The Securities Act and Corporate Reorganizations

Abstract

In 1934, Congress directed the Securities and Exchange Commission to make an investigation of reorganization and protective committees and to report the result of its study and its recommendations. The Securities Act of 1933 was not designed to provide controls over corporate reorganizations. Comparatively few reorganizations are subjected to the regulatory provisions of the Act, and no specialized treatment is provided for even these cases. Moreover, observation of the current cycle of reorganizations and the detailed investigations made by the Commission, pursuant to Congressional direction, have shown that adequate controls over reorganizations do not elsewhere exist–that controls are necessary and that existing regulatory machinery is inadequate. It is, therefore, timely and important to canvass the theory and operation of existing controls so that new machinery may be devised which will be effective for the purpose of inducing reorganizations which are fair and economically sound.