Securities and Exchange Commission v. Robert Collier & Co.

Section 20(b) of the Securities Act of 1933 (act), as originally proposed, contained two clauses with nearly identical language. Both clauses prohibited the Securities and Exchange Commission (SEC) (plaintiff) from representing itself in court. The first clause required the SEC to refer potential suits for injunction to the attorney general and the second clause required the SEC to refer potential criminal prosecutions to the attorney general. The proposed version of § 20(b) was consistent with a long-standing general rule requiring the SEC to refer certain matters to outside prosecutors. Robert E. Healey, chief counsel for the Federal Trade Commission, testified in a committee hearing on proposed § 20(b), suggesting that the statutory language be changed to allow the SEC to seek injunctions on its own behalf but to require it to refer criminal prosecutions to an outside prosecutor. Healey argued that time was of the essence in obtaining injunctions to stop or prevent securities violations and thus allowing the SEC to represent itself in such matters made more sense than requiring it to refer them to the attorney general. After Healey’s testimony, the first clause of § 20(b) was amended to allow the SEC, through its own solicitor, to seek injunctions in federal district court. The Securities and Exchange Commission (SEC), through its solicitor, sued in federal district court to enjoin Robert Collier & Co., Inc. (Collier) (defendant) from violating the act. The district court dismissed the suit, applying the general rule requiring the SEC to refer suits for injunctions to the attorney general. The SEC appealed, arguing that pursuant to § 20(b) of the act, the SEC was required to refer criminal prosecutions to an outside prosecutor but that it was empowered to send its own solicitor to court to seek an injunction.