Securities Law Section

Message from the Chair

Section Chair: 

Charles Niemeier
Williams & Connolly LLP
Washington, D.C.

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The Federal Bar Association - Securities Law Section is a proud sponsor of the virtual museum and archive of the history of financial regulation at While the museum is free and accessible to everyone at all times, the Section will highlight specific material and information within the museum on securities law issues in the coming months, providing current and prospective Section members with unique insight and context.

            Shortly after its establishment, the SEC noted a substantial uptick in foreign purchases of U.S. securities. Though the reasons behind these investments were largely innocent, the SEC was on high alert for foreign meddling in the securities it regulated and saw potential risks in the trading of U.S. securities on supposedly “unregulated European exchanges.” To allay its fears, some SEC staff suggested implementing a high tax on foreign transactions in U.S. securities or even isolating domestic securities entirely from overseas investors. But before it put any plans in motion, the SEC dispatched Lunsford Yandell in 1938 and Harold Neff in 1939 to study and report back on the depth of U.S. securities trading abroad. Though they were filed separately and received negatively, the Yandell and Neff reports concluded that foreign trading in U.S. securities, and the limited number of Americans involved in such trading, had very little impact on U.S. markets.
            It is unclear why Lunsford Yandell, an attorney with the Radio Corporation of America, was selected to be the SEC’s eyes and ears on the ground in Europe, but former SEC Chairman and then Ambassador to the United Kingdom, Joseph Kennedy, wasted no time in arranging meetings for him once he arrived in England. Although Yandell traveled with the head of The Economist, his report was derided by the SEC’s staff, which took issue with his lack of reliable statistics and heavy use of anecdotal evidence, rather than hard facts. Yandell concluded that there were only a small number of Americans trading U.S. securities abroad to circumvent U.S. regulations, and that such trading represented no threat to U.S. markets. Upset with Yandell’s findings and claiming his conclusions were too anti-regulatory, the SEC decided not to publish or circulate the report.
            A year later, the SEC tried again, this time sending Harold Neff to London to pick up where Yandell left off. The regulators figured Neff, an expert in international business and former director of the Export-Import Bank, would deliver a report more in line with the SEC’s suspicions. Though his trip was cut short because of World War II, Neff’s conclusions largely mirrored Yandell’s, and he too drew the agency’s ire. Focusing on the London Stock Exchange, Neff asserted it was regulated as effectively as the New York Stock Exchange, a notion with which the SEC took issue. Like Yandell, Neff concluded that American trading abroad wasn’t as widespread as believed, and that the U.S. markets were not in peril because of foreign trading in U.S. securities. Still frustrated, the SEC shelved Neff’s report, too.
            Though they remained unreleased for years and were poorly received by the SEC, the Yandell and Neff reports offered small glimpses into the state of interconnected securities markets across the world in the late 1930s. Both Yandell and Neff found that international trading in American securities was not detrimental to U.S. markets as the SEC had feared.



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