16 U.S.C. § 825d: Officials dealing in…

Summary

Officers and directors of a public utility must not take money or anything of value for arranging, pledging, or selling the utility’s securities, share in those sale proceeds, or help pay dividends out of money that should be counted as capital. After six months from August 26, 1935, a person cannot serve as an officer or director of more than one public utility, or serve at the same time for a public utility and for a bank, underwriter, or a company that supplies electrical equipment to that utility, unless the Commission has approved those roles after being shown that no public or private interests will be harmed. The Commission will not approve positions that existed on August 26, 1935 unless an application was filed within sixty days after that date. The rule about holding both utility and underwriting or banking roles does not apply if the person stays out of decisions about choosing underwriters when their bank or firm is under consideration, if their bank or firm does not underwrite the utility’s securities, if the utility picks underwriters by competitive bidding, or if every federal and state regulator with jurisdiction has approved the security issue. By April 30 each year, anyone who in the prior year was an officer or director of a public utility and also held certain other listed positions (like roles at banks, underwriters, fuel or equipment suppliers, top customers, or related companies) must file a public statement with the Commission. Each utility must publish, by January 31 each year, the list of top buyers used for that reporting. Definitions: “public utility” here includes companies in a holding company system with a registered holding company unless no company in that system is an electric utility. “Holding company,” “registered holding company,” and “holding company system” use the meanings from the Public Utility Holding Company Act of 1935.

Title 16, §825d

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(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)

(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.

(c)Statement of prior positions; definitions

(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.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Public Utility Holding Company Act of 1935, referred to in subsec. (c)(3)(B), is title I of act Aug. 26, 1935, ch. 687, 49 Stat. 803, which was classified generally to chapter 2C (§ 79 et seq.) of Title 15, Commerce and Trade, prior to repeal by Pub. L. 109–58, title XII, § 1263, Aug. 8, 2005, 119 Stat. 974. For complete classification of this Act to the Code, see Tables.

Amendments

1999—Subsec. (b). Pub. L. 106–102 inserted subsec. heading, designated existing provisions as par. (1), inserted heading, and substituted “After 6” for “After six”, and added par. (2). 1978—Subsec. (c). Pub. L. 95–617 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 1978 Amendment Pub. L. 95–617, title II, § 211(b), Nov. 9, 1978, 92 Stat. 3147, provided that: “No person shall be required to file a statement under section 305(c)(1) of the Federal Power Act [subsec. (c)(1) of this section] before April 30 of the second calendar year which begins after the date of the enactment of this Act [Nov. 9, 1978] and no public utility shall be required to publish a list under section 305(c)(2) of such Act [subsec. (c)(2) of this section] before January 31 of such second calendar year.”

§825d Officials Dealing in Securities