Citation Numbers: 146 F. Supp. 9
Judges: McGohey
Filed Date: 11/5/1956
Status: Precedential
Modified Date: 11/26/2022
This is a suit for a declaratory judgment and a permanent injunction against the Securities and Exchange Commission. The plaintiff has moved by order to show cause to enjoin the Commission, pending determination of the suit, from
The Commission makes a point that venue is improperly laid in this district because the Commission, which it is contended is an indispensable party, is officially located in the District of Columbia. I am far from sure that the point is sound in light of the decisions of the Supreme Court in Williams v. Fanning
The plaintiff is the President and a Director and stockholder of L. D. Friedman & Co., Inc., a New York corporation which is registered with the Commission as a broker-dealer in securities. Section 15 (b) of the Securities Exchange Act of 1934 authorizes the Commission to initiate proceedings leading to the revocation of a registration if it finds that the registrant or persons controlling or controlled by it have committed certain acts and that revocation is in the public interest.
On August 15, 1956, the Commission made its order instituting proceedings and setting a date for hearings at which evidence would be heard to determine whether a further order should issue revoking the registration of L. D. Friedman & Co., Inc. The grounds, as set forth in the Commission’s initial order, are that the corporate registrant, by means of acts performed by the plaintiff and one Raymond, the registrant’s Vice-President, Treasurer and Director, has violated the statute. The plaintiff received a copy of the Commission’s order of August 15, together with the Commission’s letter of even date, setting forth, in part, the following: “Please take notice that the enclosed order in the Matter of L. D. Friedman & Co., Inc., involves, among other things, a question whether the Commission should determine that you have wilfully violated certain provisions of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78a et seq., and the Securities Act of 1933, 15 U.S.C.A. § 77a et seq. Your attention is directed to the fact that the findings of the Commission herein may be binding on you in future proceedings under the Act, as well as in the present pro^ceedings.
“Rule X-15B-9
In Wallach v. Securities and Exchange Commission
There can be no doubt that the Commission has the authority and indeed the duty to inquire into the activities of the corporate registrant and if the facts developed at the hearings warrant, to revoke its registration — Friedman indeed does not contend otherwise — and so there is no possible ground for enjoining the Commission from holding the proposed hearings. Since the charge is that Friedman, the registrant’s President, committed on its behalf acts which are alleged to contravene the statute, the Commission necessarily will have to hear testimony and make findings relatihg to Friedman. This circumstance, however, furnishes no ground for interlocutory judicial interference with the usual investigative processes which form the basis of the Commission’s administrative action. The latter, of course, is subject to judicial review in the manner noted, but only by a United States Court of Appeals. Whether and to what extent such findings as the Commission may make in the pending hearings will be “binding” on Friedman in some possible future proceeding against another registrant cannot be determined at this time and on this record. Accordingly, there is no need now to pass on the propriety or effect of Rule X-15B-9. It' is sufficient now to note that it does not compel Friedman to' become a party to the pending proceeding.
The motion is denied.
Settle order.
„ 332 U.S. 490, 68 S.Ct. 188, 92 L.Ed. 95.
. 349 U.S. 48, 75 S.Ct. 591, 99 L.Ed. 868.
. Securities Exchange Act of 1934, as amended to Aug. 10, 1954, § 15(b) (A) to (D), 15 U.S.C.A. § 780(b) (A-D).
. 17 C.E.R. § 240.15b-9.
. 92 U.S.App.D.C. 108, 202 F.2d 462, 463.
. Wallaeh v. Securites & Exchange Commission, 93 U.S:App.D.C. 41, 206 F.2d 486.