Sporking Awakens the SEC

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.