16 U.S.C. § 825d — Officials dealing in securities

submitted 106 years ago by ch. 285 to r/title-16-CONSERVATION · 939 words · no verdicts yet

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Public-utility officers and directors may not secretly benefit from the utility's securities transactions or pay dividends from capital funds. The section also limits overlapping leadership positions, subject to Commission approval and listed exceptions, and requires annual public disclosures of certain outside positions.

(a) An officer or director of a public utility may not directly or indirectly receive money or anything valuable for personal benefit from negotiating, pledging, or selling the utility's securities, share the proceeds, or help make or pay dividends from funds properly included in capital. (b)(1) After six months from August 26, 1935, a person may not be an officer or director of more than one public utility, or of a public utility and a bank, trust company, banking association, securities-underwriting firm, or electrical-equipment supplier connected with it, unless the Commission authorizes the positions after the required showing that public and private interests will not be harmed. Positions held on August 26, 1935 could be authorized only if the application was filed within 60 days. (2) The prohibition does not apply to the utility and financial-institution positions in (A) when one of (B)'s conditions applies: the person does not take part in the utility's choice of an institution being considered; the institution does not underwrite or market that utility's securities; the utility chooses underwriters competitively; or all responsible Federal and State regulators approved the security issuance. (c)(1) By April 30 each year, a person who was a public-utility officer or director in the prior calendar year and also held a listed position in that year must file the Commission's required written statement, which must be public. (2) Listed entities include financial-service or credit organizations, securities underwriters, suppliers of electrical equipment or fuels, the utility's 20 largest qualifying electricity purchasers during the specified three-year period, entities covered by (b), and entities controlled by those organizations. By January 31 each year, each utility must publish the applicable purchaser list under Commission rules. (3) Here, “public utility” includes a company in a holding-company system with a registered holding company unless no company in the system is an electric utility. “Holding company,” “registered holding company,” and “holding company system” have the meanings used in the Public Utility Holding Company Act of 1935. This section does not define those terms.

the actual law source: uscode.house.gov ↗public domain

(a) Benefits; making or declaring dividends out of capital account

It shall be unlawful for any officer or director of any public utility to receive for his own benefit, directly or indirectly, any money or thing of value in respect of the negotiation, hypothecation, or sale by such public utility of any security issued or to be issued by such public utility, or to share in any of the proceeds thereof, or to participate in the making or paying of any dividends of such public utility from any funds properly included in capital account.

(b) Interlocking directorates

(1) In general

After 6 months from August 26, 1935, it shall be unlawful for any person to hold the position of officer or director of more than one public utility or to hold the position of officer or director of a public utility and the position of officer or director of any bank, trust company, banking association, or firm that is authorized by law to underwrite or participate in the marketing of securities of a public utility, or officer or director of any company supplying electrical equipment to such public utility, unless the holding of such positions shall have been authorized by order of the Commission, upon due showing in form and manner prescribed by the Commission, that neither public nor private interests will be adversely affected thereby. The Commission shall not grant any such authorization in respect of such positions held on August 26, 1935, unless application for such authorization is filed with the Commission within sixty days after that date.

(2) Applicability

(A) In general

In the circumstances described in subparagraph (B), paragraph (1) shall not apply to a person that holds or proposes to hold the positions of—

(i)

officer or director of a public utility; and

(ii)

officer or director of a bank, trust company, banking association, or firm authorized by law to underwrite or participate in the marketing of securities of a public utility.

(B) Circumstances

The circumstances described in this subparagraph are that—

(i)

a person described in subparagraph (A) does not participate in any deliberations or decisions of the public utility regarding the selection of a bank, trust company, banking association, or firm to underwrite or participate in the marketing of securities of the public utility, if the person serves as an officer or director of a bank, trust company, banking association, or firm that is under consideration in the deliberation process;

(ii)

the bank, trust company, banking association, or firm of which the person is an officer or director does not engage in the underwriting of, or participate in the marketing of, securities of the public utility of which the person holds the position of officer or director;

(iii)

the public utility for which the person serves or proposes to serve as an officer or director selects underwriters by competitive procedures; or

(iv)

the issuance of securities of the public utility for which the person serves or proposes to serve as an officer or director has been approved by all Federal and State regulatory agencies having jurisdiction over the issuance.

(1)

On or before April 30 of each year, any person, who, during the calendar year preceding the filing date under this subsection, was an officer or director of a public utility and who held, during such calendar year, the position of officer, director, partner, appointee, or representative of any other entity listed in paragraph (2) shall file with the Commission, in such form and manner as the Commission shall by rule prescribe, a written statement concerning such positions held by such person. Such statement shall be available to the public.

(2)

The entities listed for purposes of paragraph (1) are as follows—

(A)

any investment bank, bank holding company, foreign bank or subsidiary thereof doing business in the United States, insurance company, or any other organization primarily engaged in the business of providing financial services or credit, a mutual savings bank, or a savings and loan association;

(B)

any company, firm, or organization which is authorized by law to underwrite or participate in the marketing of securities of a public utility;

(C)

any company, firm, or organization which produces or supplies electrical equipment or coal, natural gas, oil, nuclear fuel, or other fuel, for the use of any public utility;

(D)

any company, firm, or organization which during any one of the 3 calendar years immediately preceding the filing date was one of the 20 purchasers of electric energy which purchased (for purposes other than for resale) one of the 20 largest annual amounts of electric energy sold by such public utility (or by any public utility which is part of the same holding company system) during any one of such three calendar years;

(E)

any entity referred to in subsection (b); and

(F)

any company, firm, or organization which is controlled by any company, firm, or organization referred to in this paragraph.

On or before January 31 of each calendar year, each public utility shall publish a list, pursuant to rules prescribed by the Commission, of the purchasers to which subparagraph (D) applies, for purposes of any filing under paragraph (1) of such calendar year.

(3)

For purposes of this subsection—

(A)

The term “public utility” includes any company which is a part of a holding company system which includes a registered holding company, unless no company in such system is an electric utility.

(B)

The terms “holding company”, “registered holding company”, and “holding company system” have the same meaning as when used in the Public Utility Holding Company Act of 1935.1

Source credit: (June 10, 1920, ch. 285, pt. III, § 305, as added Aug. 26, 1935, ch. 687, title II, § 213, 49 Stat. 856; amended Pub. L. 95–617, title II, § 211(a), Nov. 9, 1978, 92 Stat. 3147; Pub. L. 106–102, title VII, § 737, Nov. 12, 1999, 113 Stat. 1479.)

history & why it existsrecord from the source credit

1920Enacted · Act of June 10, 1920, ch. 285 · 49 Stat. 856
1978Amended · Pub. L. 95-617 · 92 Stat. 3147
1999Amended · Pub. L. 106-102 · 113 Stat. 1479

A history note hasn’t been published yet. The record shows enactment by ch. 285 on 1920-06-10.

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