PUBLIC LAWS-CH. 411-AUG. 3, 1939 Necessity otr regu- lation declared. 48 Stat. 909. 15U.s. o. 578jJ. Sec. 316. Directions and waivers by bondholders; prohibition of impairment of holder's right to payment. Sec. 317. Special powers of trustee; duties of paying agents. Sec. 318. Effect of prescribed indenture provisions. Sec. 319. Rules, regulations, and orders. Sec. 320. Hearings by Commission. Sec. 321. Special powers of the Commission. Sec. 322. Court review of orders; jurisdiction of offenses and suits. Sec. 323. Liability for misleading statements. Sec. 324. Unlawful representations. Sec. 325. Penalties. Sec. 326. Effect on existing law. Sec. 327. Contrary stipulations void. Sec. 328. Separability of provisions. "N ECESSITY FOR REGULATION "SEc. 302. (a) Upon the basis of facts disclosed by the reports of the Securities and Exchange Commission made to the Congress pursuant to section 211 of the Securities Exchange Act of 1934 and otherwise disclosed and ascertained, it is hereby declared that the national public interest and the interest of investors in notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein, which are offered to the public, are adversely affected- "(1) when the obligor fails to provide a trustee to protect and enforce the rights and to represent the interests of such investors, notwithstanding the fact that (A) individual action by such investors for the purpose of protecting and enforcing their rights is rendered impracticable by reason of the disproportionate expense of taking such action, and (B) concerted action by such investors in their common interest through representatives of their own selection is impeded by reason of the wide dispersion of such investors through many States, and by reason of the fact that information as to the names and addresses of such investors generally is not available to such investors; "(2) when the trustee does not have adequate rights and powers, or adequate duties and responsibilities, in connection with mat- ters relating to the protection and enforcement of the rights of such investors; when, notwithstanding the obstacles to concerted action by such investors, and the general and reasonable assump- tion by such investors that the trustee is under an affirmative duty to take action for the protection and enforcement of their rights, trust indentures (A) generally provide that the trustee shall be under no duty to take any such action, even in the event of default, unless it receives notice of default, demand for action and indemnity, from the holders of substantial percentages of the securities outstanding thereunder, and (B) generally relieve the trustee from liability even for its own negligent action or failure to act; "(3) when the trustee does not have resources commensurate with its responsibilities, or has any relationship to or connection with the obligor or any underwriter of any securities of the obligor, or holds, beneficially or otherwise, any interest in the obligor or any such underwriter, which relationship, connection, or interest involves a material conflict with the interests of such investors; "(4) when the obligor is not obligated to furnish to the trustee under the indenture and to such investors adequate current infor- mation as to its financial condition, and as to the performance of its obligations with respect to the securities outstanding under such indenture; or when the communication of such information to such investors is impeded by the fact that information as to 1150 [53 STAT.
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