What is the purpose of the Public Utility Holding Company Act of 1935 (PUHCA)?

The Public Utility Holding Company Act of 1935 (PUHCA) sought to protect consumers and shareholders from the anticompetitive activities of a growing number of corporate holding companies. The law was designed to regulate the larger holding companies that owned and/or managed multiple public utilities and regulated industries. PUHCA was meant to protect consumers from large utilities engaging in price discrimination, unfair labor practices, and other anticompetitive behaviors. It also sought to protect shareholders from abuses that included conflicts of interest, self-dealing, and unfair pricing practices. For example, the law prohibited holding companies from owning public utilities or securities of any unrelated company and from spending more than 5% of their consolidated gross income on non-utility activities. The law also prevented holding companies from engaging in unfair pricing practices. Lastly, the law set up a system of more frequent and complete disclosures regarding financial and operating data of holding companies and their utility subsidiaries. In sum, the Public Utility Holding Company Act of 1935 was intended to protect consumers and shareholders by regulating the activities of corporate holding companies. The law promoted competition in the public utility industry, safeguarded consumers against unreasonable prices, and established a system of disclosure that would protect the interests of shareholders.

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What is the purpose of the Public Utility Holding Company Act of 1935 (PUHCA)?

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