Administration ‘Sounds Out’ Giuliani for Top Post at SEC
Rudolph W. Giuliani, the aggressive U.S. attorney in Manhattan who is now leading the prosecution of Wall Street’s insider trading scandal, has been “sounded out” about replacing John S. R. Shad as chairman of the Securities and Exchange Commission, Administration sources said Wednesday.
Giuliani, 42, who was No. 3 man in the Justice Department during President Reagan’s first term, discussed the SEC post Tuesday with White House Chief of Staff Howard H. Baker Jr. and Atty. Gen. Edwin Meese III at a White House meeting, the sources said.
It could not be learned, however, whether Giuliani said he would take the job or whether he would remain in New York, where he has become one of the nation’s most widely known prosecutors, winning cases against organized crime and municipal corruption as well as stock market violations. The SEC job is opening because Shad is leaving to become U.S. ambassador to the Netherlands.
While the sources said only that Giuliani had been “sounded out” about the job, they acknowledged that this was tantamount to a job offer. Baker and Meese are understood to have made the argument that the need to restore integrity in the nation’s financial markets would be helped if someone with Giuliani’s law enforcement reputation took the job.
Giuliani’s appointment would bring a surprised and largely negative reaction from Wall Street, some financial executives and former SEC officials predicted. While Giuliani is well known and well respected on Wall Street, “they’d be scared to death,” said A. A. Sommer, a former SEC commissioner. “They’d be afraid that with Giuliani’s prosecutorial fire, he’d want to treat all securities law violations as criminal offenses.”
Giuliani’s lack of background in securities law would be “a drawback,” he said, though he noted that former SEC Chairman Harold M. Williams also lacked such a background.
If the appointment brought a greater emphasis on enforcement, it would also mark a sharp change in direction for the commission’s leadership, which in recent years has focused on deregulating American markets, said Roderick M. Hill, who was SEC chairman between 1975 and 1977.
From Giuliani’s viewpoint, the SEC chairmanship would broaden his background beyond the role of law enforcer and place him in the center of an issue likely to gain increased attention, with attempts to legislate reform expected.
Shad is expected to hold the post until a successor is confirmed.
Ronald J. Ostrow reported from Washington and Paul Richter from New York.
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