In the 1945 case North American Company v. Securities & Exchange Commission, the Supreme Court of the United States ruled in favor of the SEC, upholding its authority to regulate holding companies under provisions set forth by The Public Utility Holding Company Act (PUHCA) of 1935. The North American Company was a utility holding company that challenged PUHCA's constitutionality and claimed it violated their Fifth Amendment rights due to forced dissolution without just compensation. However, Justice Frankfurter delivered an opinion for a unanimous court stating that Congress had acted within its power when enacting PUHCA as part of New Deal legislation aimed at reforming public utilities' structure and operations after widespread abuses were uncovered during Great Depression era investigations. Furthermore, he noted that there was no violation of Fifth Amendment rights since any loss incurred would be due to voluntary corporate restructuring rather than government action forcing liquidation or confiscation.

In the dissenting opinion for North American Company v. Securities & Exchange Commission, Justice Frankfurter argued that the majority's decision to uphold the Public Utility Holding Company Act of 1935 was an overreach of federal power and a violation of states' rights. He contended that Congress did not have authority under the Commerce Clause to regulate local utility companies because they were intrastate businesses, not interstate commerce. Furthermore, he disagreed with the majority's interpretation of "public interest" in relation to this case; he believed it should be narrowly defined as protecting consumers from fraud or manipulation rather than broadly applied to include restructuring entire industries for economic efficiency or social welfare purposes. Lastly, Justice Frankfurter criticized his colleagues for failing to consider potential negative consequences such as job losses and disruptions in service delivery due to forced divestitures mandated by this law.