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Law School Case Brief

Inv. Co. Inst. v. Camp - 401 U.S. 617, 91 S. Ct. 1091 (1971)


Courts should give great weight to any reasonable construction of a regulatory statute adopted by an agency charged with the enforcement of that statute.


The right of a national bank to operate a mutual investment fund was challenged in two separate proceedings. In No. 61, several open-end investment companies and an association of such companies instituted an action in the United States District Court for the District of Columbia, attacking the validity of a regulation of the Comptroller of the Currency which authorized national banks to operate collective investment funds, as well as the validity of the Comptroller's approval of an application of the First National City Bank of New York for permission to operate a fund whereby investors were issued redeemable and transferable units of participation in a stock fund which was created and managed by the bank as investment advisor pursuant to managing agency agreements. The plaintiffs contended that such activities were prohibited by various provisions of the Glass-Steagall Banking Act of 1933 as amended, including § 16 of the Act, prohibiting a national bank from underwriting any issue of securities or stock and from purchasing for its own account any shares of stock of any corporation, and § 21 of the Act, prohibiting a national bank from engaging in the business of issuing, underwriting, selling, or distributing stocks or securities. The District Court entered judgment for the plaintiffs. The United States Court of Appeals for the District of Columbia consolidated the appeal in No. 61 with No. 59, which was a petition filed in the Court of Appeals by the National Association of Securities Dealers for review of an order of the Securities and Exchange Commission that partially exempted the collective investment fund of the First National City Bank of New York from various provisions of the Investment Company Act of 1940. The Court of Appeals, holding that the actions of both the Securities and Exchange Commission and the Comptroller were valid, affirmed the Commission's order in No. 59, and reversed the District Court's judgment in No. 6. The investment companies and its association filed a petition for certiorari review.


Did the order violate the Glass-Steagall Banking Act of 1933, 12 U.S.C.S. § 24?




On certiorari review, the United States Supreme Court found that the operation of an investment fund of the kind approved by respondent Camp, the Comptroller of the Currency, involved a bank in the underwriting, issuance, sale, and distribution of securities in direct violation of §§ 16 and 21 of the Glass-Steagall Banking Act, 12 U.S.C.S. §§ 24 and 378. Because the Glass-Steagall Banking Act prevented what respondent sought to authorize, the judgment upholding respondent's order was reversed.

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