Tuesday, May 21, 2013

Securities and Exchange Commission v. Chenery Corp case brief

Securities and Exchange Commission v. Chenery Corp case brief
318 U.S. 80, 63 S. Ct. 454, 87 L. Ed. 626 (1943)

CASE SYNOPSIS: Certiorari was granted to the United States Court of Appeals for the District of Columbia, to review a judgment that set aside petitioner Securities and Exchange Commission's order approving respondents' corporate reorganization plan under the Public Utility Holding Company Act of 1935, 15 U.S.C.S. § 79.

FACTS: Respondents, as officers, directors, and stockholders of a company, registered the company as a holding company under the Public Utility Holding Company Act of 1935, 15 U.S.C.S. § 79, and filed reorganization plans. While the plans were pending, respondents purchased additional preferred stock in the company. Petitioner Securities and Exchange Commission refused to treat respondents' preferred stock on equal footing with the other preferred stock, because respondents had a duty of fair dealing. Petitioner approved an amended reorganization plan. The appellate court set aside the order. The United States Supreme Court remanded the action for further proceedings. Petitioner's order could not be upheld, because it was not supported by judicial principles. Neither Congress nor the courts proscribed respondents' purchase of preferred stock. The Court could not uphold the action under petitioner's power under the Act, because petitioner did not rely upon those powers when it made its determination that respondents' stock could not be treated on equal footing with the other preferred stock.

CONCLUSION: The judgment that set aside petitioner's order, which approved respondents' reorganization plan, was remanded, because the order was based upon judicial principles that did not support petitioner's determination.

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