UNITED STATES of America, Appellee, v. Jerome DEUTSCH, Appellant

This appeal presents questions of first impression under the Investment Company Act of 1940 (the Act). It involves the first criminal prosecution charging violations of § 17(e)(1) of the Act, 15 U.S.C. § 80a — 17(e) (1) (1964), during the thirty years the Act has been on the books — willful violations of the Act being punishable by a fine of not more than $10,000 and/or imprisonment of not more than two years. 15 U.S.C. § 80a-48 (1964).

Jerome Deutsch appeals from a judgment of conviction entered upon a jury verdict after a six day trial in the Southern District of New York, Charles M. Metzner, District Judge, finding him guilty, in violation of 18 U.S.C. § 2 (1964), of aiding and abetting one Frank D. Mills in knowingly accepting compensation from the issuer of certain securities while Mills was acting as agent for certain registered investment companies, in violation of 15 U.S.C. § 80a-17(e)(l) (1964). Deutsch also appeals from Judge Metzner’s order denying his post-conviction motion for coram nobis relief, 321 F.Supp. 1356. Finding no reversible error, we affirm.

OFFENSES CHARGED

Deutsch wasJ tried on one count of a seven-count indictment charging violations of § 17 of the Act, 15 U.S.C. § 80a-17(1964),! and of 18 U.S.C. § 2(1964).

*103 Counts One and Two charged Detusch’s co-defendant, Frank D. Mills, with knowingly effecting purchases of securities for his personal account and for the accounts of two registered investment companies of which he was an affiliated person, Puritan Fund, Inc. and Fidelity Trend Fund, Inc., in violation of § 17(d) of the Act, 15 U.S.C. § 80a-17(d) (1964). Counts Three and Four charged Deutsch with aiding and abetting these crimes, in violation of 18 U.S.C. § 2 (1964).

Count Five charged Mills with knowingly accepting compensation from Realty Equities Corporation in New York, the issuer of the securities, while Mills was acting as agent for the registered investment companies, in violation of 15 U.S.C. § 80a-17(e) (1) (1964). Count Six charged Deutsch with aiding and abetting this crime.

Count Seven charged both defendants with use of the mails in making false statements and omitting material statements regarding the transactions between Realty Equities and the investment companies with which Mills was affiliated, in violation of the Securities Exchange Act of 1934, 15 U.S.C. § 78j (b) (1964), and of 18 U.S.C. § 2 (1964). The government consented to a dismissal of Count Seven prior to trial.

Mills pleaded guilty to Count One on April 7, 1970. After Deutsch’s trial, Mills was fined $7,500 on May 19, 1970, and Counts Two and Five were dismissed. Trial of Deutsch alone commenced April 20 and ended April 27, 1970. Counts Three and Four were dismissed at the close of the government’s case. The jury found Deutsch guilty on the remaining count, Count Six. Deut-sch was fined $10,000 on August 4, 1970.

TRANSACTIONS UNDERLYING OFFENSES CHARGED

Before discussing the claims raised on appeal, a narration of the events beginning in the summer of 1967 and culminating in the indictment returned April 11, 1969 is necessary to an understanding of the rather sophisticated crimes with which Mills and Deutsch were charged. Upon the record before us, the jury could have found as follows.

During the summer of 1967, Deutsch was executive vice-president and a member of the three-man board of directors of Realty Equities Corporation in New York, a real estate investment company listed on the American Stock Exchange. Realty had been founded by Deutsch and others in 1959. By 1968 it had consolidated assets of $137 million.

In the summer of 1967, Realty anticipated a forthcoming merger in connection with which it needed- to raise a substantial amount of capital. Realty decided to finance the merger by a private placement, limited to institutional investors only, of $12 million in promissory notes with warrants attached. This security was to be issued in units of $500,000. Each unit was to consist of a $500,000 7 1 /2'% 15-year promissory note, a warrant for the purchase of 37,500 shares of Realty stock at a gradually ascending price, and the right to use the note in lieu of cash when exercising the warrant. The purchase price of the unit *104 was to be the face amount of the note. The initial exercise price of the warrant was to be the market price of Realty stock on the day before the first closing.

Deutsch was in charge of selling the issue. His initial efforts met with failure. As of December 4, 1967, he had not succeeded in selling a single note. While peddling this issue, however, Deutsch had his first contact with the co-defendant, Frank D. Mills, a contact which resulted in the first sale of Realty notes.

During the summer of 1967 and throughout 1968, Mills was a senior officer of Fidelity Management and Research Company in Boston, and of twelve mutual funds for which it acted as investment adviser. Mills was a member of the six-man investment committee of all the funds, whose aggregate assets exceeded $3.5 billion and whose combined stockholders numbered over 500,-000. As such, he participated in the preparation of periodic guidelines listing securities and maximum dollar values which the fund account managers could buy or sell without approval; he also was one of the two men whose approval was needed for any transaction outside the guidelines. Mills was the account manager of one of the funds, the Puritan Fund, and, as such, he had authority to buy or sell up to $2 million in any bond and up to the guideline limits for approved stocks. Mills also was vice-president of eight of the funds, including Puritan Fund and Fidelity Trend Fund. It is undisputed that Puritan and Fidelity Trend were registered investment companies and that Mills was an affiliated person of each of them within the meaning of the Act. 15 U.S.C. §§ 80a-2(3), 80a-3, 80a-8 (1964).

Deutsch’s first contact with Mills occurred as a result of Deutseh’s attempt, in the summer of 1967, to sell some of the issue to Massachusetts Mutual Life Insurance Company in Boston. Homer Chapin, executive vice-president in charge of investments, was also a director of Fidelity Management and the chairman of its investment committee. He told Deutsch that state insurance law barred Massachusetts Life from purchasing that type of security; but a few days later, Chapin recommended the issue to Mills, saying that from what he knew Realty was satisfactory in every way and that if he were interested he should contact Deutsch directly. The first sale of Realty notes ensued.

On December 8, 1967, Mills committed the Puritan Fund to purchase two notes. This first sale appeared to be the shot in the arm that Realty needed. With Mills’ permission, Deutsch used Puritan’s prestigious name in talking to prospective buyers. As Deutsch testified at trial, this was “a good sales pitch” and “very helpful.” The entire offering was soon fully subscribed, and an additional $5 million in notes was authorized. This offering, too, was fully subscribed, with Puritan itself taking an additional $700,-000 on June 14, 1968, bringing its investment up to the statutory limit of 10% of the offering. By August 9, 1968, Realty had thus succeeded in borrowing $17 million.

On August 29, 1968, Deutsch again called Chapin who had recently joined Realty’s board of directors at Deutsch’s invitation. Realty had contracted to repurchase five units from Republic National Life Insurance Company in Texas, one of the original subscribers, and had an option to repurchase seven more, the balance of Republic’s interest, at prices which were advantageous in view of an appreciable rise in the market price of Realty stock. 2 Meanwhile, Massachu *105 setts law had changed, and the notes were now permissible purchases for insurance companies. Deutsch was thus able to offer to sell Massachusetts Life some of the Eepublic National Life units. Deut-seh did not disclose the repurchase contract between Eealty and Eepublic National Life. He led Chapin to believe that the seller was Eepublic National Life and that the price had not yet been negotiated. Deutsch pointed out to Chapin that the exercise price was 15% whereas the stock was trading at 32. Chapin said he was interested and asked for more information.

On September 11, Eichard Dooley, a Massachusetts Life securities analyst to whom Chapin had referred the matter, told Deutsch that Massachusetts Life was rejecting the offer because of house counsel’s opinion that the price was so advantageous it gave the transaction the appearance of being a corporate gift in view of Chapin’s interlocking directorships. 3 Deutsch renewed the offer at a higher price, 7% premium per warrant instead of 3, saying that it brought the price into line with what he was told was the customary discount. 4 Counsel for Massachusetts Life still thought the price was too advantageous. On September 25, Dooley relayed his company’s final rejection. .

Some time between September 23 and September 26, Chapin told Mills about Eealty’s exceptional offer and suggested that Mills call Deutsch. However, unknown to Chapin, Mills already knew about Deutsch’s offer and had taken steps to seize the opportunity for himself. On September 16, five days after the initial rejection by Massachusetts Life, Mills had approached the president of the National Shawmut Bank in Boston for the purpose of borrowing enough cash to buy a unit of the Eealty securities for himself.

Mills told the bank that he wanted the transaction kept strictly confidential. To insure confidentiality, Mills asked the bank to make an exception to its general practice and to place the transaction in a nominee account. Shortly after September 24, the bank agreed to lend Mills $572,000 as the entire purchase price of a unit.

On September 30, a few days after the Shawmut Bank agreed to lend Mills the $572,000, the Banque de Paris bought two identical units from Eepublic National Life at a price per unit of $928,-125.

Some time in early October, Mills took two steps with respect to Eealty securities. First, he gave a 50% participation in his private deal with Eealty to a real estate investor named Philip Levin. 5 *106 Second, he tried unsuccessfully to interest Richard Smith, the account manager of one-half of Fidelity Trend, to buy two notes for the fund.

On October 15, after his unsuccessful approach to Richard Smith, Mills approached the account manager of the other half of Fidelity Trend, Ross Sher-brooke. Mills said two units would be available for a little over $900,000 per unit, but that there was some urgency and that Sherbrooke had to make up his mind by October 17, after which the notes would no longer be available. Mills did not disclose that he and Levin were about to buy a unit themselves at a substantially lower price. On the same day, Mills told the Shawmut Bank that he was ready to proceed with the loan and would require only half the money since he was buying only half the unit.

Mills undoubtedly was influential in Sherbrooke’s decision to buy the Realty notes. 6 Sherbrooke had never heard of Realty before. He looked up the company in standard reference books, asked a Fidelity specialist about it, and a day or so later told Mills he would take the two units. Mills was considerably senior to Sherbrooke. Since Sherbrooke had been on the job for only four months, he may well have been reluctant to reject his senior’s suggestion. Sherbrooke at trial conceded that Mills’ high opinion of Realty played a “significant role in influencing my judgment” :

“I relied on Mr. Mills, on his judgment as one who knew the company better than I and who had some dealing with the security and the company through the ownership in Puritan Fund, and I regarded him as being knowledgeable on the subject and on the company, and to that extent I relied on him.”

Mills’ and Levin’s purchase and Fidelity Trend’s purchase closed three days apart. Mills and Levin paid $537,000 for one unit on October 21; Fidelity Trend paid $928,125 per unit for two units — a total of $1,856,250 — on October 24.

After his purchase was made, Mills continued to try to conceal the transaction. In violation of the Fidelity group’s internal code of ethics, Mills did not report his purchase of the Realty note. Moreover, Mills had not requested advance approval of the transaction from the SEC, in violation of the regulations governing joint and several transactions of an affiliated person such as Mills and a fund such as Fidelity Trend. 15 U.S.C. § 80a-17(d) (1964); 17 C.F.R. § 270.-17d-1 (1971).

Deutsch also tried to conceal the transaction. He insisted that Levin use a nominee. When called before the SEC on November 22, 1968, he falsely testified that the two nominees were “two banks in the United States”, when in fact Levin’s nominee was Saul and Co. and Mills’ nominee was Harris and Co. Deutsch also supplied the SEC with what he said was an office memorandum listing all subscribers and purchasers at resale. With respect to other nominees, this memorandum indicated the real parties in interest in parentheses; but with respect to Mills’ and Levin’s nominees,’ the real parties were not indicated.

At trial, the main thrust of Deutsch’s defense was that he had agreed to sell a Realty note to Mills in February or March 1968 and that the actual sale the following October was the fulfillment of *107 a promise made at a time when Deutsch had no idea that the notes would be worth so much more than face value.

Deutsch testified that on February 29, 1968, after the closing of the sale of two Realty notes to Puritan, Mills told him he wanted personally to buy a note; that the next day, Deutsch told Realty’s president, Morris Karp, about Mills’ request and that Karp said it could not be done on original issue, but that Mills could purchase one of the notes on re-sale; and that several weeks later, near the end of March, Deutsch told Mills, “I got approval from Morris that if there is ever a resale you can have it for whatever price we get it for,” to which Mills’ response was, “Great. You got a deal.” Despite Deutsch’s customary practice of making notes on his way home from negotiations, he made none of this commitment. His promise was not reflected in any contemporaneous writing. Moreover, this alleged oral agreement was not binding on Realty. See N. Y. Uniform Commercial Code, §§ 8-319 and 2-201 (McKinney 1964).

Morris Karp, Realty’s president, and David Stein, Realty’s counsel, testified on Deutsch’s behalf. While their testimony generally corroborated that of Deutsch, several inconsistencies between their testimony and Deutsch’s could have led the jury to disbelieve Deutsch’s story of the February-March commitment.

CLAIM THAT TRIAL COURT MISINTERPRETED § 17(e)(1) OF THE ACT

The essential issues on this appeal require interpretation of § 17(e)(1) of the Act, 15 U.S.C. § 80a-17(e) (1)(1964). While this is the first criminal prosecution under § 17(e)(1), the SEC has had occasion at the administrative level to construe this section of the statute. 7 Prior to the instant ease, however, no court, so far as we know, has discussed the intent of Congress in enacting § 17 (e)(1) 8

Unfortunately, the legislative history affords little help in our present task of construing § 17(e)(1). While enactment of the Act was preceded by lengthy hearings, 9 the section in question was explained only once during these proceedings, and this brief comment sheds little light on Congressional intent. 10 *108 The Senate and House Reports on the Act 11 also fail to deal specifically with § 17(e)(1). Congress did set forth in the Act a declaration of Congressional policy and specific findings, based on the SEC Report mentioned below. -Section 1 of the Act, 15 U.S.C. § 80a-l (1964).

The Act resulted from a four-year study of the investment company industry by the SEC. 12 The SEC Report depicted fantastic abuse of trust by investment company management and wholesale victimizing of security holders. The Act evolved from a bill which was based on the conclusions and recommendations of the SEC Report. After hearings had been held on a bill drafted by the SEC, the industry and the Commission worked out a compromise bill which passed without a dissenting vote. 13

The Senate and House Reports indicate that the Act was designed primarily to correct the abuses of self-dealing which had produced injury to stockholders of investment companies. 14 Four sections of the Act, including § 17, were aimed specifically at insuring the independence of management and its fidelity to stockholders. 15 Congress recognized that its existing laws were inadequate to prevent the abuses of self-dealing. Several times during the hearings, Senators questioned SEC attorneys on their inability to obtain convictions, thus evincing a concern about the difficulties of obtaining convictions for abuse of trust in the investment company industry. 16 At one point, David Schenker, Chief Counsel of the SEC Investment Trust Study and one of the drafters of the Act, said:

“When you deal with investment companies, because of the peculiar nature of their assets — they deal in securities — it is difficult to convince a jury in certain situations. We tried to set forth broad standards to prohibit transactions like the ones that have been recounted, because we knew the difficulty of trying to convince a jury of larcenous intent and conspiracy.” Senate Hearings, supra note 9, at 131.

The Act was thus designed in part quite clearly to establish broad standards which would more easily enable the government to convict affiliated persons for self-dealing in the management of investment companies — an industry the very nature of which made it particularly difficult to gather proof.

*109 Interpretation of the Phrase “Acting as Agent”

Section 17(e)(1), so far as here relevant, provides as follows: “It shall be unlawful for any affiliated person of a registered investment company, . . . acting as agent, to accept from any source any compensation . . . for the purchase ... of any property . for such registered company.

it

Deutsch does not dispute the fact that Mills was an affiliated person within the meaning of the Act and that Puritan and Fidelity Trend were registered companies. He contends, however, that the trial court misconstrued the phrase “acting as agent.” He argues that this phrase makes the violation proscribed by § 17(e)(1) incomplete unless the compensation actually caused a fund to purchase or sell securities. The trial court rejected Deutsch’s proposed construction and charged the jury that:

“The Government does not have to show that Mills was influenced by the compensation he received or that as a result of receiving it Mills caused either of the funds to purchase the notes or influenced others in either of the funds to make such purchase.”

Moreover, the trial court, interpreting the phrase as being merely descriptive of a subclass of affiliated persons, instructed the jury on the element of acting as agent in the following manner:

“You may find that he acted as an agent if you determine that he had the power to make investment decisions for Puritan Fund at the time of its purchases or that as a result of his position in the company he could influence the decisions regarding the purchases by Fidelity Trend of Realty Equities notes.”

We believe that the trial court’s interpretation of the phrase “acting as agent” was incorrect but that, if anything, it imposed a greater burden on the government in proving its case than was necessary and therefore Deutsch was not prejudiced.

Section 17(e)(1) does not explicitly make it an element of the offense that the recipient of the compensation take any action as a result thereof. Deutsch argues that the draftsman’s use of a verb in the phrase “acting as agent” expresses a Congressional intent to prohibit only gratuities which succeed in influencing the recipient’s conduct. We find it hard to believe, however, that a Congress which had recognized that the investment company industry “offer [ed] manifold opportunities for exploitation by unscrupulous managements .,” Senate Report, supra note 11, at 6, meant that an offense was complete only when the affiliated person acted as a result of receiving something of value. Rather, we believe that the more reasonable interpretation is that an offense under § 17 (e) (1) is complete when the compensation is delivered and received with the forbidden intent. The objective of § 17(e)(1) is to prevent affiliated persons from having their judgment and fidelity impaired by conflicts of interest. It is clear that, as soon as Mills purchased the Realty note at a reduced price, he was inhibited by a conflict of interest which could easily becloud his judgment to the detriment of the beneficiaries of the funds. The abuse which § 17(e)(1) was designed to prevent — affiliated persons operating under conflicts of interest — was complete when Mills received the compensation, even if he never exerted any influence on Realty’s behalf. Moreover, to accept Deutsch’s construction would emasculate § 17(e)(1). Given the nature of the investment company industry, it would be extremely difficult to prove that the payment of compensation actually caused a particular purchase. It is most unlikely that Congress intended a construction which would rob § 17(e)(1) of its effectiveness.

Our interpretation of the phrase “acting as agent,” namely, that it is a descriptive phrase and does not require a showing that the recipient of the compensation took any action as a result thereof, appears to be buttressed by the *110 SEC’s administrative views. In Provident Management Corporation, supra note 7, the SEC found a violation of § 17 (e)(1) when an investment adviser to a registered investment company retained fees which rightfully belonged to the company. On three occasions, when the investment company tendered its holdings of securities in certain companies pursuant to public tender offers, Por-teous, the president of the investment adviser, caused his company to be designated as soliciting agent and received and retained approximately $42,000 in tender fees from those inviting the tenders. The SEC held that the retention of the tender fees by Porteous constituted an impermissible form of compensation derived from the investment company’s portfolio transactions. In so holding, however, the Commission did not find that the retention of the tender fees had caused Porteous to take any improper action. Instead, the mere retention of the fees constituted a violation of § 17(e)(1), because the SEC recognized that to permit the investment adviser to retain the fees would create a conflict of interest which might influence the adviser’s future advice to the investment company: “To countenance such conduct would permit the determination whether an investment company’s portfolio securities should be tendered to be influenced by considerations relating to the affiliate’s compensation, and thereby create a conflict of interest between those acting in a fiduciary capacity for the investment company and the fund.” Id. at 9.

Similarly, in Imperial Finance Services, Inc., supra note 7, the SEC found that actual conduct as a result of being compensated was not an essential element of the offense proscribed by § 17 (e)(1). There the SEC held that it was a violation of § 17(e)(1) for an officer of an investment adviser to an investment company to buy securities at a discount from a broker-dealer, because the officer “was in a position to influence” the choice of broker-dealers who would be granted business through transactions in the investment company’s portfolio securities. Id. at 10. See also Consumer-Investor Planning Corporation, supra note 7. It is true that in the latter two cases the affiliated person probably acted as a result of receiving compensation, but the opinions do not turn on this.

Our interpretation of the phrase “acting as agent,” that it is not necessary to show actual conduct as a result of the compensation, further appears to be consistent with decisions of this Court and of other Courts of Appeals interpreting statutes analogous to § 17(e)(1) which likewise are designed to prevent officials and other “insiders” from operating under conflicts of interest. In United States v. Irwin, 354 F.2d 192 (2 Cir. 1965), cert. denied, 383 U.S. 967 (1966), we held that it was not necessary to show actual conduct to prove the unlawful payment of a gratuity to a public official under 18 U.S.C. § 201(f) (1964): “It is not necessary for the Government to show that the gift caused or prompted or in any way affected the happening of the official act.” 354 F.2d at 197. In Howard v. United States, 345 F.2d 126 (1 Cir.), cert. denied, 382 U.S. 838 (1965), the First Circuit said that under the anti-kickback statute, 41 U.S.C. § 51 (1964), the crime is “complete upon the acceptance of a bribe regardless of whether or not improper action is thereafter taken.” 345 F.2d at 128. See also Krogmann v. United States, 225 F.2d 220, 225 (6 Cir. 1955) (the offense defined by the predecessor to 18 U.S.C. § 201(b) “was complete upon the payment of money to Krueger . . . ”); Smith v. United States, 305 F.2d 197, 210 (9 Cir.), cert. denied, 371 U.S. 890 (1962) (the statute, 18 U.S.C. § 434, superceded by 18 U.S.C. § 208, “is directed not only at dishonor, but also at conduct that tempts dishonor ...” and “whether he actually gives or withholds instructions ... is immaterial”).

Rejection of Deutsch’s construction does not make the phrase “acting as agent” superfluous. It defines a subclass of affiliated persons. Within the *111 statutory scheme of § 17(e), affiliated persons who are acting as brokers may receive limited compensation in connection with portfolio transactions of the registered investment company. 15 U.S.C. § 80a-17(e)(2) (1964). If affiliated persons are not acting as brokers, however, but otherwise are acting as agents of the investment company, they cannot accept compensation in connection with the purchase or sale of securities. While § 17(e) is far from a model of clarity, we believe that an affiliated person is acting as agent within the meaning of § 17(e)(1) in all cases when he is not acting as broker for the investment company.

The government and the trial court believed that the phrase “acting as agent” defined a more limited subclass of affiliated persons: those who have the capacity to influence investment decisions. This construction, we believe, is inconsistent with other sections of the Act and with other subsections of § 17 itself. One of the primary objectives of the Act was to prevent affiliated persons, and affiliated persons of such persons, from self-dealing and from operating under conflicts of interest. To achieve this objective, Congress thought it necessary to prohibit affiliated persons from engaging in certain types of conduct; accordingly, all other sections of the Act, including the other subsections of § 17, prohibit all affiliated persons from engaging in the unlawful conduct. There is no reason to believe that Congress intended to allow certain affiliated persons to accept compensation with the forbidden intent and be immune from violating § 17(e)(1). 17 ’ We believe that the more reasonable interpretation of “acting as agent” is that it is a descripfive phrase distinguishing affiliated persons acting as brokers from those who are not acting as brokers in connection with a sale or purchase of securities for an investment company.

In view of our interpretation of the phrase “acting as agent,” we believe that the trial court erred in submitting to the jury the issue of whether Mills was acting as agent. As we have indicated, “acting as agent” does not require a showing that Mills took any action as a result of being compensated. Since Deutsch did not dispute the facts that Mills was an affiliated person and that Mills was not acting as broker, we believe that the government established, as a matter of law, that Mills was acting as agent for the investment companies within the meaning of § 17(e)(1). While the trial court erred in submitting this issue to the jury, it was harmless error, for Deutsch suffered no prejudice. See United States v. Guidice, 425 F.2d 886, 890 (2 Cir. 1970); United States v. Mingola, 424 F.2d 710, 713 (2 Cir. 1970); United States v. Ragland, 375 F.2d 471, 479 (2 Cir. 1967), cert. denied, 390 U.S. 925 (1968).

Deutsch makes one final contention about the phrase “acting as agent.” He maintains that the phrase was intended to mean acting as agent for an outsider dealing with the investment company and not as agent for the investment company itself. This contention is without merit.

The only support for Deutsch’s contention is an isolated comment by David Schenker, Chief Counsel of the SEC Investment Trust Study, during the hearings on the Act. In discussing the rea *112 sons for § 17(d), which is now § 17(e) (1), Mr. Sehenker said:

“You might say, Why did the Commission write that? That is because we found cases where although the controlling person did not sell any property to the investment trust, he was a real estate agent in the transactions in which real estate was sold to the investment trust, and we feel under those circumstances that he has this conflict of interest. But he can act as the underwriter or the distributor of securities.” Senate Hearings, supra note 9, at 262.

While this comment at first blush would appear to substantiate Deutsch’s claim that the phrase was intended to apply to agents of outsiders dealing with the investment company, it is far from conclusive. The attorney may have been referring to only one reason for drafting § 17 (e) (1). Moreover, this isolated comment is insignificant when weighed against the repeated administrative adjudications of the SEC that “acting as agent” means acting as agent for the investment company. See supra note 7. On balance, we believe that the more reasonable interpretation is the one adopted by the SEC.

Accordingly, we hold that Deutsch was not prejudiced by the trial court’s interpretation of the phrase “acting as agent.”

Requisite Intent Under § 17(e)(1)

Deutsch maintains that the evidence was insufficient to prove that compensation was given with the intent to influence. We find it unnecessary to reach this issue, because we believe that the trial court erred in charging the jury that, in order to convict, they must find that the compensation was given and received with the intent to influence Mills. 18

The language of § 17(e)(1) makes no mention of intent to influence; the subsection is cast in the familiar “for” terminology of the gratuity statutes (e. g., 18 U.S.C. §§ 201 (f-i) (1964)) where the only intent required is that the payment be given and accepted in appreciation of past, or in anticipation of future, conduct. We have held that intent to influence is not án element of 26 U.S.C. § 7214(a) (2) (1964), which makes it a crime for a federal officer “acting in connection with” the revenue laws to receive “compensation . . . for the performance of any duty.” United States v. Cohen, 387 F.2d 803, 806 (2 Cir. 1967), cert. denied, 390 U.S. 996 (1968). Similarly, we have held that the government does not have to show intent to influence to prove an offense under 18 U.S.C. § 201(f) (1964), which makes it a crime to give a public official something of value “for and because of any act performed or to be performed.” United States v. Irwin, 354 F.2d 192, 197 (2 Cir. 1965), cert. denied, 383 U.S. 967 (1966). See also, United States v. Umans, 368 F.2d 725, 730 (2 Cir. 1966), cert. dismissed as improvidently granted, 389 U.S. 80 (1967).

The statute in the instant case is similar in this respect to the gratuity statutes. We do not believe that Congress intended that intent to influence should be read into § 17(e)(1) of the Act. The paying of compensation is an evil in itself, even though the payor does not corruptly intend to influence the affiliated person’s acts, for it tends to bring about preferential treatment in favor of the payor which can easily injure the beneficiaries of investment companies. Congress recognized that affiliated persons had manifold opportunities *113 for self-dealing and designed a statute to remove the potential for conflicts of interest by prohibiting the receipt of compensation “for the purchase or sale of any property. . . .”15 U.S.C. § 80a-17(e)(l) (1964). We hold that to read into § 17(e)(1) a requirement of intent to influence would frustrate this statutory purpose.

Since the requisite intent under § 17(e)(1) is intent to give and accept a gratuity in appreciation of past or future conduct, we believe that the evidence was sufficient to prove the necessary intent with respect to the transactions by both Puritan Fund and Fidelity Trend Fund. The jury was justified in finding that the sale of the note at a discounted price was compensation in appreciation of past conduct “which met with [Deutsch’s] satisfaction.” United States v. Cohen, supra, 387 F.2d at 806. Deutsch’s efforts to sell the issue were unsuccessful until Mills, by committing Puritan to purchase two notes, gave Realty the boost which eventually turned the issue into an overwhelming success. It is equally clear that the jury was entitled to infer that the compensation was “for” the purchase by Fidelity. Mills’ conduct in urging the Realty notes on the two managers of the Fidelity Trend Fund is not readily understandable except in the context of Deutsch’s relationship to Mills. It would seem unlikely that Mills would want Fidelity Trend to purchase Realty notes at the same time he did, because he would thereby create an invidious comparison between the bargain opportunity he received and the far more expensive purchase he recommended for the fund with which he was affiliated.

The trial court’s error in charging the jury that intent to influence was a necessary element of the offense did not prejudice Deutsch, for the erroneous charge merely “exacted a higher standard of proof than the law required.” Killian v. United States, 368 U.S. 231, 258 (1961). In United States v. Heine, 149 F.2d 485 (2 Cir.), cert. denied, 325 U.S, 885 (1945), we held that it was not prejudicial for the trial court to read to the jury a prior version of the statute which contained a specific intent provision omitted from the version under which the defendant was prosecuted: “[I]f it influenced the jury at all, [it] must have done so favorably to defendant.” 149 F.2d at 488. At most, the erroneous charge here imposed on the government the burden of proving an additional element of the offense. The instructions on intent therefore could only have been favorable to Deutsch and do not necessitate reversal. See United States v. Umans, supra, 368 F.2d at 729.

CLAIM THAT STATUTE IS VOID FOR VAGUENESS

Deutsch claims that § 17(e)(1) of the Act is unconstitutional because the language is so vague as to be void under the due process clause of the Fifth Amendment. This claim is without merit.

The applicable test is whether the language conveys “sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices.” United States v. Petrillo, 332 U.S, 1, 8 (1947). See United States v. 16, 179 Molso Italian .22 Caliber Winlee Derringer Convertible Starter Guns, 443 F.2d 463, 466 (2 Cir. 1971). A statute violates due process if “men of common intelligence must necessarily guess at its meaning and differ as to its application.” Connally v. General Construction Co., 269 U.S. 385, 391 (1926). Even in criminal cases, however, where the vagueness standard is most stringently applied, the statute must only present “ascertainable standard [s] of guilt.” Winters v. People of State of New York, 333 U.S. 507, 515 (1948). As the Supreme Court stated in Petrillo:

“That there may be marginal cases in which it is difficult to determine the side of the line on which a particular fact situation falls is no sufficient reason to hold the language too ambiguous to define a criminal offense. *114 The Constitution does not require impossible standards.” 332 U.S. at 7.

We do not believe that Deutsch was “required at peril of life, liberty or property to speculate as to the meaning of penal statutes.” Lanzetta v. State of New Jersey, 306 U.S. 451, 453 (1939). Section 17(e)(1) clearly places men of reasonable intelligence on notice that affiliated persons cannot accept compensation in connection with the purchase or sale of property to or for their affiliated investment companies. The phrase “acting as agent” is not so vague as to make men of common intelligence guess at its meaning. 19 We believe that § 17(e)(1) establishes standards of guilt which are at least as definite as those in a gratuity statute, e. g., 18 U.S.C. § 201(f) (1964), which withstood this same constitutional challenge in United States v. Irwin, supra, 354 F.2d at 196.

CLAIM THAT THERE WAS INSUFFICIENT EVIDENCE TO PROVE COMPENSATION

Deutsch argues that the evidence was insufficient to prove the statutory element of compensation. He admits that he sold Mills a note at a substantial discount in October and he does not dispute the trial court’s definition of compensation as a “benefit or thing of value [including] being granted an opportunity to purchase securities at a discount price.” He claims, however, that he made a commitment to sell one of the notes to Mills in February or March 1968 and that when he made this commitment he had no idea that the Realty note and attached warrant would be 'so valuable eight or nine months later. He contends that, since compensation must be paid and accepted knowingly and willfully to render him guilty, he did not violate § 17(e)(1) by fulfilling an oral agreement which was made with no intention of selling at a discount price.

The trial court, accepting Deutsch’s contention that the jury must acquit if they found Deutsch had agreed to sell Mills a Realty note in February or March 1968, instructed the jury as follows:

“If you find that Mills was granted the opportunity for the first time in September or thereafter to purchase these securities at a price which was significantly lower than the price charged other buyers at the same time, then you may find that Mills received compensation in the form of this reduced price.

If, on the other hand, you find that the commitment to Mills was made in February, then you should acquit the defendant.” 20

In view of the jury’s verdict, they evidently chose to disbelieve Deutsch’s story of a February-March commitment. Deutsch now contends that the issue of compensation should never have gone to the jury, because the government failed to challenge his affirmative defense with directly contradictory proof, and because there was insufficient evidence to prove that the first time Deutsch offered the deal to Mills was *115 in September 1968. These contentions are without merit.

Deutsch’s claim that the government was required to offer proof which directly contradicted his testimony about the February-March commitment is frivolous. In Misciale v. United States, 356 U.S. 386, 388 (1958), the Supreme Court held that a jury was entitled to disbelieve the defendant’s testimony that an informant trapped him into meeting with an undercover agent, notwithstanding the fact that the defendant’s testimony was uncontradicted because of the informant’s failure to testify. See also Turner v. United States,