Question: Who is a leading candidate for the title of “The Best Friend of the U.S. Shareholder”?
Answer: Stanley Sporkin. chief of the Enforcement Division of the Securities & Exchange Commission, which is Uncle Sam’s watchdog against corporate financial manipulations.
SPORKIN? Who ever heard of Sporkin? Ask a growing number of big businessmen and their assorted lawyers and accountants whose corporate frauds and swindles have robbed great numbers of innocent shareholders.
To them, “Sporkin” is a seven-letter cuss word —because Sporkin believes in law and order for corporations.
For years, the SEC sleepily ignored the most shocking looting of shareholder interests, particularly those of small investors.
Then came the colossal collapses of such companies as Penn Central, Equity Funding, Investors Overseas Services and the National Student Marketing Corporation, due to assorted corporate crimes and managerial cover-ups.
Some SEC officials began to wonder why the agency had not uncovered any of these corporate frauds before billions of shareholder dollars went down the drain.’
One of those concerned was SEC chairman Ray Garrett, who assumed his duties in 1973 and simply let Sporkin begin to enforce the law against crimes in corporate suites. With a small staff, Sporkin went after a growing school of big fish. He also brought within the enforcement net involved brokerage firms, accountants and lawyers.
AS CHAIRMAN Garrett once stated: “A really successful fraud can scarcely be accomplished in our complex financial world without the help of accountants and lawyers.”
It is one thing to go after large corporate criminals. But also bringing involved accounting firms and lawfirms to account resulted in a torrent of slurs against Sporkin that has become a corporate-inspired drive to remove him from his job.
You see, Sporkin is one of those civil servants who takes his public trust seriously. He has sought remedies which go beyond the timid civil injunctions that simply ask the business looters to stop what they are doing but leave it up to private shareholder suits to attempt recovery of what was illegally diverted or stolen.
Within the limitations of the SEC laws (criminal prosecutions must be referred to the Justice Department), he has obtained, on behalf of the SEC, consent agreements from the corporate culprits to appoint special auditing committees, issue full disclosure of the illegalities and bring on “outside” directors satisfactory to the commission to supervise matters more responsibly in the future.
TO MANY consumers and investors, the magnitude and deliberate nature of these corporate violations would seem to warrant stricter penalties on the violators following a thorough and fair prosecution. After all, look how many years poor people spend in jail for stealing some furniture or forging small checks.
It all depends on expectation levels, and the world of big business, virtually writing many of the laws under which it operates, is not used to a regulatory agency that wants to protect citizens and the economic system.
The challenge before the new SEC chairman, Roderick Hills, is to stand firm for enforcement of the law against corporate marauders.
As a former corporate attorney and White House aide, Hills knows the realities of “business in politics.” That’s why he should be proud to find some government lawyers such as Sporkin and his associates, who want to separate the law from both.