONS OF SECTION 20 (B) OF THE SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES AND EXCHANGE COMMISSION INSTITUTED INJUNCTION PROCEEDINGS IN THE DISTRICT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK TO ENJOIN PRACTICES CONSTITUTING A VIOLATION OF THE PROVISIONS OF TITLE 1 OF SAID ACT.

BECAUSE OF THE NUMEROUS PARTIES INVOLVED IN THE ACTION AND THE POSSIBLE IRREPARABLE INJURY WHICH MIGHT BE OCCASIONED TO THE PARTIES BY DELAY IN FINAL DETERMINATION OF THE CAUSE, THE COURT HAS REFERRED THE CASE TO A REFEREE TO HEAR AND REPORT HIS FINDINGS TO THE COURT FOR ULTIMATE DETERMINATION. THE REFEREE IS, OF COURSE, AN OFFICER OF THE COURT AND I AM ADVISED BY COUNSEL THAT IT IS WITHIN THE DISCRETION OF THE COURT TO REFER SUCH A CASE AS THIS TO SUCH AN OFFICER FOR HEARING. UNDER THESE CIRCUMSTANCES IT WOULD APPEAR THAT THE COMMISSIONS OF THE REFEREE ARE A PROPER COST OF SUCH PROCEEDINGS AUTHORIZED TO BE INSTITUTED BY THE COMMISSION PURSUANT TO SECTION 20 (B) OF THE SECURITIES ACT OF 1933, AS AMENDED.

"THE INDEPENDENT OFFICES APPROPRIATION ACT, 1936," PUBLIC, NO. 2, 74TH CONGRESS, MAKES APPROPRIATION "FOR ALL * * * AUTHORIZED EXPENDITURES OF THE SECURITIES AND EXCHANGE COMMISSION IN PERFORMING THE DUTIES IMPOSED BY LAW * * *.' THESE EXPENDITURES EXTEND TO CERTAIN SPECIFIED ITEMS AND ALSO "OTHER NECESSARY EXPENSES" OF THE COMMISSION.

IT IS THE DUTY OF THE COMMISSION TO INSTITUTE INJUNCTION PROCEEDINGS WHERE IT APPEARS THAT ANY PERSONS ARE "ENGAGED OR ABOUT TO ENGAGE IN ANY ACTS OR PRACTICES WHICH CONSTITUTE OR WILL CONSTITUTE A VIOLATION OF THE PROVISIONS OF" TITLE 1 OF THE SECURITIES ACT OF 1933, AS AMENDED. THE INSTITUTION OF SUCH PROCEEDINGS IS LEFT BY SAID ACT TO THE DISCRETION OF THE COMMISSION AND THE COMMISSION IS AUTHORIZED TO INSTITUTE SUIT AND PROSECUTE IT THROUGH ITS OWN COUNSEL. THAT THIS IS THE PROPER INTERPRETATION OF THE PROVISION IS CLEARLY EVIDENCED BY THE CONTRAST IN THE WORDING OF THE AUTHORITY GRANTED THE COMMISSION TO INSTITUTE INJUNCTION PROCEEDINGS "IN ITS DISCRETION" AND THE AUTHORITY TO TRANSMIT EVIDENCE OF CRIMINAL VIOLATIONS TO THE ATTORNEY GENERAL FOR SUCH PROCEEDINGS AS THE ATTORNEY GENERAL MAY "IN HIS DISCRETION" DETERMINE ADVISABLE. THIS CONCLUSION IS FURTHER SUPPORTED BY THE LEGISLATIVE HISTORY OF THE PROVISION. INITIALLY THE SECTION PROVIDED THAT BOTH IN THE CASE OF INJUNCTION PROCEEDINGS AND CRIMINAL PROSECUTIONS THE EVIDENCE SHOULD BE TRANSMITTED TO THE ATTORNEY GENERAL FOR PROCEEDINGS IN HIS DISCRETION. THE AUTHORITY WITH RESPECT TO THE INSTITUTION OF INJUNCTION PROCEEDINGS WAS AMENDED AND THE RECORD OF THE HEARINGS WITH RESPECT TO THIS AMENDMENT CLEARLY INDICATES THAT THE PURPOSE OF THE AMENDMENT WAS TO AUTHORIZE THE COMMISSION TO INSTITUTE INJUNCTION PROCEEDINGS IN ITS DISCRETION AND THROUGH ITS OWN COUNSEL. THIS INTERPRETATION HAS BEEN GIVEN AUTHORITATIVE JUDICIAL SANCTION BY THE DECISION OF THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT IN THE CASE OF ,SECURITIES AND EXCHANGE COMMISSION, APPELLANT, V. ROBERT COLLIER AND COMPANY, INC., APPELLEES.'

I AM CONSEQUENTLY ADVISED BY MY COUNSEL THAT THE INSTANT ACTION WAS COMMENCED BY THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE DUTY IMPOSED UPON IT BY SECTION 20 (B) OF THE SECURITIES ACT OF 1933, AS AMENDED. THE QUESTION THEN IS WHETHER, IN EVENT THE COURT SHOULD DIRECT IN ACCORDANCE WITH COMMON PRACTICE, THAT A PART OR ALL OF THE FEES OF THE REFEREE OR SPECIAL MASTER BE PAID BY THE UNITED STATES, SUCH PAYMENT COULD BE MADE FROM THE ABOVE-REFERRED TO APPROPRIATION FOR THE EXPENSES OF THIS COMMISSION OR THE PAYMENT WOULD BE CHARGEABLE TO THE APPROPRIATION CONTAINED IN THE ACT OF APRIL 7, 1934, 48 STAT., 542, 543, FOR "MISCELLANEOUS EXPENSES" OF THE UNITED STATES COURTS AND IF THE LATTER, THE TERMS AND CONDITIONS UNDER WHICH THE PAYMENT COULD BE MADE. FOR OBVIOUS ADMINISTRATIVE REASONS THIS COMMISSION WOULD PREFER TO MAKE THE PAYMENT FROM ITS OWN APPROPRIATIONS IF IT MAY BE LEGALLY DONE.

SECTION 20 (B) OF THE SECURITIES ACT OF 1933, 48 STAT. 86, REFERRED TO IN YOUR LETTER, ROVIDES:

WHENEVER IT SHALL APPEAR TO THE COMMISSION THAT ANY PERSON IS ENGAGED OR ABOUT TO ENGAGE IN ANY ACTS OR PRACTICES WHICH CONSTITUTE OR WILL CONSTITUTE A VIOLATION OF THE PROVISIONS OF THIS TITLE, OR OF ANY RULE OR REGULATION PRESCRIBED UNDER AUTHORITY THEREOF, IT MAY IN ITS DISCRETION, BRING AN ACTION IN ANY DISTRICT COURT OF THE UNITED STATES, UNITED STATES COURT OF ANY TERRITORY, OR THE SUPREME COURT OF THE DISTRICT OF COLUMBIA TO ENJOIN SUCH ACTS OR PRACTICES, AND UPON A PROPER SHOWING A PERMANENT OR TEMPORARY INJUNCTION OR RESTRAINING ORDER SHALL BE GRANTED WITHOUT BOND. THE COMMISSION MAY TRANSMIT SUCH EVIDENCE AS MAY BE AVAILABLE CONCERNING SUCH ACTS OR PRACTICES TO THE ATTORNEY GENERAL WHO MAY, IN HIS DISCRETION, INSTITUTE THE NECESSARY CRIMINAL PROCEEDINGS UNDER THIS TITLE. ANY SUCH CRIMINAL PROCEEDING MAY BE BROUGHT EITHER IN THE DISTRICT WHEREIN THE TRANSMITTAL OF THE PROSPECTUS OR SECURITY COMPLAINED OF BEGINS, OR IN THE DISTRICT WHEREIN SUCH PROSPECTUS OR SECURITY IS RECEIVED.

WHILE THE TERM "COMMISSION" AS USED IN SAID SECTION ORIGINALLY REFERRED TO THE FEDERAL TRADE COMMISSION, SECTION 210 OF THE SECURITIES EXCHANGE ACT OF 1934, 48 STAT. 908, PROVIDES:

UPON THE EXPIRATION OF SIXTY DAYS AFTER THE DATE UPON WHICH A MAJORITY OF THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION APPOINTED UNDER SECTION 4 OF TITLE I OF THIS ACT HAVE QUALIFIED AND TAKEN OFFICE, ALL POWERS, DUTIES, AND FUNCTIONS OF THE FEDERAL TRADE COMMISSION UNDER THE SECURITIES ACT OF 1933 SHALL BE TRANSFERRED TO SUCH COMMISSION, TOGETHER WITH ALL PROPERTY, BOOKS, RECORDS, AND UNEXPENDED BALANCES OF APPROPRIATIONS USED BY OR AVAILABLE TO THE FEDERAL TRADE COMMISSION FOR CARRYING OUT ITS FUNCTIONS UNDER THE SECURITIES ACT OF 1933. ALL PROCEEDINGS, HEARINGS, OR INVESTIGATIONS COMMENCED OR PENDING BEFORE THE FEDERAL TRADE COMMISSION ARISING UNDER THE SECURITIES ACT OF 1933 SHALL BE CONTINUED BY THE SECURITIES AND EXCHANGE COMMISSION. ALL ORDERS, RULES, AND REGULATIONS WHICH HAVE BEEN ISSUED BY THE FEDERAL TRADE COMMISSION UNDER THE SECURITIES ACT OF 1933 AND WHICH ARE IN EFFECT SHALL CONTINUE IN EFFECT UNTIL MODIFIED, SUPERSEDED, REVOKED, OR REPEALED. ALL RIGHTS AND INTERESTS ACCRUING OR TO ACCRUE UNDER THE SECURITIES ACT OF 1933, OR ANY PROVISION OF ANY REGULATION RELATING TO, OR OUT OF ACTION TAKEN BY, THE FEDERAL TRADE COMMISSION UNDER SUCH ACT, SHALL BE FOLLOWED IN ALL RESPECTS AND MAY BE EXERCISED AND ENFORCED.

UNDER AUTHORITY OF THE STATUTES QUOTED IT HAS BEEN HELD THAT THE SECURITIES AND EXCHANGE COMMISSION CREATED UNDER SECTION 4 (A) OF TITLE I OF THE SECURITIES EXCHANGE ACT OF 1934, 48 STAT. 885, MAY APPEAR IN COURT BY ITS OWN SOLICITOR AND BRING AN ACTION FOR AN INJUNCTION OR RESTRAINING ORDER UNDER CERTAIN CIRCUMSTANCES. SECURITIES AND EXCHANGE COMMISSION V. ROBERT COLLIER AND COMPANY, INC., 76 FED./2D) 939. FEES OF REFEREES OR SPECIAL MASTERS AND THE COST OF OTHER SPECIAL PROCEEDINGS LEGALLY ALLOWED BY A COURT ARE EXPENSES INCIDENT TO THE ACTION. SEE 8 COMP. GEN. 554.

THE APPROPRIATION FOR MISCELLANEOUS EXPENSES, UNITED STATES COURTS, 48STAT. 542, WOULD BE AVAILABLE FOR PAYING SUCH EXPENSES AS ARE INVOLVED HERE IN ALL COURT ACTIONS UNDER CONTROL OF THE DEPARTMENT OF JUSTICE, SUBJECT TO APPROVAL BY THE ATTORNEY GENERAL OF THE UNITED STATES.

THE "INDEPENDENT OFFICES APPROPRIATION ACT, 1936," FEBRUARY 2, 1935, 49 STAT. 14, MADE AN APPROPRIATION FOR USE OF THE SECURITIES AND EXCHANGE COMMISSION AS FOLLOWS:

FOR FIVE COMMISSIONERS, AND FOR ALL OTHER AUTHORIZED EXPENDITURES OF THE SECURITIES AND EXCHANGE COMMISSION IN PERFORMING THE DUTIES IMPOSED BY LAW OR IN PURSUANCE OF LAW AND FOR OTHER PERSONAL SERVICE, INCLUDING EMPLOYMENT OF EXPERTS WHEN NECESSARY; CONTRACT STENOGRAPHIC REPORTING SERVICES; SUPPLIES AND EQUIPMENT; PURCHASE AND EXCHANGE OF LAW BOOKS, BOOKS OF REFERENCE, DIRECTORIES, PERIODICALS, NEWSPAPER AND PRESS CLIPPINGS, TRAVEL EXPENSES, INCLUDING THE EXPENSE OF ATTENDANCE, WHEN SPECIFICALLY AUTHORIZED BY THE COMMISSION, AT MEETINGS CONCERNED WITH THE WORK OF THE SECURITIES AND EXCHANGE COMMISSION; GARAGE RENTAL; FOREIGN POSTAGE; MILEAGE AND WITNESS FEES; RENT OF QUARTERS OUTSIDE THE DISTRICT OF COLUMBIA; RENTAL OF EQUIPMENT; AND OTHER NECESSARY EXPENSES; $2,234,494; PROVIDED, THAT SECTION 3709 OF THE REVISED STATUTES (U.S.C., TITLE 41 SEC. 5) SHALL NOT BE CONSTRUED TO APPLY TO ANY PURCHASE OR SERVICE RENDERED FOR THE SECURITIES AND EXCHANGE COMMISSION WHEN THE AGGREGATE COST INVOLVED DOES NOT EXCEED THE SUM OF $50.

FOR ALL PRINTING AND BINDING FOR THE SECURITIES AND EXCHANGE COMMISSION, $30,000.

TOTAL, SECURITIES AND EXCHANGE COMMISSION, $2,264,494.

IN CASES WHERE THE DEPARTMENT OF JUSTICE HAD NO CONTROL OVER THE INSTITUTION OF THE PROCEEDINGS OR THE AMOUNT OF THE EXPENSES INVOLVED, THERE BEING NO OTHER APPROPRIATION MORE SPECIFICALLY AVAILABLE FOR PAYING FEES OF REFEREES OR SPECIAL MASTERS, YOUR APPROPRIATION, SUPRA, WOULD APPEAR AVAILABLE THEREFOR, IF AND WHEN SUCH FEES HAVE BEEN APPROVED, ALLOWED, AND ORDERED PAID BY THE COURT.