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OCR Page 1 of 217(Not for public distribution until made Þublic by
the Senate or House Committee on the Judiciary.)
COMMENTS OF THE SECURITIES AND EXCHANGE COMMISSION
TRUMAN NARA
ON S. 7
"A Bill to Improve the Administration of Justice
by Prescribing Fair Administrative Procedure.
Revised Text - Committee Print, May, 1945.
This is in reply to a request for our views on S. 7, Revised Text,
May 1945, now before the Senate Committee on the Judiciary. Considera-
tion of the effect of the bill on six different statutes administered by
the Commission had delayed completion of our comments on the bill as
introduced, and we have found the revision so substantial as to require
a completely new analysis of the effect of the revised bill on our
statutes.
Under the statutes which we administer there is a wide variety of
procedures which are in most cases controlled by mandatory provisions of
the statutes themselves. In cases where procedure is not directly
governed by statutes but is left to our discretion, we have adopted pro-
cedures which we believe fair to the persons affected and consistent with
the public interest intended to be protected. Notwithstanding our belief
that the presently applicable procedures are in general fair and workable,
we do not question the possiblity of improvement or that such procedure
should be the subject of constant examination. We believe, however, that
the best approach to the problem of improvement of administrative proce-
dure is to consider each individual problem and each statutory regulation,
in the light of what is fair under the circumstances directly affecting
the particular regulation, rather than a general rule applicable without
di fferentiation to all the various types of proceeding under which the
agencies are required to exercise supervision. It has been apparent from
our experience that this the fairer and simpler approach even as applied
to the limited variety of regulatory procedures provided for by our own
statutes. Thus, as the revised text seems to recognize in part, we
believe it is impractical and unnecessary to apply the same rules for
example in the case of an application by a utility company to be permitted
to refund outstanding indebtedness as would be applied in the case of a
proceeding to revoke the registration of a broker or dealer for willful
violation of law.
The statutes which the Commission administers require administrative
proceedings of various sorts, and what is fair and just in one case would
be merely administrative red tape in another. The great advantage of ad-
ministrative agencies is their flexibility and their ability to do a job
fairly but with dispatch and to cut red tape to a minimum. To require
that vastly different proceedings be treated alike, would result not only
in added burden to administrative agencies, but also in serious inconveni-
ence and, perhaps in some cases, in great damage to the persons subject to
regulation. We believe that the existing procedures applicable under the
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