Norris & Hirshberg v. Securities and Exchange Com'n
| Decision Date | 17 February 1947 |
| Docket Number | No. 9272.,9272. |
| Parties | NORRIS & HIRSHBERG, Inc., v. SECURITIES AND EXCHANGE COMMISSION. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Messrs. Carl McFarland and Joseph B. Brennan, both of Washington, D. C., with whom Mr. William A. Sutherland, of Washington, D. C., was on the brief, for petitioner.
Mr. Roger S. Foster, Solicitor, Securities and Exchange Commission, and Mr. Nathan D. Lobell, Special Assistant to the Commission, Securities and Exchange Commission, both of Philadelphia, Pa., of the Bar of the State of New York, pro hac vice, by special leave of court, for respondent.
Before CLARK, WILBUR K. MILLER, and PRETTYMAN, Associate Justices.
On the 28th day of December, 1943, the Securities and Exchange Commission instituted against Norris & Hirshberg, Inc., of Atlanta, Georgia, a proceeding under §§ 15(b) and 15A(l) (2) of the Securities Exchange Act of 1934, to determine whether that firm's registration as an over-the-counter broker and dealer in securities should be revoked, and whether it should be suspended or expelled from membership in the National Association of Securities Dealers, Inc. Some seventeen months after an extensive hearing before one of the Commission's trial examiners, his report that the charges had not been sustained was rejected by the Commission, and the registration of Norris & Hirshberg, Inc., as a broker and dealer was revoked.
A petition for review of the Commission's order was filed with this court on April 29, 1946, and service thereof upon a member of the Commission cast upon that body the statutory duty to "certify and file in the court a transcript of the record upon which the order complained of was entered."1 On June 8, 1946, there was filed with us a transcript in thirteen volumes containing in the aggregate 4,344 pages. A great portion of its bulk is made up of exhibits containing statistical and historical data.
After this filing, Norris & Hirshberg, Inc., petitioned for a writ of certiorari to obtain correction and completion of the transcript, which it assailed as incorrect and incomplete in four particulars:
1. In that thirteen exhibits prepared and presented by the petitioner herein which actually were received in evidence, and which contain information substantial in nature and material to the issues, are shown in the index to the transcript as having been received "for identification only," and are thus represented as not being parts of the record made up at the hearing.
2. In that the transcript incorrectly includes twelve documents styled as Commission exhibits which in fact were never offered in evidence; that these documents, which purport to be explanations and interpretations of exhibits actually filed, were made up and attached after the record had been closed.
3. In that the transcript was certified only by an employee of the respondent Commission, instead of by the Commission itself as required by the Act; and that it was certified as "the transcript of the record of the proceedings * * * in which the orders complained of in the above entitled matter were entered," when the statute required the Commission to certify and file "a transcript of the record upon which the order complained of was entered."
4. In that the transcript does not include as a part of the record a summary or digest of the testimony and exhibits, prepared by the Commission's staff, which was the real basis of the Commission's order; that at the oral argument, the presiding Commissioner admitted that he and his associates do not undertake to read the entire record; that petitioner believes that the omitted summary or digest of the evidence did not correctly reflect the actual evidence, but differed therefrom in material respects to its detriment, and that in consequence petitioner has been denied a consideration of, and a decision upon, the actual facts and proofs adduced at the administrative hearing.
By its answer to the petition for certiorari, the respondent Commission admits the factual bases of the petitioner's four points, but denies that any correction of the transcript is thereby required. The case is before us now only for the purpose of considering whether a writ of certiorari should issue.
When a petition for review of an order of the Securities and Exchange Commission is filed with a court, as is permitted by § 78y of Title 15, U.S.C.A., the court's duty is limited in scope, as a provision of the same section is that upon review "the finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive."
Thus restricted and simplified, the function of the court is simply to see if the Commission's factual findings are supported by substantial evidence. In order that this duty may be performed, § 78y requires the Commission, when served with a petition for review, to "certify and file in the court a transcript of the record upon which the order complained of was entered."2 The filing of a transcript so certified is a condition precedent to the performance of the court's statutory task.
The several volumes which have been filed in this case purport to be a transcript of the record of the proceedings in which the Commission entered the order of which the petitioner complains. Although the certificate does not conform to the statute, we would have been inclined to suppose this transcript to be a true copy of the actual record made by the parties at the hearing before the trial examiner, and to regard it also as a true copy of the record which the Commission considered and upon which it based its order, had we not been confronted with the petitioner's challenge of its authenticity.
The petitioner alleges, and the Commission admits, that the transcript contains as Commission exhibits twelve documents which not only were not received in evidence, but were not offered as such, having been made up and attached after the record before the trial examiner had been closed. This criticism is a serious one. For it is of prime importance that there be certified to the court an accurate transcript of the evidence introduced at the hearing. If we should suppose that the transcript before us was the basis of the order, then we would be left to speculate as to whether the Commission's expert judgment would have been the same, had the true record been before it. The court, in its work of review, is entitled to the informed judgment of the skilled Commission upon the evidence which was fairly and legally before it as it deliberated.
It is charged also by the petitioner, and admitted by the Commission, that thirteen exhibits, which the petitioner regarded as important to its defense and which were received in evidence, are represented in the index to the transcript as having been marked as received "for identification only." This would signify that the thirteen documents were not received in evidence. It is not an answer to say, as the Commission now does, that the index is not a part of the record. The Commission's staff prepared the index. Presumably its understanding of the record is thereby reflected. Whether the index was prepared only for this court, or whether it was made as a convenience for the Commission itself during the period of some seventeen months which intervened between the close of the hearings and the Commission's order, we are unable to say For either purpose, the index should not confuse.
It is not our duty to go forward with the work of reviewing a transcript with such infirmities to see if it affords a substantial evidentiary basis for the Commission's order. Moreover, the transcript is not certified as a copy of the record upon which the order was entered. We have no way of knowing whether the order was based on the actual record of the hearing or on the quite different record which is reflected by the transcript.
If the transcript filed with the court, failing as it does accurately to reflect the record of the proceedings before the trial...
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