Issuers of registered securities would be required to maintain and file with the Securities and Exchange Commission a list of the names and nationalities of the beneficial owners of their equity securities.

The Department of Commerce opposes enactment of S.425 because it represents

a substantial departure from our traditional open door policy on foreign investment which has brought great benefits to the United States.

I fully appreciate the concern expressed through the proposed legislation over the effect of recent and anticipated foreign direct investments on our national security and on our national economy. On the basis of data currently available, I believe the effects of such investments have been modest and we have no reason to believe they represent a threat either to our security or to control over our economy. Moreover, the President already possesses substantial authority to act in specific cases affecting the national security.

As I have indicated above, and as I am sure the Committee already knows, the Commerce and Treasury Departments are now in the process of carrying out the comprehensive mandated surveys requested by the Congress in the Foreign Investment Study Act of 1974. We expect that these studies will provide us with the data we require to make appropriate policy recommendations to the Congress, if necessary. However, appreciating the sense of urgency which has motivated this bill, the Executive Branch has reviewed the whole range of administrative and legislative regulations and controls

to insure that present procedures and mechanisms for gathering and disseminating data and enforcing existing laws and regulations are adequate to protect the national interest. As a result, the Administration proposes to strengthen existing arrangements by establishing a foreign investment monitoring unit in the Executive Branch to review the information available. In addition, the Administration proposes to encourage foreign governments contemplating substantial investments in the United States to consult with us on such investments before

making any commitments.

It is our view that these measures

should be adequate to protect the national interest and thus

we do not believe that new legislation such as S. 425 is needed at this time.

In closing, I wish to thank the Committee for allowing me to set forth the Commerce Department's views on S. 425. I will be pleased to answer any questions the Committee may have on the topics contained in my statement.

Foreign Direct Investments in the United States, Value by Industry

FOREIGN INVESTMENT ACT OF 1975

WEDNESDAY, MARCH 5, 1975

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS,

SUBCOMMITTEE ON SECURITIES,
Washington, D.C.

The subcommittee was reconvened, pursuant to adjournment, at 10:03 a.m. in room 5302 of the Dirksen Senate Office Building; Senator Harrison A. Williams, chairman of the subcommittee, presiding. Present: Senators Williams, Stevenson, Morgan and Jacob K. Javits (by special invitation of Senator Williams).

Senator WILLIAMS. This is a continued hearing of the Subcommittee on Securities, on the bill S. 425, the Foreign Investment Act of 1975.

This is the second of 3 days of hearings. Tomorrow's hearing will be at the same hour, 10 o'clock, but in room 1318 rather than the Banking Committee's hearing room.

We start this morning with the Chairman of the Securities and Exchange Commission, Ray Garrett.

We are pleased to have you on this subject matter.

STATEMENT OF RAY GARRETT, JR., CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION; ACCOMPANIED BY ALAN B. LEVENSON AND CARL T. BODOLUS

Senator WILLIAMS. You are helpful on the work of this subcommittee.

Mr. GARRETT. Thank you, Mr. Chairman, members of the subcommittee.

I am pleased to appear today before this subcommittee to testify on S. 425, "The Foreign Investment Act of 1975." With me this morning is Alan B. Levenson, Director of the Commission's Division of Corporation Finance; and on his right, Carl T. Bodolus, Chief of the Office of International Finance within that division.

S. 425 apparently is intended to serve two primary purposes. First, this bill would, if enacted, enable the Commission to elicit more information regarding persons making acquisitions of the equity securities of American companies. It would also make more effective any monitoring of foreign investments in the equity securities of most large, publicly-owned, American companies.

Second, S. 425 would impose a screening process for significant foreign investments in American companies. It would authorize the Presi