Securities and Exchange Commission Historical Society

The Center for Audit Quality Gallery on Corporate Governance

Coming to Grips with Prosperity

End of the Honeymoon

“As Dan Yankelovich tells us, the populous began to believe in the New Society and in what was being built by the economic and business communities in the ‘50s and ‘60s. They became convinced that a totally new and totally unprecedented economy had been achieved upon which we could all depend and build. But not only did the public believe in this vision, but business also believed in it. Many of those in the business community became convinced that they had found the ultimate wisdom, that they could do no wrong, that all their ventures would always turn out well.”

March 17, 1980 The Challenges of the New Decade – Address by SEC Chairman Harold Williams to the Providence Journal/Brown University Public Affairs Conference

The post-war decades had been very good for American business, and a new generation of investors had joined in the boom years. By 1966, the number of individuals holding shares in American companies had tripled to nearly 22 million. Tens of millions more held shares through pensions and other funds. Relations between shareholders and management were generally harmonious, and collegial corporate boards rarely contested management decisions.

But corporate growth helped bring the honeymoon to an end. In an era of strong antitrust regulation, corporations seeking expansion found it safest to acquire unrelated businesses, thus creating the famed conglomerates of the 1960s. Before, contests for corporate control usually revolved around proxy contests; in the conglomerate era, surprise cash tender offers were the weapon of choice. Potential acquirers would quietly assemble a substantial block of stock and then make a bid for control by offering high prices during a brief window of time. Between 1948 and 1954, 1,773 companies were acquired by larger entities.11 Between 1960 and 1971, nearly 25,000 takeovers took place, making them an ever-present threat to management.

The SEC had no authority over tender offers, so SEC staff first campaigned for and then materially assisted in drafting legislation to bring them under its purview. In 1968, U.S. Senator Harrison A. Williams, Jr. (D-NJ) helped to enact tender offer reform legislation. The Williams Act required significant disclosure from bidders seeking to acquire control of a company, particularly their identity, intentions and source of funds. It also required them to accept all shares tendered within a 10-day window and to pay the same price to all shareholders. In subsequent years, new SEC rules broadened the scope of the Williams Act.

The Williams Act put the brakes on the use of tender offers to seize corporate control for more than a decade. But it drew the SEC into pitched battles over the boardroom in decades to come.12


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Related Museum Resources

Papers

April 26, 1957
transcript pdf (William O. Douglas Papers, courtesy Library of Congress)
April 29, 1957
transcript pdf (William O. Douglas Papers, courtesy Library of Congress)
June 10, 1957
image pdf (Stanley Forman Reed Collections, courtesy University of Kentucky)
June 12, 1957
transcript pdf (Gardiner Means Papers, courtesy of Franklin Delano Roosevelt Presidential Library)
July 3, 1957
transcript pdf (Courtesy of National Archives and Records Administration)
November 20-22, 1957
transcript pdf (AICPA Collection, University of Mississippi)
December 5, 1957
image pdf (Gardiner Means Papers, courtesy of the Franklin Delano Roosevelt Presidential Library)
August 1, 1958
transcript pdf (Courtesy of National Archives and Records Administration)
April 2, 1959
image pdf (Courtesy of National Archives)
October 15, 1959
transcript pdf (AICPA Collection, University of Mississippi)
April 19, 1960
image pdf (Gardiner Means Papers, courtesy of the Franklin Delano Roosevelt Presidential Library)
January 18, 1962
transcript pdf (AICPA Collection, University of Mississippi)
April 9, 1962
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
January 17, 1964
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
January 23, 1964
transcript pdf (Courtesy of the Lyndon B. Johnson Library and Museum)
April 16, 1964
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
June 17, 1965
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
June 29, 1965
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
July 14, 1965
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
September 2, 1965
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
September 27, 1965
image pdf (Government Records)
October 5, 1965
transcript pdf (Courtesy of National Archives and Records Administration)
October 20, 1965
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
November 1965
image pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
November 19, 1965
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
November 16, 1966
image pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
January 24, 1967
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
January 26, 1967
transcript pdf (AICPA Collection, University of Mississippi)
May 16, 1967
image pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
February 20-23, 1968
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
March 7, 1968
image pdf (Courtesy of Stephen A. Zeff)
March 19, 1968
transcript pdf (Courtesy of National Archives and Records Administration)
March 25, 1968
transcript pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
March 25, 1968
transcript pdf (Courtesy of National Archives and Records Administration)
March 25, 1968
transcript pdf (Courtesy of National Archives and Records Administration)
April 1, 1968
image pdf (Courtesy of National Archives)
April 23, 1968
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
July 12, 1968
transcript pdf (Adolf A. Berle, Jr. Papers, courtesy Franklin Delano Roosevelt Presidential Library)
October 1, 1968
image pdf (Government Records)
October 26, 1968
image pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)
January 22, 1969
image pdf (All rights are owned exclusively by NYSE Euronext copyright 2007 NYSE Euronext, All Rights Reserved, Courtesy New York Stock Exchange Archives)
June 17, 1969
image pdf (All worldwide intellectual property rights including without limitation moral rights vest in NYSE Euronext and/or its affiliates.)

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