Securities and Exchange Commission v. Chenery Corporation (332 U. S. 194 (1947) is a famous administrative law case, in which the Administrative Procedure Act, Public Utility Holding Company Act of 1935 was applied. In this case the Federal Water Service Corporation, registered under the Public Utility Holding Company Act, was accused of illegal stock purchases. To be more specific, the Securities Exchange Commission was working at the plan of reorganization of the company. As a result, the Commission produced an order penalizing the Corporation for certain stock manipulations. These manipulations could not be held before the reorganization was not over. Thus the Fact is that the Commission on reorganization of the Corporation found out that the respondents, including the officers, directors and controlling shareholders of the Corporation acquired 12,407 shares to increase their holdings. The Commission put it under question that he issuance of the new stocks would be fair and equitable, while the Respondents have violated the obligation not to have trade while the reorganization was still pending. Therefore, the decision of the Commission was that the preferred stock could only be surrendered herein at its cost plus four percent, but not converted into the stock of the reorganized company. After that the Respondents could not agree and sought a review in the Court of Appeal. At the same time the Securities and Exchange Commission wanted to prove that “the rationale for the charges could not be sustained”, while there was not enough evident for the common law fraud reviewed in the earlier case SEC v. Chenery Corporation 318 U.S. 80 (1943)
Consequently, the Issue of the case was whether the respondents, including the officers, directors and controlling shareholders of the Federal Water Service Corporation, were to be guaranteed or denied the benefits of preferred stockholders as reorganization managers. Coming up with the answers we should underline that as a result of the case it was held that there was no dishonesty in the actions of the Respondents, but still the judicial principles of equity and fairness under the Public Utility Holding Company Act were violated. However, the decision of the Commission did not satisfy the Judge Fred M. Vinson while the Commission was provided with large powers in evolving the policy standards by the Public Utility Holding Company Act.
In the process of discussion it was concluded that the decisions of agency could be sustained only on the basis of each case reviewed, that is to say, on the ad hoc basis and on the grounds the agency specifically relies on. After the case it has been stated that sometimes policies are quite reasonable to be made through administrative adjudication. In comparison with the procedures of rule-making adjudications are more flexible and comfortable to be used when the judges have to deal with some unexpected problems, or with those problems they never faced before. What is more, sometimes a general rule is impossible to apply inasmuch as the problem is too specialized.
Finally, in the case under consideration the retroactivity on specific interpreting of the statute (as for the unlawful actions of the officers and so on) has been regarded as permissible. After all, the Court put forward the decision to make the execution agency responsible for the acts outside the law when it is found beyond any judicial discretion or any established legislative delegation.
United States. U. S. Supreme Court. “Securities and Exchange Commission v. Chenery Corporation (332 U. S. 194 (1947)”. Justia.com. US Supreme Court Center, n.d. Web. 11 sept. 2011.