Word: sec
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Dates: during 1930-1939
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...double-alert for conflicts of interests in fiduciary or quasi-fiduciary positions is SEC, and before approving the committee's registration statement for deposit certificates (to be exchanged for Colombian bonds), it wanted to know what would happen if the protection of bondholders required action detrimental to Standard, such as pressing for higher taxes in Colombia. Committeemen Hayes and McCann admitted they would resign before doing anything prejudicial to the big oil company. The fact that the committee was "plastered with 26 Broadway'' seemed largely coincidence, but SEC took the case under advisement...
Another case of conflicting interests over another and bigger foreign defaulter was before SEC last week. After more than two years of futile effort to get Germany to amplify registration statements covering $69,000,000 worth of 3% scrip to be issued to present holders of German bonds in settlement of past-due interest, SEC finally gave up. It allowed the registration to become effective but not without a bold attempt to supply on its own hook some of the missing information it deemed vital to investors, particularly a hint as to the Reich's "secret debt...
...pumped into the credit system. According to the Reich, this paper is not debt until it becomes due, a contention which would have a counterpart in the U. S. if WPA workers were paid in baby Government Bonds which were excluded from the national debt until they matured. SEC pointed out that by the middle of 1935 this odd accounting conception had swollen the total Reich debt by at least $2,000,000,000 above the admitted figure...
...While SEC was giving luckless U. S. investors a lesson in Nazi finance, it also called their attention to the anomalous position of the big U. S. banks which are involuntary German creditors by virtue of the famed "standstill agreements," the seventh of which was concluded last month. Under these agreements German credits extended by U. S. banks and frozen since 1931 have been cut in six years from $600,000,000 to $114,000,000. Interest has been paid regularly at rates varying from 2% to 4¼%. Moreover, these banks hold a considerable amount of Reich Treasury notes...
Acidly observed SEC last week: "The Commission of course . . . does not attempt to evaluate the significance of these interests ... or the fact that although many of such special agents . . . were the issuing bankers for the bonds in question, and despite their professed recognition of a moral obligation to attempt to obtain for the bondholders the best that was possible under the circumstances, they nevertheless sought and obtained better treatment of their claims than those of bondholders who may have looked to such issue houses for protection...