published in: Time in Modern Intellectual Thought, ed. by Patrick Baert, Amsterdam and New York, Elsevier, 1999.
German translation in: Die Wiederentdeckung der Zeit, ed. by Antje Gimmler, Mike Sandbothe and Walther Ch. Zimmerli, Wissenschaftliche Buchgesellschaft, Darmstadt, 1997.
The subject of 'time' has occupied both scholars and the layman repeatedly throughout the course of the twentieth century, but has acquired particular importance and a certain brisance over the last two decades. The current vogue for time is a multidisciplinary one, in fields ranging from the humanities, social sciences, history, literature, media theory and linguistics through to medicine, law, sciences and economics. This situation, characterized by a plurality of heterogenous concepts, lends particular significance to philosophical debate about the problem of time. The central problem for contemporary philosophy is to relate to one another the varying conceptions of time developing in individual disciplines. The different approaches to this task are embedded in the following three basic tendencies which define the contemporary philosophy of time.
The first basic tendency in contemporary philosophy of time may be described as the tendency to unify our understanding of time. The protagonists of this unification tendency are convinced that time's validity is that of being a new Archimedean Point which unifies our everyday experience of the self and the world with our academic theories about nature and man. This point of unification, they contend, has been emphasized time and time again in philosophy (for instance by von Baader, Schelling, Bergson or Whitehead), but has been ignored for far too long by science and technology. It wasn't until the second half of this century that a global time concept was developed and mathematically implemented at the interface between physics, chemistry and biology within the framework of the so-called theories of "self-organization". According to the proponents of the unification tendency this new conception of time enables the old duality between natural time and historical time to be overcome and resolves the conflict between physical, biological and philosophical approaches to time which had characterized the first half of the twentieth century. Against this background the German theoretician of time, Hermann Lübbe, observed, "that even the temporal structure of historicality, which, according to Heidegger and the hermeneutic theory which followed him, results exclusively from the subject's relationship to itself, which constitutes meaning, is in reality a structure belonging to all open and dynamic systems which is indifferent to the subject matter." Lübbe's convergence theorem can be supported by the deliberations of the Nobel prize-winning physicist, chemist and self-organization theorist Ilya Prigogine, who noted as early as 1973, in the light of his thermodynamic theory of irreversibility: "Whatever the future of these ideas, it seems to me that the dialogue between physics and natural philosophy can begin on a new basis. I don't think that I can exaggerate by stating that the problem of time marks specifically the divorce between physics on one side, psychology and epistemology on the other. (...). We see that physics is starting to overcome these barriers."
The convergence theorem, which lies at the heart of the unification tendency in contemporary philosophy of time, remains however by no means undisputed. Paul Ricoeur, the French phenomenologist, opposes this for example with his diagnosis of an inpenetrable incommensurability between historical and natural time. Ricoeur's outset serves to illustrate the second basic tendency in contemporary philosophy of time, namely the tendency to split time into a multitude of mutually incompatible heterogenous concepts. As a representative of this pluralization tendency, Ricoeur regards "the break, on the level of epistemology, between phenomenological time on the one hand and astronomical, physical, and biological time on the other" as being insurmountable. In the light of the underlying discontinuity which exists "between a time without a present [natural time - M.S.] and a time with a present [historical time - M.S.]" , Ricoeur describes the alleged coherence between the two heterogenous understandings of time as being "a phenomenon of mutual contamination" through which "the notion of history had been extrapolated from the human sphere to the natural sphere."
From Ricoeur's perspective, the "reciprocal overlapping of the notions of change (or evolution) and history" is factually without foundation, and is as such to be refuted. Ricoeur reasons, "whatever the interferences between the time with a present and the time without a present, they presuppose the fundamental distinction between an anonymous instant and a present defined by the instance of discourse that designates this present reflexively." Hence, to Ricoeur, "it (...) seems impossible (...) to include phenomenological time in the time of nature, whether it is a question of quantum time, thermodynamic time, the time of galactic transformations, or that of the evolution of species." Phenomenological time consisting in a dimension of future, past and present is explained by Ricoeur as being appropriate only in the narrative medium. And time in the narrative "refiguration" itself becomes comprehensible only up to a point. Finally, for Ricoeur, time marks the "mystery" in our thought which denies representation in that our existence irrevocably pervades our thinking. This negativistic feature of Ricoeur's is also found in Emmanuel Levinas' and Michael Theunissen's philosophical thoughts on time.
The third basic trend in contemporary philosophy of time is best seen when one considers the common assumptions which relate the thesis of convergence and its antithesis of an irreconcilable divergence between natural and historical time. In both cases time is considered as being a basic universal structure which disavows itself of historical contingency and cultural change. Those who advocate the tendency towards unification regard the "ontological universality of the temporality aspect" as having been proved through the unity of historized natural time in theories of self-organization. Proponents of the incommensurability of time argue quite differently, but reach a similar result. According to them, the plurality of time refers to a negative unity in time, which even in principle defies representation, but which seems to be factually evident through the experience of its unrepresentability. Ricoeur for example sees the narrative "totalization" and the associated "universal ambition of the metahistorical categories of historical thought" as being confirmed in the essentially irreconcilable phenomenological "fundamental" of our experience of time.
The third basic tendency which is of importance in the contemporary philosophy of time deviates from the two previously discussed with regard to the universality and ahistoricality of time presupposed by the first two tendencies. Supporters of the third tendency, the tendency to relativize and historize time, assume that the role time plays for human understanding of the self and of the world is an aspect of practical means of interaction with the world, which is culturally divergent and, within individual cultures, subject to change over time. The American pragmatist Richard Rorty represents this basic idea with particular refinement. According to Rorty, a radical approach to time must do away with the conception, based on theology, that time and eternity come together in man. This old, prevalent, totalitarian philosophy has had its day. Instead of this Rorty demands, "that we [should] try to get to the point where we no longer worship anything, where we treat nothing as a quasi divinity, where we treat everything - our language, our conscience, our community - as a product of time and chance." According to Rorty, we will only achieve this when we no longer mystify time, but understand it in a radically reflexive way as being a product of chance.
The interrelations between the different conceptions of time which are currently being discussed in academia, as well as the question of the relationship between academic and everyday perceptions of time, are to be dealt with pragmatically on the basis of the historization tendency, as represented by Rorty. The convergence of different vocabularies of time is, from Rorty's perspective, by no means proof of an intrinsic coincidence between natural and historical time. The transfer of the vocabulary of historical time from the context of human self-description into the realms of the natural world, as well as the mathematically operational implementation of time, illustrate only the historical ability to adapt, inner flexibility and contextual feedback even in a highly attuned vocabulary such as that found in physics and mathematics. In Rorty's view, the different vocabularies which we make use of for differing purposes and in varying contexts are to be understood as neither convergent in an intrinsic sense, nor as being essentially incommensurate in a phenomenological sense. Rather, they are themselves subject to change over time, through which they become related and disjoined in various ways according to the various historical situations which arise.
The radical temporalization of time which is expressed in these deliberations has already been outlined literarily by the Austrian novelist Robert Musil. In his novel The Man without Qualities he writes, "The train of events is a train unrolling its rails ahead of itself. The river of time is a river sweeping its banks along with it. The traveller moves about on a solid floor between solid walls; but the floor and the walls are being moved along too, imperceptibly, and yet in very lively fashion, by the movements that his fellow-travellers make." The inner reflexivity in the modern apprehension of time, which Musil enounces here, was introduced within philosophy by the differing approaches of Kant and Heidegger respectively. The second part of my considerations concerns itself with this twofold foundation, in which the debate between universality and ahistoricality of time on the one hand and relativity and historicality of time on the other hand is central.
The transcendental philosophy of time, from Kant's Transcendental Aesthetic in the Critique of Pure Reason, may be described as the Magna Carta of modern philosophy of time. In the Critique, Kant ordained time as being reflexive, i.e. with recourse to the basic constitution of human subjectivity as being "a pure form of sensible intuition." There is almost no single philosophical theory which has been so oft misunderstood as this, Kant's designation of time as a pure form of sensible intuition. The standard misinterpretation is that Kant, with his theory, had refuted the reality of time and downgraded it to being a mere subjective illusion. This miscomprehension is widespread not only amongst philosophers but, above all, amongst scientists.
The following quote from the British philosopher, and founder of analytical philosophy of time, John M.E. McTaggart provides a significant example of the insistence with which this miscomprehension had established itself within philosophy. In his famous 1908 essay The Unreality of Time he writes, "In philosophy, again, time is treated as unreal by Spinoza, by Kant, by Hegel and by Schopenhauer." Scientists such as Albert Einstein or Kurt Gödel also went along with this prejudice. Gödel, whose view was that time had lost its "objective meaning" through the "relativity of simultaneity" which Einstein had proven, writes: "In short, it seems that one obtains an unequivocal proof for the view of those philosophers who, like Parmenides, Kant, and the modern idealists, deny the objectivity of change and consider change as an illusion or an appearance due to our special mode of perception." Just as Gödel praises Einstein's work as being the physical evidence of the unreality of time, McTaggart commends his own work as being an analytic variant of the proof of time's unreality, as is allegedly demanded by Kant. In this context McTaggart writes, "I believe that time is unreal. But I do so for reasons which are not, I think, employed by any of the philosophers whom I have mentioned (...)."
At this point it would be going too far to expand on McTaggart's proof in detail. In summary however, it may be said that what McTaggart proves is nothing other than what Kant had shown long ago: namely not - as McTaggart believed - that time is absolutely unreal, but rather that time has no reality which is independent of the subject. This is an important difference. If time has no subject-independent reality, then it lacks only a certain kind of reality - and not reality altogether. Thus it is not the case that time is unreal in an indiscriminate sense, and just a mere illusion. Further, to have no subject-independent reality is by no means a deficit which devalues time's being in contrast to other things. As Michael Dummett highlighted in his essay McTaggart's Proof of the Unreality of Time: A Defence the idea of time as a subject-independent, fully describable reality is in itself a fiction. A fiction which presupposes that we have access to a world through which - detached from our finite perceptory conditions - we connect, in a quasi-devine sense, with entities' inner-being. It is this fiction which Kant had put an end to.
In contrast to the assumptions made by McTaggart and Gödel in the quotes mentioned here, it was by no means Kant's aim to question the objectiveness of time by reducing it to the level of 'illusion' and 'mere appearance'. The Kantian coupling of time, traditionally conceptualized as a structure of the world in itself by Newton and Leibniz, with the transcendental subject, is far more an attempt to base time's objectivity on a new, transcendental plane whilst considering the justified doubts expressed by Hume about the traditional Leibnizian-Newtonian view. The point of Kant's reasoning is that time can be unevadable and a priori - i.e. generally valid and necessary - only when it's proven to be an intersubjective condition for the possibility of knowledge in general.
Kant accentuates sensible intuition as the fundament of all human knowledge - this in contrast to the traditional, Platonic idea of knowledge, prevalent until the time of Leibniz and Newton, according to which only the intelligible can be a true object of knowledge. This basic proposition is contained in the first sentence of the Critique of Pure Reason, which reads, "In whatever manner and by whatever means a mode of knowledge may relate to objects, intuition is that through which it is in immediate relation to them, and to which all thought as a means is directed." It is this basic proposition, of the primacy of intuition as the main condition in enabling of all human knowledge, which one must consider in order to understand how far Kant's proof that time is "a pure form of sensible intuition" simultaneously assures its empirical objectivity and transcendental quasi-universality.
Kant's simple proposition, which Gödel fails to consider along with most other physicists who've come up against the Kantian conception of time, is that all knowledge accessible to humankind - and that includes humankind in our pursuing science (e.g. in physics) - is sensual, that is temporal intuition. Thus Kant tries to assert the empirical objectivity of time through its transcendental subjectivism. This connection is expressed in the following, much cited, excerpt from the Transcendental Aesthetic. First it appears that Kant really does want to deny time all reality. He writes, "Time is therefore a purely subjective condition of our (human) intuition (which is always sensible, that is, so far as we are affected by objects), and in itself, apart from the subject, is nothing." However, the next sentence, which is mostly omitted in citation, is decisive. This states, "Nevertheless, in respect of all appearances, and therefore of all the things which can enter into our experience, it is necessarily objective." With this in mind, Kant then speaks of the "empirical reality" of time, that is to say of its "objective validity in respect of all objects, which allow of ever being given to our senses."
Along with the already mentioned misconception about the unreality of time, an influential second shortfall distinguishes the reception of Kant's philosophy of time. Strictly speaking, this shortfall is less a misunderstanding than a failure to understand, that is to say perceiving the theory with a narrowed outlook. Decisive aspects of Kant's thinking about time have long been eclipsed, in the mould of Schopenhauer and Hegel, by its being equated with the treatment of time in the Transcendental Aesthetic. This equation was addressed, with recourse to insights gained from Heidegger's book Kant and the Problem of Metaphysics (1929), by the German philosopher Klaus Düsing in his Examination of Kant's Theory of Time and its Critical Modern Reception. As Düsing emphasizes at the beginning of his examination, "Kant's theory of time is of course contained only incompletely in the Transcendental Aethetic of the Critique of Pure Reason; essential details of this theory are found in the following sections (...)." Similarly in §10 of Heidegger's Kantbuch: "The following interpretation will reveal how time in the course of the development of the several stages of the foundation of metaphysics comes more and more to the fore and thereby reveals its proper essence in a more original way than is possible by means of the provisional characterization in the Transcendental Aesthetic."
The obscuring of Kant's thoughts on time which go beyond the Transcendental Aesthetic is based on another, profoundly narrowed outlook, upon which Düsing does not expand. This narrowing of outlook consists in the failure to have apprehended the fact that Kant himself had not only implicitly but also explicitly relativized his own transcendental universalization of time. Whilst the transcendental universality of time in modern philosophy after Kant is retained as a dimension which constitutes the subjectivity of the subject by both the finite, intentional subject (Husserl) and the living self of pure duration (Bergson), Kant himself had already questioned the universality of time which he had initially presupposed. In so doing he opened up a field of discussion which was further set out by Heidegger and is currently being addressed by Rorty, Derrida, Lyotard and others.
Kant's relativization of the time, whose transcendental universalization was completed in the Transcendental Aesthetic, is not found in the Transcendental Aesthetic itself, but is developed contiguously within the context of his Transcendental Logic. The distinction which Kant makes, in a footnote in the B edition of the Transcendental Deduction, between time as a "form of intuition" and as "formal intuition" is central here. The distinction to which this footnote relates is already introduced in the main text. The main text reads, "In the representations of space and time we have a priori forms of outer and inner sensible intuition; and to these the synthesis of apprehension of the manifold of appearance must always conform, because in no other way can the synthesis take place at all. But space and time are represented a priori not merely as forms of sensible intuition, but as themselves intuitions which contain a manifold [of their own], and therefore are represented with the determination of the unity of this manifold (vide the Transcendental Aesthetic)." Thus, according to Kant's own understanding, the subject of the Transcendental Aesthetic is not the form of intuition as such, but a quasi-objective construction: time as formal intuition.
This is made quite explicit in Kant's annotation. This reads, "Space, represented as object (as we are required to do in geometry), contains more than mere form of intuition; it also contains combination of the manifold, given according to the form of sensibility, in an intuitive representation, so that the form of intuition gives only a manifold, the formal intuition gives unity of representation." With an eye to the Transcendental Aesthetic the annotation continues, "In the Aesthetic I have treated this unity as belonging merely to sensibility, simply in order to emphasize that it precedes any concept, although, as a matter of fact, it presupposes a synthesis which does not belong to the senses but through which all concepts of space and time become possible. For since by its means (in that the understanding determines the sensibility) space and time are first given as intuitions, the unity of this a priori intuition belongs to space and time, and not to the concept of the understanding." The conceived unity of time in the Transcendental Aesthetic, which in the "Transcendental Exposition of the Concept of Time" at the same time serves as a fundament of the "general doctrine of motion" , in itself preconceives time as an objectivized, and thus conceptual and categorial synthesis. It is this unifying, linear conception of time, which may be introduced "by analogies" in describing "a line progressing to infinity" , which Kant universalizes in its "empirical reality" not at least aiming at a new epistemological foundation of Newton's physics.
At the same time however, the second 'concept' of time upon which the concept of objectivized time is based evades transcendental philosophical explanation. For time, as a form of intuition in the strict sense, forms the horizon which Kant fails to illuminate, in which time can first be dealt with as formal intuition. The universality of the notion of objective time in the Transcendental Aesthetic is decentralized and at the same time methodically relativized by this horizon's irrevocable transcendental philosophical dimension. In this context Heidegger underlines in §9 of his Phenomenological Interpretation of Kant's Critique of Pure Reason , that, from Kant's perspective, "formal intuition is not a primordial, but a derived conception." How Heidegger's analysis of temporality presents itself against the background of this insight is to be elaborated in the following.
Heidegger developed his analysis of temporality in the second division of the first part of his Being and Time (1927). In this, Heidegger's early, still fragmentary master work one must differentiate between two things: the non-realized, but suggested undertaking of a fundamental ontology, and the factually accomplished analysis of the Dasein. In the following I shall concentrate on the analysis of temporality developed in the second division of Being and Time, which bears the title Dasein and Temporality. The work's broader perspective of a fundamental ontology is drawn upon only in so far as it affects the analysis of temporality.
Unlike Husserl and Bergson, who did not directly relate their theories of time to Kant's, Heidegger's early thinking takes issue directly with Kant. This was clearly expressed in his lecture, the Phenomenological Interpretation of Kant's Critique of Pure Reason, in the year Being and Time was published, as well as in the book Kant and the Problem of Metaphysics, published in 1929, and in references to Kant found in Being and Time itself. In directly contesting Kant, Heidegger broke through the theoretical means of approach to the problem of time, as established by the Critique of Pure Reason and retained by Bergson and Husserl. With Heidegger, the question of time as a pure form of sensible intuition - which is left open by Kant and reformulated by Bergson and Husserl as a question of the intrinsic temporality in subjectivity - becomes a question of the genuinely practical means of temporal self-projection in human existence.
'Dasein' is Heidegger's term for what is called 'subject' or 'I think' in Kant. Heidegger is of the opinion that Kant - in basing it on 'I think' - reduces the transcendental subject to being an aspect of theoretical knowledge. According to Heidegger, man is not a creature which aims first and foremost to cognize the present-at-hand (das Vorhandene). As Dasein, he is far more a being which has always been cast amidst in its 'there' (Da), and thus did not first begin artificially and retrospectively to construct an epistemological relationship to the outside world, but rather one which had always found itself practically related to a concrete environment - to the "ready-to-hand" (das Zuhandene). Here Heidegger highlights: "The 'I' is not just an 'I think', but an 'I think something'." And he explains: "Kant has indeed avoided cutting the 'I' adrift from thinking; but he has done so without starting with the 'I think' itself in its full essential content as an 'I think something', and above all, without seeing what is ontologically 'presupposed' in taking the 'I think something' as a basic characteristic of the self." This postulate is the 'Being-in-the-world' of Dasein. Since Kant "did not see the phenomenon of the world" , the basic Heideggerian insight must continue to obstruct him: "In saying 'I', Dasein expresses itself as Being-in-the-world."
Like Kant, Heidegger also asks about the conditions of possibility. For him however, it's not an abstract enquiry about the possible conditions of knowledge, but quite concretely about the possible conditions of our Being-in-the-world. In the second division of Being and Time Heidegger reveals that "temporality" is the basic existential structure forming the fundamental dimension which underlies the Dasein's structure of care (Sorge), upon which he had expanded in the first division of Being and Time. With recourse to Kierkegaard he describes the "double- movement" which effects the Da ('there') in the Dasein, and which opens the world, as a doubly temporal occurence. The first partial movement in this occuring exists in the anticipation of the future; the second partial movement in coming back to the present as an openness for the encountered world determined by the past - or as Heidegger put it, the "having been." In summary Heidegger writes: "Coming back to itself futurally, resoluteness brings itself into the Situation by making present. The character of 'having been' arises from the future, and in such a way that the future 'has been' (or better, which is 'in the process of having been') releases from itself the present. This phenomenon has the unity of a future which makes present in the process of having been; we designate it as 'temporality'."
Here, on the existential level of conditions of possibility, the concern is not the concrete future, determined by certain substantive aims, but the future in general, of which is written: "By the term 'futural', we do not here have in view a 'now' which has not yet become 'actual' and which sometime will be for the first time. We have in view the coming [Kunft] in which Dasein, in its ownmost potentiality-for-Being, comes towards itself." Heidegger's designation of this basic structure of Dasein as "transcendence" has also given cause to infer theological implications here. Heidegger defended himself against such a reading of his work from an early stage. Even in his early lecture The Concept of Time to theologians in Marburg in 1924, in which he had just formulated the general ideas behind his analysis of temporality, he emphasized in the Kantian manner: "The philosopher does not believe. If the philosopher asks about time, then he has resolved to understand time in terms of time (...)." To understand time in terms of time means to think about time temporally, or to be in favour of a temporalization of time. Such is the through and through secular Heideggerian programme, and one must also understand his designation of "futurality" as being the "coming [Kunft] in which Dasein, in its ownmost potentiality-for-Being, comes towards itself" against this backdrop.
Unlike Kierkegaard, for whom the double-movement of human existence only fails to lead us into desperation when it happens in the consciousness of belief in God, Heidegger considers successful temporal self-fulfilment to be possible in the absence of devine transcendence. Heidegger describes the anticipation of one's own future as a "Being- towards-death" , but he means that this anticipation of the "possibility of the measureless impossibility of existence" , which represents death, allows a kind of 'authentic' existence. A kind of existence in which the experience of a radical finiteness does not occasion Kierkegaardian desperation, but which rather opens up a new horizon of manifold possibilities, within which our everyday Dasein was always organized, without the essential characteristics of its possibilities having entered our consciousness. This radical view of 'the future as coming towards' (Zu-kunft) in anticipating one's own death as the "ownmost, non- relational possibility, which is not to be outstripped" is also understood by Heidegger to be the self's own "resoluteness" to itself: as authentic "potentiality-for-Being-one's-Self" (Selbstseinkönnen).
Heidegger contrasts this distinguished basic form of human temporality with its opposite, or what he calls our "everyday understanding of time." He attempts to show how the everyday understanding of time arose as a derivative of the original temporality of human Dasein. Or to put it another way: Heidegger's goal is to show why and how the objectivized time which we read off our clocks and calendars arises from the temporal processes of our self-constitution, that is from the authentic temporality of the double-movement of human existence. Heidegger's perception is that we can only hold ourselves temporarily - in distinguished moments of our Dasein - in the authentic temporality, or the resolute anticipation of death. In the normal run of things we anticipate a future whose content is determined by our concrete needs and plans, and whose final horizon, death, is excluded. This reduced, practical everyday form of double-movement is what Heidegger calls the "inauthentic temporality."
The inauthentic temporality is again different from what Heidegger in §81 of Being and Time calls "vulgäres Zeitverständnis", a vulgar or "ordinary conception of time". Whilst in the inauthentic, practical everyday temporality a "reflect[ion of] the ecstatical constitution of temporality" can still be sensed, the temporal origin of time from the temporality of human Dasein is totally obscured in the vulgar conception of time. Heidegger makes this distinction quite clear through our use of clocks. He refers here to a paradox which economists and managers of time have yet to overcome. This paradox is that "precisely that Dasein which reckons with time and lives with its watch in its hands (...) constantly says 'I have not time.'" How is it that the greatest strategist of time at once suffers the greatest stress due to time? Heidegger's answer is: because to this methodical strategist, time has congealed into a series of nows of exchangable seconds, minutes, days, weeks, months and years, into a objectivized external authority of time, that is like an infinitely divisible, endless line which lies before him and which he can never really succeed in filling. The objectivized time slips through his fingers. Any time he saves through skillful time management immediately imposes itself again on him as empty and in need of being filled with work. It is no longer concrete concerns and needs which dictate planning of time, rather it is the emptiness itself, which awakens new needs and forces its own capitalization. Whilst today this form of dealing with time has long become the norm , Heidegger was still able to view this vulgar conception of time as being an extreme case, from which the inauthentic temporality could still be clearly delineated. In the practical context of everyday concerns time appears to be not exactly an external, nor still the physically determined power of the clock or "nature-time" , but to be built into our everyday concerns and determined by these as "world-time".
Heidegger identifies the aspects of datability, tension and publicness as being the three central characteristics which distinguish inauthentic temporality from the vulgar conception of time. The Heideggerian standpoint can be shown particularly clearly by taking datability as an example. Whereas in the vulgar conception of time the "now- point" (Jetztpunkt) is defined solely through the immanent relation to other now-points, or through the abstract relationship earlier/later, time perceived with respect to everyday concerns is always integrated with concrete regard to daily business, whose datability is provided by: there is a "now that ..." (Jetzt, da ...). In this context Heidegger notes: "When we look at the clock and say 'now' we are not directed toward the now as such but toward that wherefore and whereto there is still time now; we are directed toward what occupies us, what presses hard upon us, what it is time for, what we want to have time for." He concludes from this: "The fact that the structure of datability belongs essentially to what has been interpreted with the 'now', 'then' and 'on that former occasion', becomes the most elemental proof that what has thus been interpreted has originated in the temporality which interprets itself. When we say 'now', we always understand a 'now that so and so ...' though we do not say all of this. Why? Because the 'now' interprets a making-present of entities. In the 'now that ...' lies the ecstatical character of the Present. The datability of the 'now', the 'then' and the 'on that former occasion', reflects the ecstatical constitution of temporality, and is therefore essential for the time itself which has been expressed."
In summary it can be said: In Heidegger's differentiation between authentic temporality, inauthentic temporality and the vulgar conception of time there is a continuation of the relativization of objective time, which Kant began with his distinction between time as 'formal intuition' and time as a 'form of intuition'. Heidegger radicalizes it under the concrete conditions of human Being-in-the-world. This continuation has a dual aspect. For one, Heidegger relativizes the objectiveness on which the vulgar conception of time is based with recourse to the pragmatic, inauthentic temporality which pervades our dealing with time in relation to daily concerns. On the other hand, Heidegger relativizes not only the objectiveness on which the vulgar conception of time is based, but also the pragmatic understanding of time, from which inauthentic temporality arises. This he does with recourse to the superior and, in his view, fundamental form of authentic temporality. From this fundamental form of temporality Heidegger believed he could effect the transition from an analysis of the Dasein to a fundamental ontology. It simultaneously marks the inner turning point, at which Heidegger's phenomenology of the temporality of human Dasein is subsumed within and forcibly enshrouded by the fundamental ontological perspective in Being and Time.
This last aspect in Heidegger's thinking - the fundamental ontological lapse into a new time theoretical universalism - was brought to the fore by Rorty in his Heidegger critique. In his book Contingency, Irony and Solidarity Rorty writes: "Heidegger seems seriously to have thought, when he was writing Being and Time, that he was carrying out a transcendental project, namely, giving an accurate list of the 'ontological' conditions of possibility of merely 'ontic' states. (...). Just as Kant seems never to have asked himself how, given the restrictions on human cognition the Critique of Pure Reason had discerned, it was possible to assume the 'transcendental standpoint' from which that book was purportedly written, so the Heidegger of this period never looks into the question of methodological self-reference. He never asks himself how 'ontology' of the sort he was busy producing was, given its own conclusions, possible." Rorty adds: "In remarking on this early unselfconsciousness, I am not trying to denigrate Heidegger's early (internally inconsistent, hastily written, brilliantly original) book. Heidegger was, after all, not the first philosopher to have taken his own idiosyncratic spiritual situation for the essence of what it was to be a human being."
That the Kantian theory of time should only be partially affected by Rorty's criticism has already been made clear above in reference to the relativization of time by Kant in the Transcendental Logic. In closing, it can be shown to be similar for Heidegger. To this end, Rorty's initially positive reading of Heidegger's incipient intentions is quoted. In connection with this, Rorty précis the basis of Being and Time as follows: "Heidegger would like to recapture a sense of what time was like before it fell under the spell of eternity, what we were before we became obsessed by the need for an overarching context which would subsume and explain us (...). To put it in another way: he would like to recapture a sense of contingency, of the fragility and riskiness of any human project (...)." This productive intention, continues Rorty, was undermined by Heidegger's absolution of authentic temporality and its fundamental ontological elucidation.
None the less, an objection to this essentially justified criticism is that the subsumption of Heidegger's analysis of temporality into a fundamental ontology, although projected, was not carried out in reality. At the same time rudimentary attempts to relativize the model of temporal double-movement, i.e. to understand this temporally in itself, are found in Heidegger's early work on time. This step, on which Heidegger's work borders in several places, marks the principal feature of a radical temporalization of time in its full consequence. This radical temporalization of time, is above all implicitly anticipated in Heidegger's addressing of "the ideas of Count Yorck" which is found in §77 of Time and Being. Here Heidegger ascertains positively: "And Yorck (...) did not hesitate to draw the final conclusion from his insight into the historicality of Dasein." As evidence Heidegger approvingly quotes from correspondence between Yorck and Dilthey: "Behaviour and historicality are like breathing and atmospheric pressure; and - this may sound rather paradoxical - it seems to me methodologically like a residue of metaphysics to not historicize one's philosophizing." Heidegger above all explicitly demands the reflexive temporalization of time in his early lecture The Concept of Time. Heidegger notes: "(...) we must talk temporally about time. Time ist the 'how'. If we inquire into what time is, then one may not cling prematurely to an answer (time is such and such), for this always means a 'what'." And Heidegger concludes: "Time itself is meaningless; time is temporal."
If one takes Heidegger literally at this point, a description of the Dasein's temporality may be given free of the fundamental ontological implications engendered by the singling out of one specific temporal structure as the 'authentic temporality'. In this way, the bonding of pragmatic temporality with the formal structure of the temporal double-movement can be retained, without requiring that the hierarchy of temporal structures, which Heidegger constructs, be overtaken. This modification is tantamount to a radical pluralization of Heidegger's analysis of temporality. A plurality is meant here which goes beyond the simple pluralization which typifies the second basic tendency in contemporary philosophy of time. This is the case in so far that it no longer attempts to defuse the plurality of time through the speculative evidence of a negatively conceived unity of time. Rather, in the language of Musil's metaphor introduced above, the banks of the river of time are swept along by the radical historization and relativization of time.
The radical pluralization of time which is seen in Heidegger has two aspects. First it leads to an internal pluralization in so far as the Heideggerian time structures are no longer to be understood as being founded in a hierarchichal context furnished with normative implications (authentic/inauthentic). With this background, the coupling of pragmatic temporality, temporality based on certain projections of the future, within the Dasein's temporal double-movement is to be understood as being a synthesis on a horizon from which future appears first to be concretely experienceable and in its contingency as compellingly comprehensible. The modification in the apprehension of the temporal double-movement is secondly bound to an external pluralization. It no longer concerns only the temporal structures which Heidegger described, but also incorporates alternative forms of subjectivity and temporality which can no longer be understood under the conditions presupposed by Heidegger's "priority of the future." The range of diverse types of temporality is to be considered here, reaching from Kant's 'reflective faculty of judgement', Freud's 'free association', via Proust's 'mémoire involontaire', Benjamin's 'Jetztzeit' and Newman's 'now', through to Lyotard's 'passage' or Derrida's 'écriture'. This spectrum of time structures is currently being investigated by a multitude of different authors from the perspective of media philosophy.
Baumgartner, Hans-Michael (Hrsg.) (1993), Das Rätsel der Zeit. Philosophische Analysen, Freiburg/München.
Coveney, Peter / Highfield, Roger (1990), The Arrow of Time, London.
Dummett, Michael (1960), A Defense of McTaggart's Proof of the Unreality of Time, in: Philosophical Review, vol. 69, 497-504.
Düsing, Klaus (1980), Objektive und subjektive Zeit. Untersuchungen zu Kants Zeittheorie und zu ihrer modernen kritischen Rezeption, in: Kant-Studien, Bd. 71, 1-34.
Gödel, Kurt (1970), A Remark About the Relationship Between Relativity Theory and Idealistic Philosophy, in: Albert Einstein. Philosopher - Scientist, ed. by Paul Arthur Schilpp, The Library of Living Philosophers, vol. 7, London, 557-562 (first published 1949).
Griffin, David Ray (ed.) (1986), Physics and the Ultimate Significance of Time. Bohm, Prigogine, and Process Philosophy, New York.
Heidegger, Martin (1962), Kant and the Problem of Metaphysics. Translated by James S. Churchill, Bloomington (German original first published: Bonn 1929).
Heidegger, Martin (1977), Phänomenologische Interpretation von Kants Kritik der reinen Vernunft, in: ders., Gesamtausgabe. II. Abteilung: Vorlesungen 1923-1944, Bd. 25, Frankfurt a.M.
Heidegger, Martin (1992a), Being and Time. Translated by John Macquarrie and Edward Robinson, Oxford and Cambridge (first published 1962; German original first published: Tübingen 1927).
Heidegger, Martin (1992b), The Concept of Time. Translated by William McNeill, Oxford and Cambridge (Mass.) (German original first published: Tübingen 1989).
Kant, Immanuel (1983), Critique of Pure Reason. Translated by Norman Kemp Smith, London 1987 (first published: London 1929; German original first published: Riga 1781[A]; 1787[B]).
Kierkegaard, Sören (1987), Fear and Trembling. Edited and translated with introduction and notes by Howard V. Hong and Edna H. Hong, Princeton (Danish original first published: Kopenhagen 1843).
Kierkegaard, Sören (1980), The Sickness Unto Death: A Christian Psychological Exposition for Upbuilding and Awakening. Edited and translated with introduction by Howard V. Hong and Edna H. Hong, Princeton (Danish original first published: Kopenhagen 1849).
Krohn, Wolfgang / Küppers, Günter / Nowotny, Helga (ed.) (1990), Selforganization. Portrait of a Scientific Revolution, Dordrecht/Boston/London.
Le Poidevin, Robin / McBeath, Murray (1993), The Philosophy of Time, Oxford.
Levinas, Emmanuel (1979), Le Temps et l'Autre, Montpellier 1979.
Lübbe, Hermann (1992), Im Zug der Zeit. Verkürzter Aufenthalt in der Gegenwart, Berlin/Heidelberg/New York.
Macey, Samuel L. (1991), Time. A Bibliographic Guide, New York / London.
McTaggart, John M.E. (1908), The Unreality of Time, in: Mind, vol. 17, 457-474.
Musil, Robert (1954), The Man without Qualities, vol. II(2), London (German original first published: Berlin, 1930-1933).
Prigogine, Ilya (1973), Time, Irreversibility and Structure, in: J.Mehra (ed.), Physicist's Conception of Nature, Dordrecht/Boston, 561-593.
Prigogine, Ilya (1980), From Being to Becoming: Time and Complexity in the Physical Sciences, San Francisco.
Prigogine, Ilya / Stengers, Isabelle (1988), Entre le temps et l'éternité, Paris.
Ricoeur, Paul (1984), Time and Narrative, vol. 1. Translated by Kathleen McLaughlin and David Pellauer, Chicago (French original first published: Paris 1983).
Ricoeur, Paul (1988), Time and Narrative, vol. 3. Translated by Kathleen Blamey and David Pellauer, Chicago (French original first published: Paris 1985).
Rinderspracher, Jürgen P. (1985), Gesellschaft ohne Zeit. Individuelle Zeitverwendung und soziale Organisation der Arbeit, Frankfurt.
Rorty, Richard (1989), Contingency, Irony, and Solidarity, Cambridge 1989.
Rorty, Richard (1991), Essays on Heidegger and others, Philosophical Papers, vol. 2, Cambridge.
Sandbothe, Mike (1993), Zeit und Medien. Postmoderne Medientheorien im Spannungsfeld von Heideggers 'Sein und Zeit', in: Medien und Zeit. Forum für historische Kommunikationsforschung, Bd. 8, Heft 2, 14-20.
Sandbothe, Mike (1994), Zeitlichkeit und Selbstorganisation. Ilya Prigogines Theorie irreversibler Prozesse und Martin Heideggers Zeitlichkeitsanalyse, Dissertation, Otto-Friedrich-Universität Bamberg, Fakultät für Pädagogik, Philosophie, Psychologie.
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Zimmerli, Walther Ch. / Sandbothe, Mike (Hrsg.) (1993), Klassiker der modernen Zeitphilosophie, Darmstadt.


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Jack Corinblit (argued), Los Angeles, Cal., Meyer Berkowitz, Beverly Hills, Cal., for appellant.
Gordon F. Hampton (argued), Don T. Hibner, Jr., of Sheppard, Mullin, Richter & Hampton, Los Angeles, Cal., A. Donham Owen of Owen, Wickersham & Erickson, San Francisco, Cal., for appellee.
Before CHAMBERS and MERRILL, Circuit Judges, and SOLOMON, District judge.
This appeal is taken pursuant to 28 U.S.C. 1292(a)(1), from an interlocutory order denying a temporary injunction.
Until December 3, 1963, Monsanto held a patent on an extremely clear, durable type of plastic sheet known as 'biaxially oriented polystyrene sheet' and, in the trade, called 'OPS'. It remains the major U.S. supplier of this sheet. Soon after the expiration of its patent, A. & E., a producer of finished products from this type of plastic sheet, began attempts to develop a plant to make OPS for itself, using information disclosed by the patent.
In April, 1964, A. & E. hired away from Monsanto one of the latter's engineers, Merlin Evans, who had worked for Monsanto since graduation from college seven years earlier. In the course of his employment he had been intimately involved in OPS research and development and had had full access to Monsanto's latest technology in this field. Monsanto held an employment contract with Evans under which he had agreed never to disclose 'any secret or confidential information or matter of the company.' Monsanto, fearing that Evans would disclose confidential technology to A. & E., wrote A. & E. warning that it would take legal action if such information were used by A. & E. in setting up its OPS process.
A. & E. thereupon suspended installation of the sheet process in its plant and efforts were begun to settle the issue. On December 22, 1964, a written agreement was entered into by which Monsanto granted A. & E. a license to use its technology as known to Evans, apparently to the extent necessary to provide OPS for use in the manufacture of thermoformed articles. A. & E. agreed to pay royalties for a period of ten years. Evans was released from his obligation of secrecy.
Apparently for the purpose of allowing A. & E. the economies of largescale production while refraining from competition with Monsanto in the sale of the sheet itself, the agreement also provided that Monsanto would purchase from A. & E. five million pounds of OPS over the first three years after its production was begun by A. & E. The exact terms of this agreement were not specified and the parties were unable subsequently to agree upon further clarification. In September, 1965, A. & E. notified Monsanto that it was prepared to deliver sheet pursuant to the terms of the agreement. Monsanto then repudiated its obligation to purchase and A. & E. thereupon began sale of the sheet on the open market in competition with Monsanto.
The agreement between the parties provided for arbitration of all disputes 'arising out of or relating to' the agreement. On March 4, 1966, Monsanto served a demand for arbitration of the following issues: (1) whether A. & E. had breached its licensing agreement with Monsanto, and (2) whether Monsanto was justified in repudiating its commitment to purchase five million pounds of OPS from A. & E. An answering statement filed by A. & E. presented as issues: (1) whether it had agreed not to sell the OPS it produced to third parties, and (2) whether trade secrets or 'know-how' existed which could be imparted to it by Merlin Evans and form the subject of a valid license.
While A. & E. initially appeared to accept arbitration, and participated in the selection of arbitrators, on June 27, 1966, just before arbitration was to begin, it filed this suit in the District Court for the Central District of California claiming that if the agreement were construed as Monsanto wished it to be it would violate the Sherman Act as an attempt to monopolize the market in OPS and restrain trade in that product. As relief it sought, in part, permanent and temporary injunctions enjoining Monsanto from proceeding with arbitration.
Upon motion of A. & E. the District Court entered its order denying temporary injunction. It is from this order that appeal is taken.
At the outset we are faced with Monsanto's motion to dismiss the appeal for lack of appellate jurisdiction. Monsanto contends that the order denying a temporary injunction is not an appealable order under 28 U.S.C. 1292(a)(1);1 that it was not in truth an injunction which was sought but a 'stay' of arbitration; and that the order was a mere step in the controlling of litigation before the court. In support of its contention Monsanto relies upon Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80 (2d Cir. 1961), cert. denied, Dawson v. Lummus Co., 368 U.S. 986, 82 S.Ct. 601, 7 L.Ed.2d 524 (1962).
We cannot agree. This is not a case of a court's staying or refusing to stay its own hand in deference to proceedings going forward in another forum.2 The order was not an exercise by a court of its inherent power to control its own proceedings. Here the court was asked (and declined) affirmatively to interfere with proceedings in another forum; to exercise its equity powers to halt action of its litigants outside of its own court proceedings-- the classic form of injunction. That arbitration is not a mere extension of court proceedings but involves a separate tribunal seems clear from Bernhardt v. Polygraph Co. of America, 350 U.S. 198, 202-203, 76 S.Ct. 273, 100 L.Ed. 199 (1956).
1. That the contract upon its face is invalid under the Sherman Act and that this invalidity voids the agreement to arbitrate.
2. That if issues remain to be decided upon which the validity of the contract will depend these issues are for the court and not the arbitration panel.
3. That in any event where the existence of a valid arbitration agreement is in dispute this issue should have precedence and should be first resolved before resort is had to arbitration.
The agreement between Monsanto and A. & E., on its face, appears to be a license of technology or 'knowhow,'5 to which restraints of competition are attached as conditions of the license. Thus, on its face, it does not appear to be an agreement between competitors not to compete, for absent the licensed know-how, A. & E. is in no position to compete.
The holder of a patent can validly license it to others on the condition that they use it only for certain purposes. General Talking Pictures Corp. v. Western Electric Co., 305 U.S. 124, 59 S.Ct. 116, 83 L.Ed. 81 (1938). A patent is a legal monopoly and any waiver of the monopoly expands rather than diminishes its availability to the public.
Macdonald, supra, at 355, 358.
The critical question in an antitrust context is whether the restriction may fairly be said to be ancillary to a commercially supportable licensing arrangement, or whether the licensing scheme is a sham set up for the purpose of controlling competition while avoiding the consequences of the antitrust laws.
A. & E. contends that the latter is the case here, relying upon United States v. Imperial Chemical Industries, 100 F.Supp. 504 (S.D.N.Y.1951); United States v. Timken Roller Bearing Co., 83 F.Supp. 284 (N.D.Ohio 1949), aff'd, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951); United States v. General Electric Co., 82 F.Supp. 753 (D.N.J.1949).
In these cases complicated world-wide networks of cross-licensing agreements were struck down as subterfuges enabling the participants to divide markets and fix prices while avoiding antitrust laws. The courts found a lack of any true trade secrets or that what secrets existed were not sufficiently substantial to support restraints of such magnitude. The parties' intent, principally to restrain competition, was regarded as a critical factor.
If the agreement between Monsanto and A. & E. is to be found invalid for similar reasons, such invalidity is not disclosed prima facie from the face of the contract. It will depend upon the existence and the extent of know-how or technology exclusively possessed by Monsanto and within the knowledge of Evans and whether the substance of such technology may fairly be said to support ancillary restraints of the kind here involved.
The question remains whether such issues may be submitted to arbitration.
Where the validity of a contract is challenged upon the ground of fraud, the issue of fraud is a proper subject of arbitration. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). However, whether a contract is valid under the federal antitrust laws in not an arbitrable issue. American Safety Equipment Corp. v. J. P. Maguire & Co., 391 F.2d 821 (2d Cir. 1968). See also Aimcee Wholesale Corp. v. Tomar Products Inc., 21 N.Y.2d 621, 289 N.Y.S.2d 968, 237 N.E.2d 223 (1968) (state antitrust claims not arbitrable).
Monsanto asserts that the latter issue is not here submitted to arbitration; that following arbitration the contract, as construed by the arbitrators, will be back before the District Court for its determination as to validity under the antitrust laws.
We agree with Monsanto as to three of the issues submitted to arbitration: (1) whether A. & E. had promised not to sell OPS in competition with Monsanto; (2) whether A. & E. had broken that promise; (3) whether Monsanto was justified in repudiating its commitment to purchase OPS from A. & E. These are issues as to which the parties could stipulate without offense to the public interest and as to which they can as well agree upon a method of resolving disputes. To A. & E.'s contention that it will lose its right to jury trial on these issues the short answer is that it has waived this right by agreeing to arbitration. Antitrust issues in such a case as this, which does not involve alleged conspiracy, are not presented until the facts are known as to what the parties have promised each other or the action to which they are presently bound.
The same cannot be said of the fourth issue presented for arbitration: the existence and extent of technology within the knowledge of Evans which Monsanto can rightfully claim as privately controlled. This (together with Monsanto's purpose) is the crucial factual antitrust issue, for without such technology as a basis no restriction on competition could be valid as an ancillary restraint. Public interest attaches to the ascertainment of the truth as to this issue. Such issues the parties cannot, by stipulation or otherwise, exclude from the area of judicial scrutiny and determination.
We conclude that it was abuse of discretion for the court to make this issue available for arbitration.
The court has chosen to await the results of arbitration before proceeding to determination of the validity of the contract in A. & E.'s antitrust suit. We cannot say that this constituted abuse of discretion.
In Wyatt Earp Enterprises v. Sackman, Inc., 157 F.Supp. 621 (S.D.N.Y.1958), the court, in rejecting a stay, found a strong case for invalidity and noted that proceeding to arbitration would merely add to the costliness and delays of litigation that arbitration is supposed to eliminate.
Invalidity is not so clear here. The court understandably could wish to know the precise dimensions of the parties' agreement before undertaking to decide its validity.
We do by our decision, however, drastically limit the area open to arbitration and this may well affect the decision of the District Court as to the order and the forum in which factual determination should be made. The order denying temporary injunction must in any event be set aside for lack of necessary limitation. Reconsideration of the entire matter, sua sponte or upon application by either party, should now be available.
Reversed and remanded with instructions that the order denying temporary injunction be set aside and for further proceedings. No costs are allowed.

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BALDWIN, Com'r of Agriculture, et al.
Argued Nov. 6, 7, 1934.
Complaining that the fixing of this differential, in respect to sales of the same commodity, was an invasion of rights guaranteed by the Fourteenth Amendment, plaintiff brought this suit to enjoin enforcement. An interlocutory injunction was sought and a court of three judges was convened. Defendants moved to dismiss the complaint upon the grounds that it failed to state a cause of action in equity and that the provision of the statute was constitutional. Affidavits were presented on both sides and the case was heard on the motion for injunction and the motion to dismiss. In view of the cumulative penalties provided, the court had no doubt of its jurisdiction to pass upon the question of constitutionality. Dealing with the case in that aspect, the court held that the complaint did not state a cause of suit and dismissed it for that reason. The court regarded the application for an interlocutory injunction as necessarily falling with the complaint and hence made no findings of fact. (D.C.) 7 F.Supp. 352, 354. The plaintiff appeals.
We turn to the allegations of the complaint. Plaintiff sets forth the full text of the acts of 1933 and 1934 and of the applicable orders. By the order of the Commissioner of Agriculture and Markets the minimum prices for the sale of fluid milk in bottles by dealers to consumers and to stores, and by stores to consumers, are fixed for the city of New York. The order determining the four dealers who have a 'well advertised trade name' is continued in effect. Plaintiff alleges that for many years it has been continuously engaged in purchasing and selling milk in bottles in the city of New York and has built up a large business under its trade name 'Borden's' for sales both to consumers and to the stores described in the statute;6 that it operates nine retail stores in the city at which it has an extensive business in the sale of bottled milk to consumers under its trade name; that it has obtained from the Board of Health of the city all the necessary licenses and permits and has observed all the regulations of the Sanitary Code; that it has expended large sums in advertising its trade name and has thus created a valuable good will. Plaintiff alleges that it is in direct and active competition with numerous individuals, corporations and associations which are selling bottled milk to stores in the city but are not within the official determination of those having a 'well advertised trade name'; that these competitors are permitted to sell to stores bottled milk at a price one cent per quart below the minimum price at which plaintiff is permitted to sell its bottled milk to stores under its trade name; and that stores are permitted to sell to consumers the bottled milk of these competitors with the same differential as compared with the minimum price at which plaintiff's milk may be sold by stores, and thus plaintiff is deprived of a large part of the market for its milk and the value of its property and good will are seriously impaired. Plaintiff states that the loss in trade it thus suffers amounts to not less than 25,000 quarts of bottled milk daily.
Plaintiff alleges that the maintenance of this differential, with the consequent privilege to its competitors and restraint upon itself, is 'arbitrary, oppressive and discriminatory' and has 'no relation to the protection of the public health or the public welfare or to any of the objects or purposes' for which the statute was enacted, and upon this ground plaintiff charges that the statutory provision violates the due process and equal protection clauses of the Fourteenth Amendment. Inability to obtain a license, unless plaintiff agrees in writing to comply with the statute and orders, and the prohibitive character of the penalties prescribed, are assigned as affording the basis of equitable jurisdiction.
We have frequently said, especially in confiscation cases, that a mere general allegation of repugnance to the Fourteenth Amendment is not enough to state a cause of action to restrain the enforcement of a statute or administrative order. See AEtna Insurance Co. v. Hyde, 275 U.S. 440, 447, 48 S.Ct. 174, 72 L.Ed. 357; Public Service Commission v. Great Northern Utilities Co., 289 U.S. 130, 136, 137, 53 S.Ct. 546, 77 L.Ed. 1080; Hegeman Farms Corporation v. Baldwin, 293 U.S. 163, 55 S.Ct. 7, 79 L.Ed. 259, decided November 5, 1934. But in determining the sufficiency of the allegations of the complaint we cannot fail to take note of the nature and effect of the legislative action which is assailed. Both nature and effect are apparent. We have here a novel, if not a unique, provision. The legislature does not purport to exercise an authority merely to fix prices, or minimum prices, or to make different prices for different grades of milk, but attempts to establish for the respective dealers different minimum prices for the same grade of milk, bought and sold at the same time and place and under precisely the same conditions aside from the use of a well advertised trade name. There is no uncertainty as to the effect of the discrimination. As the court below said, the statute seeks to take away from dealers, who have well advertised trade names, 'economic advantages which were not only theretofore lawful, but which have generally been commended and fostered.' It strikes at the advantage acquired by dealers through the reputation of their brands and the consequent disposition of the public to buy them. In view of the peculiar nature and effect of this provision, and of the novel and important constitutional question that it presents, we think that the complaint should not have been dismissed for insufficiency upon its face and that the plaintiff is entitled to have the case heard and decided with appropriate findings by the trial court, unless it satisfactorily appears, upon facts of common knowledge or otherwise plainly subject to judicial notice, that the provision should be sustained as resting upon a rational basis consistent with constitutional right. Accordingly, we pass to the consideration of the various grounds that are suggested as adequate support for the legislative action.
In this inquiry, we again observe the limited operation of the provision. It is restricted to the city of New York, and to sales of bottled milk to and by stores. It does not apply to retail delivery direct to consumers and not through stores. It relates solely to minimum prices. It is not addressed to any practice in the industry, or trade in relation to production, handling or selling, apart from the trade name employed. As to all such matters, a dealer with a well advertised trade name is subject to the same strict requirements as are all other dealers. The price to the producer, the farmer, is not affected by the differential. He receives the same price for his milk whether it is sold by dealers with well advertised trade names or otherwise. We have had occasion to note that 'Save the conduct of railroads, no business has been so thoroughly regimented and regulated by the State of New York as the milk industry.' For many years, it has been 'progressively subjected to a larger measure of control.' Nebbia v. New York, supra, pages 521, 522 of 291 U.S., 54 S.Ct. 505, 509. This control has been in the interest of sanitary precautions and proper methods of production and trade. But because of the serious condition of the industry by reason of decline in prices and demoralizing practices, as reported by a legislative committee after an elaborate examination, and upon the committee's recommendations, the legislature has now proceeded to price control. The legislative committee did not, however, recommend the fixing of the differential here in question, and hence did not state grounds in support of such a discrimination.7 But in considering possible grounds, we are aided by the suggestions which the Attorney General of the State and the counsel for the Department of Agriculture and Markets, with their special experience, have been able to bring forward.
The ground chiefly urged is that the provision is intended as a precaution against monopoly. We turn to the expressed criterion of the statute. That criterion does not refer to restraint of trade in any of its connotations, or to any coercive action or unfair practice, or to any combination or concert. The provision for the differential is silent as to the use of any monopolizing methods or as to any monopolistic achievement. While dealers having well advertised trade names are grouped for the purpose of the differential, the statute is directed not at concerted action, but at the individual members of the group which are not shown to be, or, for the application of the differential, need not be, in any sort of combination or acting otherwise than in lawful competition with each other as well as with other dealers. The differential hits each dealer having a well advertised trade name regardless of the extent of that dealer's trade. That may be large or small. The court below said in its opinion that the four distributors determined by the department to have well advertised trade names sell about 35 per cent. of the bottled milk that is sold to stores in the city of New York and this is also stated in appellant's brief. That appears to be the amount of the described trade of the entire group, which are united only by the common characteristic that each member has a well advertised trade name. How much of the trade each of the four distributors may have, does not appear.8 So far as the criterion of the statute is concerned, that makes no difference. If the statutory provision is sustained as to Borden's, on the simple showing of a well advertised trade name, without more, it must also be sustained as to every other dealer with a well advertised trade name—those now on the list and those which the state authority may hereafter place there—no matter how small a part of the trade the dealer may have, or how independent of any connection with anyone else, or how free from any improper trade practice or lacking in monopolistic opportunity, such a dealer may be.
The suggestion has been made that the provision for the differential may find support in a supposed policy to increase the sales of milk,—that more milk may be sold than if the price were uniformly maintained. This suggestion does not appear to be sponsored by the Attorney General and the counsel for the Department of Agriculture and Markets. The answer is made that whatever opportunity there may be for increased sales lies in the lower price and not in the differential. If it be assumed that the lower price is a reasonable minimum and that it favors sales, the maintenance of the differential prevents the plaintiff and others in like case from resort to it.
Putting aside fanciful considerations, the argument at the bar has presented the case in its essential features. It is shown that the legislature was inspired by the fear that in a competitive market, under strict regulation and with a scheme of minimum prices, dealers without well advertised brands, the so-called independent dealers, would be at a disadvantage. The aim was not at advertising but at its natural result. 'Well advertised' means well known. In setting up the differential, the legislature did not deal with monopoly in the ordinary sense of the term, but with an aggregate of economic advantages, lawfully and severally acquired, and possessed in varying degrees by the separate concerns having well known brands. The legislature put all these in one class and placed it under a handicap. For this discrimination, a special justification is urged. Respondents' counsel contend that the fixing of the differential was an effort to continue a condition which had obtained before the milk control law was enacted; that, previously, milk of the independent dealers had sold at lower prices than the milk of the well known brands; that in establishing price control, the legislature sought to preserve opportunities in competition which in actual practice the independent dealers had thus enjoyed and to prevent their trade from being destroyed by the operation of a scheme of uniform prices. The argument is that the legislature was confronted with a 'practical situation'; that 'the independents were to be deprived of their buying advantage by compelling all dealers to buy from producers at prices fixed according to utilization of the milk'; that this regulation involved 'a stern readjustment of former competitive conditions,' and the question was whether the independents should also be deprived of their selling advantage. The point is also made that the milk control law purports to be an emergency measure and that the legislature was entitled to protect existing opportunities of the independent dealers so that, if the emergency ceased and price control were abandoned, there could be a return to competitive conditions without such an elimination of dealers as might be caused by a temporary period of compulsory minimum prices on a uniform scale.
The factual basis of this contention is disputed and there are no findings disclosing it. Appellant asserts that there was not at any time any customary or accepted difference in price between the milk sold by it under its trade name and the milk of its competitors who are now favored by the fixed differential. And reference is made to the disturbed state of the trade, preceding the enactment of the milk control law, and to the effect of the ban imposed by local ordinance upon the sale of 'loose milk,' which led to changes in methods of distribution and to price adjustments from time to time in order to meet competition.
Respondents invoke the presumption which attaches to the legislative action. But that is a presumption of fact of the existence of factual conditions supporting the legislation. As such it is a rebuttable presumption. Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78—80, 31 S.Ct. 337, 55 L.Ed. 369, Ann. Cas. 1912C, 160; Hammond v. Schappi Bus Line, 275 U.S. 164, 170—172, 48 S.Ct. 66, 72 L.Ed. 218; O'Gorman & Young v. Hartford Fire Insurance Co., 282 U.S. 251, 256—258, 51 S.Ct. 130, 75 L.Ed. 324, 72 A.L.R. 1163. It is not a conclusive presumption, or a rule of law which makes legislative action invulnerable to constitutional assault. Nor is such an immunity achieved by treating any fanciful conjecture as enough to repel attack. When the classification made by the legislature is called in question, if any state of facts reasonably can be conceived that would sustain it, there is a presumption of the existence of that state of facts, and one who assails the classification must carry the burden of showing by a resort to common knowledge or other matters which may be judicially noticed, or to other legitimate proof, that the action is arbitrary. Lindsley v. Natural Carbonic Gas Co., supra; State of Ohio ex rel. Clarke v. Deckebach, 274 U.S. 392, 397, 47 S.Ct. 630, 71 L.Ed. 1115; Lawrence v. State Tax Commission, 286 U.S. 276, 283, 52 S.Ct. 556, 76 L.Ed. 1102, 87 A.L.R. 374. The principle that the State has a broad discretion in classification, in the exercise of its power of regulation, is constantly recognized by this Court. Still, the statute may show on its face that the classification is arbitrary (Smith v. Cahoon, 283 U.S. 553, 567, 51 S.Ct. 582, 75 L.Ed. 1264) or that may appear by facts admitted or proved. Southern Railway Co. v. Greene, 216 U.S. 400, 417, 30 S.Ct. 287, 54 L.Ed. 536, 17 Ann.Cas. 1247; Air-Way Electric Appliance Corporation v. Day, 266 U.S. 71, 85, 45 S.Ct. 12, 69 L.Ed. 169; Concordia Fire Insurance Co. v. Illinois, 292 U.S. 535, 549, 54 S.Ct. 830, 78 L.Ed. 1411. Or, after a full showing of facts, or opportunity to show them, it may be found that the burden of establishing that the classification is without rational basis has not been sustained. Lindsley v. Natural Carbonic Gas Co., supra; Rast v. Van Deman & Lewis Co., 240 U.S. 342, 36 S.Ct. 370, 60 L.Ed. 679, L.R.A. 1917A, 421, Ann. Cas. 1917B, 455; Radice v. People of State of New York, 264 U.S. 292, 44 S.Ct. 325, 68 L.Ed. 690; Clarke v. Deckebach, supra; Ohio Oil Company v. Conway, 281 U.S. 146, 50 S.Ct. 310, 74 L.Ed. 775; State Board of Tax Commissioners v. Jackson, 283 U.S. 527, 51 S.Ct. 540, 75 L.Ed. 1248, 73 A.L.R. 1464. But where the legislative action is suitably challenged, and a rational basis for it is predicated upon the particular economic facts of a given trade or industry, which are outside the sphere of judicial notice, these facts are properly the subject of evidence and of findings. With the notable expansion of the scope of governmental regulation, and the consequent assertion of violation of constitutional rights, it is increasingly important that when it becomes necessary for the Court to deal with the facts relating to particular commercial or industrial conditions, they should be presented concretely with appropriate determinations upon evidence, so that conclusions shall not be reached without adequate factual support.
Respondents' counsel, referring to the difficulties of price regulation, say that 'Apparently the fixing of prices by government discovered as many troubles as were loosed from Pandora's box.' This complexity of problems, however, makes it the more imperative that the Court in discharging its duty, in sustaining governmental authority within its sphere and in enforcing individual rights, shall not proceed upon false assumptions.
As the court below said, no precedents come very close to the instant case. In Rast v. Van Deman & Lewis Co., supra, the facts were fully disclosed (pages 345—347 of 240 U.S., 36 S.Ct. 370), and it was held that the use of profit-sharing coupons and trading stamps constituted a distinct method of doing business justifying license taxes (page 357 of 240 U.S., 36 S.Ct. 370). The Court pointed out that the complainants' schemes did not rest with mere advertising, with 'identification and description, apprising of quality and place,' where the 'acquisition of the article to be sold constitutes the only inducement to its purchase' according to the 'practice of old and familiar transactions,' but that those schemes tempted by a promise of a value greater than the article sold and hence might be thought to be a 'lure to improvidence' (page 365 of 240 U.S., 36 S.Ct. 370, 377). See, also, Tanner v. Little, 240 U.S. 369, 36 S.Ct. 379, 60 L.Ed. 691. In State Board of Tax Commissioners v. Jackson, supra, where a license tax with respect to chain store operation was upheld, evidence had been received and considered by the District Court, but that court did not go beyond a partial summary of the facts and general conclusions of law. We said that had Equity Rule 70 1/2 (28 USCA § 723) been in force at the time of the trial, we should feel constrained to remand the case with directions to make findings of fact (page 533 of 283 U.S., 51 S.Ct. 540); but in the circumstances the Court proceeded to summarize the proofs, and, on a full examination of the factual differences between chain stores and individually owned units, reached the conclusion that these differences afforded a basis for the tax assailed (pages 534—536, 541 of 283 U.S., 51 S.Ct. 540). See, also, Liggett Co. v. Lee, 288 U.S. 518, 532, 53 S.Ct. 481, 77 L.Ed. 929, 85 A.L.R. 699.
The importance of adequate findings of fact in relation to controlling economic conditions was emphasized in Chastleton Corporation v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841. The suit had been brought to restrain the enforcement of an order of the Rent Commission of the District of Columbia cutting down rents for apartments. Plaintiff alleged that the emergency which had been held to justify the rent measures (sustained in Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165), had ceased. We said that the plaintiff's allegations could not 'be declared offhand to be unmaintainable' and that it was not impossible 'that a full development of the facts' would show them to be true, and in that case the operation of the statute would be at an end (page 548 of 264 U.S., 44 S.Ct. 405, 406). Before deciding the question, we found that it was 'material to know the condition of Washington at different dates in the past' and that 'obviously the facts should be accurately ascertained and carefully weighed.' We said that this could be done more conveniently in the Supreme Court of the District than here, and, for this reason, the judgment below, dismissing the bill, was reversed and the cause was remanded for appropriate ascertainment of the facts (page 549 of 264 U.S., 44 S.Ct. 405).
Another illustration is found in Hammond v. Schappi Bus Line, supra, involving the validity of a city ordinance regulating motor traffic in designated parts of the city's streets. The lower courts had not made findings upon crucial questions of fact. There were affidavits below, which, we said, 'are silent as to some facts of legal significance, lack definiteness as to some matters, and present serious conflicts on issues of facts that may be decisive.' We held that before the questions of constitutional law, both novel and of far reaching importance, were passed upon by this Court, 'the facts essential to their decision should be definitely found by the lower courts upon adequate evidence.' Pages 171, 172 of 275 U.S., 48 S.Ct. 66, 69. Concluding that the case had not been appropriately prepared for final disposition, we remanded it for proceedings in the District Court, 'with liberty, among other things, to allow amendment of the pleadings.' This procedure was in accordance with well-established precedents. See Estho v. Lear, 7 Pet. 130, 8 L.Ed. 632; Chicago, Milwaukee & St. Paul R. Co. v. Tompkins, 176 U.S. 167, 179, 20 S.Ct. 336, 44 L.Ed. 417; United States v. Rio Grande Dam & Irrigation Co., 184 U.S. 416, 423, 22 S.Ct. 428, 46 L.Ed. 619; Lincoln Gas & Electric Light Co. v. Lincoln, 223 U.S. 349, 364, 32 S.Ct. 271, 56 L.Ed. 466.
Laws N.Y. 1933, c. 158 (Agriculture and Markets Law N.Y. (Consol. Laws, c. 69) §§ 300—319)); see Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469.
Order of May 5, 1933. The four dealers thus designated were: 'Borden's Farm Products Co., Inc., 'Borden'; Sheffield Farms Co., Inc., 'Sealect'; Dairymen's League Co., 'Dairylea'; and M. H. Renken Dairy Co., 'Renken."
Laws N.Y. 1934, c. 126 (Agriculture and Markets Law N.Y. § 252 et seq.).
The act of 1934, like the preceding act (section 301), defines 'store' as meaning 'a grocery store, hotel, restaurant, soda fountain, dairy products store and similar mercantile establishment.' Section 253 (as added by Laws N.Y. 1934, c. 126, § 1).
It appears that in the case of both the acts of 1933 and 1934, the provision in question was added in the course of legislative consideration of proposed measures and at the instance of dealers described as independents. 7 F.Supp., page 353.
Thus it does not appear how much of the 'store' trade in bottled milk is that of the Borden Company or of the Sheffield Company or of the Dairymen's League Company or of the Renken Dairy Company, the four distributors found to have well advertised trade names.
How hazardous it is to assume that particular trade facts are of common knowledge is shown by the various estimates of the number of 'stores' at which milk is sold in the city of New York, these estimates apparently varying from 25,000 to 60,000.


The SEC has proposed certain new rules as well as amendments to existing rules under the Investment Advisers Act as a result of the Dodd-Frank Act. New Advisers Act Section 203(m)-1 provides an exemption from registration with the SEC to those groups who only advise one or more qualifying private funds and manages less than $150 million in private fund assets. The proposed new rule 203(m)-1 essentially exempts smaller fund managers from SEC registration.
The proposed rule also provides that the exemption is available for managers who are based outside of the United States and manage funds which are domiciled in the U.S. provided that the funds have less than $150 million in assets.
The full proposed rule is reprinted below.
§ 275.203(m)-1 Private fund adviser exemption.
(2) Manages private fund assets of less than $150 million.
(2) All assets managed by the investment adviser from a place of business in cheapest perscription for xenical the United States are solely attributable to private fund assets, the total value of which is less than $150 million.
(c) Calculations. For purposes of this section, private fund assets are calculated as the total value of such assets as of the end of each calendar quarter.
(d) Transition rule. With respect to the calendar quarter period immediately following the calendar quarter end date that the investment adviser ceases to be exempt from registration under section 203(m) of the Act (15 U.S.C. 80b-3(m)) due to having $150 million or more in private fund assets, the Commission will not assert a violation of the requirement to register under section 203 of the Act (15 U.S.C. 80b-3) by an investment adviser that was previously exempt in reliance on section 203(m) of the Act; provided that such investment adviser has complied with all applicable Commission reporting requirements.
(1) Assets under management means the regulatory assets under management as determined under Item 5.F of Form ADV (§ 279.1 of this title).
(2) Place of business has the same meaning as in § 275.222-1(a) of this title.
(3) Principal office and place of business of an investment adviser means the executive office of the investment adviser from which the officers, partners, or managers of the investment adviser direct, control, and coordinate the activities of the investment adviser.
(4) Private fund assets means the investment adviser’s assets under management attributable to a qualifying private fund.
(5) Qualifying private fund means any private fund that is not registered under section 8 of the Investment Company Act of 1940 (15 U.S.C 80a-8) and has not elected to be treated as a business development company pursuant to section 54 of that Act (15 U.S.C. 80a-53).
(6) Related person has the meaning set forth in § 275.204-2(d)(7) of this title.
(7) United States has the meaning set forth in § 230.902(l) of this title.
(8) United States person means any person that is a “U.S. person” as defined in § 230.902(k) of this title, except that any discretionary account or similar account that is held for the benefit of a United States person by a dealer or other professional fiduciary is a United States person if the dealer or professional fiduciary is a related person of the investment adviser relying on this section and is not organized, incorporated, or (if an individual) resident in the United States.
Bart Mallon, Esq. is a hedge fund attorney and works with a variety of managers to hedge funds, private equity funds and venture capital funds. He can be reached directly at 415-868-5345.
This entry was posted in new hedge fund regulations and tagged hedge fund registration, investment adviser registration, private fund adviser exemption, rule 203(m)-1, SEC registration on December 12, 2010 by Hedge Fund Lawyer.
The SEC has proposed certain new rules as well as amendments to existing rules under the Investment Advisers Act as a result of the Dodd-Frank Act. New Advisers Act Section 203(l) provides an exemption from registration with the SEC to those groups who only advise “venture capital funds,” without regard to the number of such funds advised by the adviser or the size of such funds. The following proposed new rule 203(l)-1 essentially creates a definition of “venture capital fund” for the purposes of the new section. The proposed rule also provides a grandfathering provision for certain presently existing venture capital funds.
§ 275.203(l)-1 Venture capital fund defined.
(6) Is not registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), and has not elected to be treated as a business development company pursuant to section 54 of that Act (15 U.S.C. 80a-53).
(3) Does not sell any securities to (including accepting any committed capital from) any person after July 21, 2011.
(1) Committed capital means any commitment pursuant to which a person is obligated to acquire an interest in, or make capital contributions to, the private fund.
(2) Equity securities has the same meaning as in section 3(a)(11) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(11)) and § 240.3a11-1 of this chapter.
(3) Publicly traded means, with respect to a company, being subject to the reporting requirements under section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), or having a security listed or traded on any exchange or organized market operating in a foreign jurisdiction.
(iv) Is not an investment company, a private fund, an issuer that would be an investment company but for the exemption provided by § 270.3a-7, or a commodity pool.
This entry was posted in new hedge fund regulations and tagged investment adviser registration, rule 203(l)-1, SEC registration, section 203(l), venture capital fund on November 22, 2010 by Hedge Fund Lawyer.
The SEC has proposed certain new rules as well as amendments to existing rules under the Investment Advisers Act as a result of the Dodd-Frank Act. The following proposed new rule 202(a)(30), among other things, defines the terms “client” and “investor” for the purposes of new Section 202(a)(30) of the Advisers Act which requires “foreign private advisers” to register with the SEC.
less than $25 million in aggregate assets under management from such clients and investors.
For the purposes of Section 202(a)(30)-1, the term “investor” will generally mean a “beneficial owner” (if the fund is a 3(c)(1) fund) or a “qualified purchaser” (if the fund is a 3(c)(7) fund). With respect to any “client” or “investor,” the term “in the United States” generally means any person who is a deemed to be a “U.S. person” as it is defined in Rule 902(k) of Regulation S under the Securities Act of 1933 (which is premised on residence in the United States, regardless of any temporary presence outside the United States).
§ 275.202(a)(30)-1 Foreign private advisers.
(ii) Two or more legal organizations referred to in paragraph (a)(2)(i) of this section that have identical owners.
(4) You are not required to count a private fund as a client if you count any investor, as that term is defined in paragraph (c)(1) of this section, in that private fund as an investor in the United States in that private fund.
Note to paragraphs (a) and (b): These paragraphs are a safe harbor and are not intended to specify the exclusive method for determining who may be deemed a single client for purposes of section 202(a)(30) of the Act (15 U.S.C. 80b-2(a)(30)).
(B) Any beneficial owner of any outstanding short-term paper, as defined in section 2(a)(38) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(38)), issued by the private fund.
Note to paragraph (c)(1): You may treat as a single investor any person that is an investor in two or more private funds you advise.
(i) Any client or investor, any person that is a “U.S. person” as defined in § 230.902(k) of this title, except that any discretionary account or similar account that is held for the benefit of a person in the United States by a dealer or other professional fiduciary is in the United States if the dealer or professional fiduciary is a related person of the investment adviser relying on this section and is not organized, incorporated, or (if an individual) resident in the United States.
Note to paragraph (c)(2)(i): A person that is in the United States may be treated as not being in the United States if such person was not in the United States at the time of becoming a client or, in the case of an investor in a private fund, at the time the investor acquires the securities issued by the fund.
(iii) The public, in the United States, as that term is defined in § 230.902(l) of this title.
(3) Place of business has the same meaning as in § 275.222-1(a) of this title.
(4) Assets under management means the regulatory assets under management as determined under Item 5.F of Form ADV (§ 279.1 of this title).
(d) Holding out. If you are relying on this section, you shall not be deemed to be holding yourself out generally to the public in the United States as an investment adviser, within the meaning of section 202(a)(30) of the Act (15 U.S.C. 80b-2(a)(30)), solely because you participate in a non-public offering in the United States of securities issued by a private fund under the Securities Act of 1933 (15 U.S.C. 77a).
Bart Mallon, Esq. is a hedge fund attorney and providers legal services to hedge fund managers through Cole-Frieman & Mallon LLP. He can be reached directly at 415-868-5345.
This entry was posted in new hedge fund regulations and tagged foreign private advisers, investment adviser registration, rule 202(a)(30)-1, SEC registration, section 202(a)(30) on November 22, 2010 by Hedge Fund Lawyer.
The SEC has proposed certain new rules as well as amendments to existing rules under the Investment Advisers Act as a result of the Dodd-Frank Act. The following proposed new rule 203A-1 will replace existing Rule 203A-1. The new rule will provide state and SEC registered investment advisers with information on the time requirements for switching between the registration status. The full proposed revised rule is reprinted below.
§ 275.203A-1 Switching to or from SEC registration.
(a) State-registered advisers—switching to SEC registration. If you are registered with a state securities authority, you must apply for registration with the Commission within 90 days of filing an annual updating amendment to your Form ADV reporting that you are eligible for SEC registration and are not relying on an exemption from registration genuine viagra online under sections 203(l) or 203(m) of the Act (15 U.S.C. 80b-3(l), (m)).
(b) SEC-registered advisers—switching to State registration. If you are registered with the Commission and file an annual updating amendment to your Form ADV reporting that you are not eligible for SEC registration and are not relying on an exemption from registration under sections 203(l) or 203(m) of the Act (15 U.S.C. 80b-3(l), (m)), you must file Form ADV-W (17 CFR 279.2) to withdraw your SEC registration within 180 days of your fiscal year end (unless you then are eligible for SEC registration). During this period while you are registered with both the Commission and one or more state securities authorities, the Act and applicable State law will apply to your advisory activities.
Bart Mallon, Esq. runs the hedge fund law blog and provides hedge fund registration and compliance services to managers through Cole-Frieman & Mallon LLP. He can be reached directly at 415-868-5345.
This entry was posted in new hedge fund regulations and tagged hedge fund compliance, hedge fund registration, ia registration, rule 203A-1, SEC registration, state registered investment adviser on November 21, 2010 by Hedge Fund Lawyer.
The SEC released a testimony from Andrew J. Donohue before the U.S. Senate about the regulation of hedge funds and other private investment pools. According to Mr. Donohue’s statement, securities laws have not kept pace with the growth market and thus the SEC has very little oversight authority over these advisors and private funds with regards to conducting compliance examinations, obtaining material information, etc primarily because these requirements only apply to those advisors and entities registered with the SEC. Because advisors to private funds have the option to ‘opt out’ of registration, they can easily bypass any monitoring and oversight. The Commission strongly supports the enforcement of the new Private Funds Transparency Act of 2009,* which attempts to close this regulatory gap by requiring advisors to private funds to register under the Advisers Act if they have at least $30 million of assets under management. The Commission also notes that in order to be effective, the new regulatory reform should acknowledge the differences in the business models pursued by different types of private fund advisers and should address in a proportionate manner the risks to investors and the markets raised by each.
The various compliance requirements on advisors to private funds as set forth by this new legislation is outlined in the testimony, reprinted in full below.
*Note: this testimony was given the same day that the Treasury announced the Private Fund Investment Advisers Registration Act of 2009 which is very similar to the Private Funds Transparency Act of 2009.
3 U.S. private equity funds raised $256.9 billion in 2008 (down from $325.2 billion in 2007). Private Equity Analyst, 2008 Review and 2009 Outlook at 9 (2009) (reporting Dow Jones LP Source data.
This entry was posted in new hedge fund regulations, News and Commentary and tagged hedge fund, hedge fund manager, hedge fund registration, hedge funds, investment adviser, Investment Advisor, investment advisor registration, SEC, SEC registration on July 20, 2009 by Hedge Fund Attorney.