Worm Turns

Last week a big worm turned in Wall Street. Underwriters Morgan Stanley & Co. haled SEC into court, demanded that it reverse its Dayton Power decision and return $90,844 in underwriting fees.

This particular phase of Wall Street's long fray with SEC started in February 1940, when Morgan Stanley agreed to let SEC "impound" the fees due them on a Dayton Power Co. bond issue, until SEC made sure the bankers were no "affiliate" of the utility. At the time, this seemed like a mere formality to Morgan Stanley; they certainly were not affiliated with Dayton Power, the money was just as good as theirs. But it wasn't. Last April (TIME, April 14) SEC (in what Morgan Stanley termed a "fantasy") declared Morgan Stanley was a Dayton Power affiliate, via Columbia Gas & Electric,

United Corp. and J. P. Morgan. Therefore, said SEC, there was no "arm's-length bargaining" on the bond sale. The impounded money went to Dayton Power, and the bankers got nothing.

Whatever the court decides, one thing is plain: there is some fight in Wall Street yet--or at least in Morgan Stanley.

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