NEW LEADER COMING TO U.S. SEC IN CHALLENGING ERA
  President Reagan's nominee as top
  policeman for the nation's securities markets will inherit an
  agency challenged by an insider trading scandal, wild stock
  price gyrations and a host of uncertainties stemming from the
  globalization of financial markets.
      David Ruder, a 58-year-old Republican law professor at
  Northwestern University in Evanston, Ill., was named Thursday
  to be the 23rd chairman of the five-member U.S. Securities and
  Exchange Commission.
      If confirmed by the Senate, as expected, he will succeed
  John Shad, who left the agency earlier this week after a record
  six years as chairman to become ambassador to the Netherlands.
      The SEC has been in the limelight for the past year as its
  investigators have probed into the most colossal insider
  trading scandal ever uncovered on Wall Street.
      The investigation, which is still active, mushroomed in
  recent months as a growing number of well known traders and
  prominent investment banking firms have been charged with
  wrongdoing.
      The pace of the probe picked up markedly in November after
  Ivan Boesky, one of Wall Street's most successful stock
  speculators, agreed to cooperate with government investigators
  and to pay a record 100 mln dlrs in penalties and illegal
  profits after being charged with insider trading.
      But the agency is also wrestling with a vexing new
  phenomenon of huge and rapid swings in stock prices, spurred by
  computer-driven trading strategies that span markets in 
  securities, options and futures. The price gyrations have
  combined with rising trading volumes to bring unprecedented
  volatility to some U.S. securities markets.
      At the same time, the SEC is being pressed by some
  lawmakers to put a stop to abusive tactics in corporate
  takeover contests as an unrelenting wave of such takeovers
  steadily reshapes the U.S. corporate landscape.
      And the agency is being pushed by U.S. and foreign
  exchanges intent on expansion to lay the regulatory groundwork
  for an international securities marketplace in which trading
  occurs across borders throughout the world, around the clock.
      Such worldwide trading networks offer vast new investment
  opportunities but could strain the SEC's ability to enforce
  U.S. securities laws and guard investors from fraud.
      Under the leadership of Shad, the SEC eased financial
  disclosure requirements for publicly traded companies,
  eliminated many minor investor protection rules, attempted to
  spur competition among exchanges and streamlined the agency's
  review of hostile corporate takeovers.
      Shad, who had been vice chairman of the E. F. Hutton
  investment banking firm, brought a Wall Street perspective to
  the agency upon being named chairman in 1981.
      In line with the views of other top administration
  officials, he favored marketplace determination of takeover
  battles over new federal regulations.
      The SEC under Shad also stressed prosecution of insider
  trading violations over the corporate wrongdoing cases that
  topped the agency's enforcement agenda during the
  administration of President Jimmy Carter, a Democrat.
      Securities lawyers and industry officials acquainted with
  Ruder say the new chairman-designate is unlikely to
  significantly alter the commission's current priorities.
      The SEC currently has about 2,000 employees, most of them
  lawyers, and an annual budget of about 115 mln dlrs though that
  figure likely will be significantly higher next year as the
  agency moves to beef up its enforcement staff.
      The agency is one of the few in the government that
  actually has taken in more money than it has spent in the past
  few years because of fees it charges public companies,
  investment banks and other securities firms it regulates.
      The SEC is structured as an independent regulatory agency,
  meaning that its five commissioners are appointed by the
  president to fixed five-year terms and protected from firing
  for policy differences alone.
      By law, no more than three commissioners may be of the same
  political party, and the agency prepares its own budget request
  each year instead of leaving this to the White House.
      Established by Congress in 1934, the SEC traces its origins
  to the great stock market crash of 1929, which was attributed
  in large part to widespread trading on credit and attempted
  market manipulations by large investment firms.
      The agency requires public companies and investment
  vehicles such as mutual funds to issue periodic reports on
  their financial condition and to disclose changes in their
  condition any time they issue new securities.
      It requires brokers, dealers and investment banks to
  register with it and comply with investor protection rules, and
  it polices exchanges and regulates trading practices.
      Its first chairman was Joseph Kennedy, an industrial
  magnate who was also the father of John Kennedy, later to
  become the nation's 35th president.
      Other former chairmen include William Douglas, who served
  from 1937 until his appointment to the U.S. Supreme Court in
  1939, and William Casey, who served during President Nixon's
  first term and was Reagan's director of the Central
  Intelligence Agency until his death earlier this year.
  

