High Court Lets Banks Stay in Brokerage Field
The Supreme Court on Monday ruled that the federal government could allow national banks to expand into the discount securities brokerage business without violating a Depression-era law limiting banking services.
The court rejected without comment an appeal by a securities dealers’ trade group, which said that permitting banks to open discount brokerages could allow more than 2,000 banks to enter the business.
The ruling upheld two 1982 decisions by then-Comptroller of the Currency C. T. Conover. Conover gave permission to Security Pacific Corp., a Los Angeles-based bank holding company, to establish its own discount brokerage service and allowed Union Planters National Bank of Memphis, Tenn., to purchase a local brokerage firm.
Many banks are attempting to diversify their range of financial products by offering services such as discount brokerages, which offer investors cut-rate trading charges but no investment advice.
The Securities Industry Assn., representing more than 500 securities brokers, dealers and underwriters, had contended that such expansions could be permitted only if Congress changed a 1933 law limiting banking activities.
The Supreme Court on Monday also decided:
- To review a federal court ruling in a Colorado case that blocked Cargill Inc. of Minneapolis and a meatpacking subsidiary from acquiring the Spencer Beef division of Minnesota-based Land O’Lakes Inc. The U.S. 10th Circuit Court of Appeals last April blocked the merger, which was challenged as anti-competitive by Monfort of Colorado Inc.
- Upheld without comment a lower court ruling for a $6.3-million award to a company denied a cable-television franchise in Houston. Affiliated Capital Corp. won the damages in an antitrust suit that it filed against Gulf Coast Cable Television Co. stemming from their 1978 competition for a Houston cable franchise. The U.S. 5th Circuit Court of Appeals in 1984 stated that city officials and influential Houston businessmen had conspired to divide the city’s cable contracts among themselves.
