A former commissioner of the Securities and Exchange Commission has written to one of the president's top advisers questioning the validity of a controversial transition team report which he claims, if followed, "might well destroy" the agency.
The letter, dated Jan. 29, was written by A. A. Sommer Jr., who served as an SEC commissioner between 1973 and 1976, and sent to Edwin Meese III, counsellor to the president.
In the letter, a copy of which was made available to The Washington Post, Sommer said that although "the following reflections are essentially my own," the also "express the sentiments and convictions of a substantial number of lawyers who practice in the securities area."
Sommer said he was writing the leter after copies of the report had circulated among attorneys at a recent securities conference in San Diego and caused concern. He said he had convened a meeting of 25 securities lawyers to discuss the report and that they had appointed him to relay their "remarkably united" views on the report to Meese.
Among the points raised by Sommer' letter:
Politics and ideology play no role in the activities of the commission, and this has been characteristic of the commission since its inception in 1934 with "rare, rare lapses."
The attorneys voiced concern about the "extension of authority" of the enforcement division, but "it was the general belief of the group that the decentralization of enforcement activities to state administrators and commission regional offices would adversely affect the ability of the commission to carry out Congress' mandate that it enforce securities laws.
Although the SEC's budget has grown "largely as a consequence of inflation," the size of the staff has not. The staff is about 5 percent larger than it was in 1975. Cuts of the size suggested in the report would undermine the effectiveness of the SEC. "A cut to 1,252 people would bring the commission back to its size in 1962 when the average volume on the New York Stock Exchange was 3,818,077 shares per day."
The proposal of the report that a virtual clean sweep of the top positions of the staff be made would be disastrous."
In reviewing the SEC budget, the administration should keep in mind that a large percentage of commission funds are raised by fees. "From 1970 through 1979 the percentage of its budget provided by fees has ranged from 42 to 71 percent and has averaged almost 60 percent."