Board of Governors v. Agnew
329 U.S. 441 (1947)

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U.S. Supreme Court

Board of Governors v. Agnew, 329 U.S. 441 (1947)

Board of Governors v. Agnew of Federal Reserve System

No. 66

Argued December 10, 1946

Decided January 6, 1947

329 U.S. 441

Syllabus

1. An order issued under § 30 of the Banking Act of 1933 by the Board of Governors of the Federal Reserve System removing a director of a national bank from office for continuing violations of law after having been warned to desist is subject to judicial review, and a district court is authorized to enjoin the removal if the Board acts beyond the limits of its statutory authority. P. 329 U. S. 444.

2. Section 32 of the Banking Act of 1933 prohibits, inter alia, any employee of any partnership "primarily engaged" in the underwriting or distribution of securities from serving at the same time as director of a member bank of the Federal Reserve System. Respondents were directors of a member bank and employees of a partnership which held itself out as being "Underwriters, Distributors . . . and Brokers" in securities, was actively getting what business it could in the underwriting field, and one year ranked 9th among 94 leading investment bankers with respect to its total participations in underwritings. Its gross income from the underwriting field ranged from 26% to 39%, and its gross income from the brokerage business ranged from 40% to 47%, of its gross income

Page 329 U. S. 442

from all sources. About 15% of the total number of transactions and of the total market value of the securities bought and sold by it as broker or dealer were in the underwriting field. The partnership did no business with the bank, and respondents did only a strictly commission business with the bank's customers.

Held: the partnership was "primarily engaged" in the underwriting and distribution of securities within the meaning of § 32 of the Act, and its employees were disqualified from serving as directors of a member bank of the Federal Reserve System. Pp. 329 U. S. 445-449.

(a) If the underwriting business of a firm is substantial, it is "primarily engaged" in the underwriting business, though, by any quantitative test, underwriting may not be its chief or principal activity, and whether its underwriting business exceeds 50% of its total business is irrelevant. Pp. 329 U. S. 445-449.

(b) Section 32 being a preventive measure, the fact that respondents have been scrupulous in their relationship to the bank is immaterial. P. 329 U. S. 449.

3. Substantiality being the statutory guide, § 3 does not constitute an unconstitutional delegation of authority to the Board, since the limits of administrative action are sufficiently definite or ascertainable. P. 329 U. S. 449.

153 F.2d 75 reversed.

In a suit to review or enjoin the action of the Board of Governors of the Federal Reserve System in removing respondents from office as directors of a national bank on the ground that they were employees of a firm "primarily engaged" in underwriting within the meaning of § 32 of the Banking Act of 133, the District Court dismissed the complaint. The United States Court of Appeals for the District of Columbia reversed. 153 F.2d 785. This Court granted certiorari. 328 U.S. 825. Reversed, p. 329 U. S. 449.

Page 329 U. S. 443

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