“I am much afraid that if Mr. Cohen is not appointed a Commissioner in tribute to his twenty years of service, he will accept one of the many lucrative offers I know he has received. If he leaves, there will be a marked drop in the effectiveness of this Commission.”
- July 6, 1961 memo from SEC Chairman William L. Cary to The White House
The appointment of Columbia Law Professor William L. Cary as SEC Chairman in 1961 profoundly changed the SEC and securities law. Cary, the author of what was then the most widely-used law school casebook on corporations, was highly respected among his colleagues across the country.
Cary encouraged Kennedy to appoint Manuel Cohen and Philip Loomis, two of the SEC's most respected staffers, to the Commission. Kennedy selected Cohen, but not Loomis, instead naming a former Senate colleague -- J. Allen Frear, Jr. -- to the Commission.
Cary did succeed in having Jack Whitney appointed and Byron Woodside re-appointed as Commissioners, agreeing with Kennedy that the revitalization of the SEC would require the best and brightest personnel in order to be effective.
One of Cary's early goals was to increase funding for the SEC. Using the results of the Landis study which described the "budget starvation" of the Eisenhower years, Cary persuaded the Bureau of the Budget to add 250 new employees to the SEC staff. Cary would use those employees, much as SEC Chairmen had done during the New Deal, to conduct policy studies in areas where regulation might be most effective.
1961 was not 1934, however, and the new administration had a thin electoral margin in Congress. Cary realized that in order to be most effective, the SEC would have to cooperate with some of the leaders in the industry it regulated. "If none of the industry's spokesmen feel there is a need and complaints mount," Cary commented in considering the implementation of the Special Study's recommendations, "Congressmen are likely to intervene and commence inquiry, and a committee may either stall the proposal or kill it."(4) Political pragmatism and administrative innovation would typify Cary's response to the issues facing the SEC during his tenure.
(4) Joel Seligman, The Transformation of Wall Street (Aspen Publishers: New York, 2003), 292.
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