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.
(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
(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)
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