The Securities and Exchange Commission (SEC) filed a case against American Trailer Rentals Co. in 1964, alleging that the company had violated securities laws by not registering certain public offerings of its stock with the SEC. The company argued that it was exempt from registration under Section 3(b) of the Securities Act because it was offering "commercial paper," short-term debt instruments issued by corporations to finance their current operations, which are exempted from registration requirements if they have a maturity date no longer than nine months after issuance. However, the Supreme Court ruled in favor of SEC stating that these stocks were not commercial papers as claimed but rather investment contracts subject to regulation under federal securities law. Therefore, American Trailer Rentals Co.'s failure to register them constituted a violation of this law.

In the dissenting opinion for SECURITIES AND EXCHANGE COMMISSION v. AMERICAN TRAILER RENTALS CO., Justice Harlan argued that the majority's decision to allow the Securities and Exchange Commission (SEC) to seek an injunction against American Trailer Rentals Co. was a misinterpretation of Section 22(a) of the Securities Act, which he believed only permitted injunctive relief in cases where there was ongoing or imminent violation of securities laws. He contended that this case involved past violations with no evidence suggesting future infringements, thus making it inappropriate for injunctive action by SEC. Furthermore, he expressed concern over granting such broad powers to administrative agencies like SEC without clear legislative intent from Congress, fearing it could lead to potential abuses and encroachments on judicial authority.