Document Type

Article

Publication Date

2009

Abstract

In this Article, we explore the role of the New Deal Justices in enacting, defending, and interpreting the federal securities laws. Although we canvass most of the Court's securities law decisions from 1935 to 1955, we focus in particular on PUHCA, an act now lost to history for securities practitioners and scholars. At the time of the New Deal, PUHCA was the key point of engagement for defining the judicial view toward New Deal securities legislation. Taming the power of Wall Street required not just the concurrence of the legislative branch, but also the Supreme Court, a body that the Roosevelt Administration generally considered hostile to its economic planning initiatives. PUHCA was enacted at a time when the constitutional scope of federal power was still very much in doubt. The statute was a major federal intervention into the free play of capitalist forces, requiring the dismantling of the utility holding companies. Thus, it stood in contrast to the other federal securities laws, which focused primarily on disclosure. At the time, PUHCA was much more important than the Exchange Act in regulating corporate finance, and more dramatic even than the Sarbanes-Oxley Act of recent vintage. PUHCA "gave the SEC power to refashion the structure and the business practices of an entire industry. Except in wartime, the federal government never before had assumed such total control over any industry." PUHCA provided the majority of securities cases in the Supreme Court over the first twenty years after the enactment of the securities laws, but PUHCA's significance to the Court's docket was not merely quantitative. The Court's decisions on PUHCA were the most closely followed securities cases in the popular press, as they pitted the giant utility holding companies against the government in a battle for survival.