800.51/813½
Mr. Laurence Duggan of the Division of Latin American Affairs to the Assistant Secretary of State (Caffery)
Title II of the Securities Act takes no notice of the existence of bondholders’ committees. At one time there was a proposal to insert in the law a provision authorizing the Corporation of Foreign Security Holders to negotiate with the existing bondholders’ committees. This proposal was dropped, since its acceptance would have indicated official recognition of these private committees.
Title II seems to indicate that the existing committees will be absorbed. Paragraph 3, section 204, authorized the Board of Directors of the Corporation of Foreign Security Holders to “appoint committees from the directors of the Corporation and/or all other persons to represent holders of any class or classes of foreign securities”. However, there is no direct prohibition against the existence of other committees. I understand that in France, where there is a semi-official body, private committees spring up from time to time if it does not appear that the semi-official body is doing the most that can be done for the bondholders.
I have discussed the above with Mr. Livesey,3 who concurs.
- Frederick Livesey, Assistant Economic Adviser.↩