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In the Midst of Revolution: The SEC, 1973-1981

What the SEC Expects
Regulating Corporate Conduct

- 1974 Stanley Sporkin and Ray Garrett, Jr.

The disclosures that came out of the Watergate scandals reverberated across the political horizon for years. For the SEC, the most significant crimes of Watergate involved the use by corporations of bribes, kickbacks, and illegal campaign contributions. The SEC saw these crimes as a corporate disclosure issue; the shareholders had a right to know the nature of any and all payments that might subject the corporation to liability and thus the shareholders to some loss of stock value.

Under SEC Chairman Roderick Hills, the SEC exposed a plethora of questionable and illegal corporate payments. Stanley Sporkin, Director of the Division of Enforcement, testified before Senator William Proxmire's Joint Economic Committee that "the improper payments differed from company to company.. every day I put in, I find another wrinkle." (41) Senator Proxmire said the SEC's investigation showed that "an important part of the private sector (economy) was a house of marked cards, composed of kings of corruption, jacks of all illicit trades and aces of political influence."(42) Some inside the SEC, including Commissioner Sommer, called for a special duty of securities lawyers to the public, instead of exclusively to their clients.(43)

But a host of issues created difficulty for the proponents of a federal solution to the issue of corporate governance and accountability. Among state securities regulators and the securities bar, widespread disapproval about the proper role of the SEC in the regulation of corporate conduct made agreement difficult. Resistance to giving the SEC broad authority over that legal field, which long had been thought a state responsibility, slowed efforts at reform.

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Footnotes:

(41) Robert M. Smith, "S.E.C.'s Chief Grapples with Disclosure Rules, Among Many Problems," The New York Times, January 4 ,1976, p NES33; "30 Corporations Under S.E.C. Study," The New York Times, January 1, 1976, 1

(42) Ibid

(43) For two views of the duty of lawyers, see A. A. Sommer, Speech on Emerging Responsibilities of the Securities Lawyer, Fed. Sec. L. Rep (CCH), Paragraph 79,631; 83, 689 (1974); and contra, Monroe Freedman, A Civil Libertarian Looks at Securities Regulation, 35 Ohio State L. J. 280 (1974)

Related Museum Resources
Papers
September 27, 1973
"Required Disclosure in the Stock Market: The Other Side," Address by SEC Commissioner A.A. Sommer, Jr. to The Conference Board
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
October 11, 1973
"New Directions in Professional Responsibility," Speech by Ray Garrett, Jr. to American Bar Association
[document] (pdf) (Courtesy of Harvey L. Pitt)
October 16, 1973
"Improving Financial Disclosure to Investors," Speech by Ray Garrett, Jr. to American Institute of Certified Public Accountants
[document] (pdf) (Courtesy of Harvey L. Pitt)
January 24, 1974
"The Emerging Responsibilities of the Securities Lawyer" - Address by SEC Commissioner A.A. Sommer, Jr. to the New York State Bar Association
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
March 13, 1974
Role of Financial Public Relations, presentation by Chairman Ray Garrett, Jr. before the Publicity Club of Chicago
[document] (pdf) (Courtesy of Milton Cohen)
March 15, 1974
"The Role of Professionals," Speech by SEC Chairman Ray Garrett, Jr. to the San Diego County Bar Association
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
March 20, 1974
"Professional Responsibility: The Public Client" - Address by SEC Commissioner A.A. Sommer, Jr. to the Columbus (Ohio) Chapter of Certified Public Accountants and Bar Association
[image] (pdf) (Government Records)
April 23, 1974
Memorandum from Stanley Sporkin, Director of the Division of Enforcement, U.S. Securities and Exchange Commission, on the Reorganization of the Division of Enforcement
[document] (pdf) (Courtesy of Theodore Levine)
April 23, 1974
U.S. Securities and Exchange Commission Release on the Reorganization of the Division of Enforcement
[document] (pdf) (Courtesy of Theodore Levine)
May 8, 1974
"Improvements in Corporate Disclosure," Address by SEC Chairman Ray Garrett, Jr. to the San Francisco Chapter, American Society of Corporate Secretaries
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
May 21, 1974
Memo to SEC Commissioner John R. Evans from the SEC Division of Enforcement concerning abusive practices in dealer banks
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 30, 1974
"Problems of Professional Responsibility," Address by SEC Chairman Ray Garrett, Jr. to the American Bar Association National Institute
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
June 14, 1974
Address by SEC Chairman Ray Garrett, Jr. before the 28th National Conference of the American Society of Corporate Secretaries
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
June 17, 1974
"Ending Uncertainty" - Address by SEC Commissioner A.A. Sommer, Jr. to the 6th National Institutional Trader Conference
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
July 4, 1974
"Professional Responsibility and the Securities Laws," Address by SEC Chairman Ray Garrett, Jr. to the State Bar of Texas
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
August 14, 1974
"The Commission and the Bar: Forty Good Years" - Address by SEC Commissioner A.A. Sommer, Jr. to the Annual Luncheon, Section of Corporation, Banking and Business Law, ABA 97th Annual Meeting
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 16, 1974
"The SEC and the Press: Partners in Ferreting Out Fraud" - Address by SEC Commissioner A.A. Sommer, Jr. to the Gerald Loeb Awards
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 20, 1974
Letter from Newton Minow for the Public Review Board, Arthur Andersen & Co. to President Ford
[image] (pdf) (Courtesy of the Gerald R. Ford Library)
October 3, 1974
"Changing Concepts of Business Ethics and the Responsibilities of Business Advisors," Address by SEC Chairman Ray Garrett, Jr. to the ABA National Institute
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
October 4, 1974
"Professional Responsibility: How Did We Get Here?" - Address by SEC Commissioner A.A. Sommer, Jr. to ABA National Institute
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
October 8, 1974
Memo to SEC Commissioner John R. Evans from Quinton Seamons regarding disclosure of auditor-client relationships
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
November 12, 1974
"Current Problems of Disclosure" - Address by SEC Commissioner A.A. Sommer, Jr. to National Association of Securities Dealers, Inc.
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
December 12, 1974
"Improving Disclosure for Investors" - Address by SEC Chairman Ray Garrett, Jr. to the Financial Executives Institute, Rocky Mountain Chapter
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
January 16, 1975
"Disclosure Rules and New Concerns" - Address by SEC Chairman Ray Garrett, Jr. to the American Society of Corporate Secretaries, Inc., Southeastern Regional Group
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
February 20, 1975
"The Disclosure Philosophy" - Address by SEC Chairman Ray Garrett, Jr. to the Union League Club
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
March 14, 1975
"Further Thoughts on 'Going Private'" - Address by SEC Commissioner A.A. Sommer, Jr. to Detroit Institute for Continuing Legal Education, Second Annual Securities Seminar
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
April 11, 1975
Letter from Arthur F. Burns, Federal Reserve to SEC Chairman Ray Garrett, Jr. on bank disclosure
[transcript] (pdf) (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
April 14, 1975
"Disclosure and Corporate Management" - Address by SEC Chairman Ray Garrett, Jr. to the Wharton Graduate Business School Club and the Harvard Business School Club, New York
[image] (pdf) (Government Records)
April 17, 1975
"Another Look at Insider Trading" - Address by SEC Commissioner A.A. Sommer, Jr. to the Southwestern Legal Foundation Symposium on Securities Regulation
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 5, 1975
Letter from Arthur F. Burns, Federal Reserve to U.S. Senator Thomas J. McIntyre on bank disclosure
[transcript] (pdf) (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
May 7, 1975
Letter from James E. Smith, Comptroller of the Currency, to SEC Chairman Ray Garrett, Jr. on bank disclosure
[transcript] (pdf) (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
May 29, 1975
"Should Bank Investors Know," Address by SEC Commissioner John R. Evans to Cooperative Securities Conference
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 10, 1975
Issue paper on SEC/bank dispute concerning required disclosure in bank holding company registration statements
[image] (pdf) (Courtesy of the Gerald R. Ford Library)
June 13, 1975
Letter from Bruce Alan Mann to Quinton F. Seamons on SEC Commissioner John R. Evans's comments on disclosure
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 24, 1975
"The Limits of Disclosure" - Remarks by SEC Commissioner A.A. Sommer, Jr. to the Wharton-AICPA Advanced Management Program for CPA Firm Partners
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
July 16, 1975
Statement of the Honorable Ray Garrett, Jr., SEC Chairman, before the Senate Committee on Banking, Housing and Urban Affairs, on disclosure by banks and bank holding companies in connection with the public distribution of their securities.
[transcript] (pdf) (Courtesy of Harvey L. Pitt)
August 12, 1975
"Disclosure Through a Glass Darkly," Address by SEC Commissioner John R. Evans to American Bar Association Annual Meeting
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
November 4, 1975
"Two Problems for Lawyers," Address by SEC Commissioner A.A. Sommer, Jr. to the Dallas Bar Association
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 10, 1976
Letter from SEC Chairman Roderick M. Hills to President Ford in support of government initiative against unlawful foreign payments
[image] (pdf) (Courtesy of the Gerald R. Ford Library)
February 16, 1976
"Business Ethics and the Free Enterprise System," Remarks by SEC Commissioner A. A. Sommer, Jr. to the National Association of Truck Stop Operators Seminar
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 17, 1976
"The Disclosure Study: What Is It?," Remarks by SEC Commissioner A.A. Sommer, Jr. to the Midwest Securities Administrators
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 20, 1976
"Disclosure - A Most Effective Regulator," Address by SEC Commissioner John R. Evans to Florida Atlantic University Bank Holding Company Seminar
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 23, 1976
"Good Municipal Markets Require Full Disclosure," Address by SEC Commissioner John R. Evans to National Governors Conference Seminar on State and Local Financial Emergencies
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 24, 1976
Memo for the President from Edward Schmults on questionable foreign payments by U.S. companies
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
March 16, 1976
Memo for Brent Scowcroft from Robert Hormats on meeting with President Ford on questionable foreign payments by U.S. companies
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
March 17, 1976
"Basic Questions: When Are We Going to Answer Them?," Remarks by SEC Commissioner A. A. Sommer, Jr. to the Financial Executives Institute
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
March 18, 1976
Letter from SEC Chairman Roderick M. Hills to Senator William Proxmire on questionable foreign payments by U.S. companies
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
March 23, 1976
U.S. Government Agency actions regarding illicit foreign payments
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
March 31, 1976
Memo from President Ford on formation of Task Force on Questionable Corporate Payments Abroad
[transcript] (pdf) (Courtesy of the Gerald R. Ford Library)
April 2, 1976
"A Parting Look at Foreign Payments," Address by SEC Commissioner A. A. Sommer, Jr. to the Ohio Legal Center Institute - Securities Law Seminar
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
April 20, 1976
President's Task Force on Foreign Payments - Outline for Roderick Hills
[transcript] (pdf) (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
May 6, 1976
"Some Reflections on Rule 10b-5 and Market Information," Remarks by SEC Commissioner Philip A. Loomis, Jr. at the Second Annual ALI-ABA Course of Study
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 12, 1976
Report of the Securities and Exchange Commission on Questionable and Illegal Corporate Payments and Practices to the Senate Banking, Housing and Urban Affairs Committee
[image] (pdf) (Reproduced with permission from Securities Regulation and Law Report, Number 353 May 19, 1976, Special Supplement, p. 1-45. Copyright 1975 by The Bureau of National Affairs, Inc. 800-372-1033; http://www.bna.com)
May 13, 1976
"Turning the Tide," Address by SEC Commissioner John R. Evans to Northwest State-Federal-Provincial Securities Conference
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 21, 1976
Letter from SEC Chairman Roderick M. Hills to U.S. Representative John E. Moss on the House study on voluntary corporate disclosure of foreign payments and practices
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 7-8, 1976
"Disclosure - The Name of the Game," Address by SEC Commissioner John R. Evans to 30th Western Regional Conference Bank Administration Institute
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 16, 1976
Letter from SEC Chairman Roderick M. Hills to Elliott L. Richardson, Secretary of Commerce, questioning White House criticism of SEC on questionable corporate payments
[transcript] (pdf) (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
June 29, 1976
Letter from SEC Chairman Roderick M. Hills to U.S. Representative John E. Moss requesting House-SEC cooperation in assessing voluntary corporate disclosure of foreign payments and practices
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
July 1, 1976
Letter from Senator Harrison A. Williams, Jr. to SEC Chairman Roderick M. Hills on SEC support for legislation of enforcement of activities of foreign investors
[image] (pdf) (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
September 16, 1976
Memo from SEC Office of Public Affairs to the Commission on Proxmire Foreign Payments Bill
[image] (pdf) (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
January 7, 1977
Memo to the SEC Commission from the Division of Enforcement concerning the voluntary disclosure program
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 15, 1977
"Investor Protection - A Shared Responsibility," Address by SEC Commissioner John R. Evans to Banks and the Securities Laws in 1977, Practising Law Institute
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
November 3, 1977
Report of the Advisory Committee on Corporate Disclosure to the SEC
[image] (pdf) (Courtesy of the Library of Congress)
December 8, 1977
Statement of Barbara M. Rothenberg, Member of the Securities Industry Conference on Arbitration, before the SEC concerning the proposals of the conference for handling small claims
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 8, 1978
"Progress Toward Professional Self-Governance: An Update" - Address by SEC Chairman Harold M. Williams to the AICPA Council
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
August 8, 1978
"Corporate Accountability and the Lawyer's Role" - Address by SEC Chairman Harold M. Williams to the American Bar Association
[image] (pdf) (Government Records)
May 2, 1979
Letter from U.S. Senator William Proxmire to SEC Chairman Harold Williams on the SEC's disclosure of questionable corporate payment cases
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 31, 1979
"Financial Reporting in a Changing Economic Environment" - Address by SEC Chairman Harold M. Williams at FASB Conference on Financial Reporting
[image] (pdf) (Government Records)
June 28, 1979
"Current Developments in Disclosure Policy," Remarks by SEC Commissioner Philip A. Loomis, Jr. to the American Society of Corporate Secretaries Annual Conference
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
August 14, 1979
"Implementation of the Foreign Corrupt Practices Act: An Intersection of Law and Management" - Address by SEC Chairman Harold M. Williams to Section of Business, Banking and Corporation Law, American Bar Association
[transcript] (pdf) (Courtesy of the estate of John R. Evans)
November 21, 1979
1979 President's Award for Distinguished Federal Civilian Service to Stanley Sporkin
[document] (pdf) (Government Records)
August 5, 1980
"Professionalism and the Corporate Bar" - Address by SEC Chairman Harold M. Williams to American Bar Association
[image] (pdf) (Government Records)
August 8, 1980
"Corporate Accountability - A Look at Strategy" - Address by SEC Chairman Harold M. Williams at Corporate Governance in the 80s, Rice University
[image] (pdf) (Government Records)
November 24, 1980
A.A. Sommer, Jr., The Myths of Corporate Governance
[document] (pdf) (Courtesy of Mrs. Storrow Sommer)
January 23, 1981
Memo to the SEC Commission from Paul Gonson and Frederick Wade on the GAO's Draft Report on the Foreign Corrupt Practices Act
[image] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
February 4, 1981
Letter from U.S. Senator Donald W. Riegle, Jr. to SEC Chairman Harold M. Wililams on the Foreign Corrupt Practices Act
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
April 24, 1981
"The Foreign Corrupt Practices Act: The Chafee Amendments" - Remarks by SEC Commissioner Stephen J. Friedman to the Annual Meeting of the Association of American Chambers of Commerce in Latin America
[transcript] (pdf) (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
Photos
1974
Stanley Sporkin and Ray Garrett, Jr.

Presentation of Distinguished Service Award

Oral Histories
05 March 2009

Hugh Makens

With Dr. Kenneth Durr

23 September 2003

Stanley Sporkin

With Irving Pollack

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