Securities Law Section



Message from the Chair

Section Chair: 


 
Charles Niemeier
Williams & Connolly LLP
Washington, D.C.

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The Federal Bar Association - Securities Law Section is a proud sponsor of the virtual museum and archive of the history of financial regulation at www.sechistorical.org. While the museum is free and accessible to everyone at all times, the Section will highlight specific material and information within the museum on securities law issues in the coming months, providing current and prospective Section members with unique insight and context.

During the somber days of the Great Depression, the public had a front row seat to a Wall Street investigation that pitted the power of one man against the titans of finance. The government was searching for answers, and, in 1932, President Herbert Hoover charged the Senate Committee on Banking and Currency with determining the causes of the stock market crash. To underscore the seriousness of their mission, the Committee called Richard Whitney, the president of the New York Stock Exchange, as its first witness. Although he was later sent to jail for grand larceny, Whitney for a time had the nickname, “White Knight of Wall Street,” for purchasing large blocks of blue chip stocks in an effort to halt the sliding market.

Whitney and his contemporaries were not interested in seeing their reputations sullied or their hold on Wall Street altered in any way, but they were no match for Ferdinand Pecora, the Committee’s chief counsel. Pecora, a Sicilian immigrant with a penchant for fine cigars, had previously served as assistant district attorney in New York where he earned a reputation as a talented prosecutor by shuttering over 100 illegal “bucket shops” (places where people went to make side bets on stock price movements without any actual buying or selling of securities). Pecora relied on his photographic memory and his brilliant staff to dig deep into the operations of some of the most powerful men in the country.

After Whitney, Pecora and his team interrogated many prominent investment bankers and stockbrokers. Another “star” witness was J.P. Morgan, Jr. Pecora was successful in getting Morgan to admit he didn’t pay income tax in 1931 or 1932. The press raged for days. Knowing he had struck a deep a nerve with the majority of Americans who were suffering in the Great Depression, Pecora continued to pound the issue, and, despite the fact that Morgan’s tax avoidance was legal, Morgan was pilloried in the court of public opinion. Pecora’s due diligence also revealed that the House of Morgan maintained a “preferred list” of stockholders that enjoyed special insider privileges. Pecora’s ability to uncover and highlight these and other morally questionable practices helped garner support for sweeping financial reform that included the passage of the Glass-Steagall Act in 1933, the Securities Act of 1933, and the Securities Exchange Act of 1934.

Pecora served briefly on the newly formed Securities and Exchange Commission, before accepting an appointment as a New York State Supreme Court judge. He published a memoir, entitled Wall Street Under Oath, about his time interrogating the bosses of Wall Street. Pecora wrote that government regulation would not be a cure-all. He warned, “the same forces that produced the riotous speculative excesses of the ‘wild bull market’ of 1929 still give evidences of their existence and influence…it cannot be doubted that, given a suitable opportunity, they would spring back into pernicious activity.”

Resources

The Source:December 2017


The Source: September 2017


The Source: June 2017


The Source: March 2017


The Source: December 2016


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The Source: March 2016


Section ByLaws


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