David S. Ruder sailed through Senate confirmation hearings yesterday, as members of both parties indicated they would support his nomination as the next chairman of the Securities and Exchange Commission.
The Northwestern law school professor promised to enforce the nation's securities laws vigorously, especially those restricting illegal insider stock trading.
He also pledged to devote attention to the globalization of securities markets and the increase in computer-driven stock trading.
Asked whether he would faithfully enforce aspects of securities law with which he disagrees, the former Northwestern law school dean replied, "I told my 14-year-old and 15-year-old sons that I was going to stop being the principal of the school and become the top cop."
Ruder dodged questions on a variety of sensitive issues relating to hostile corporate takeovers and pending takeover legislation, prompting Sen. Donald W. Riegle (D-Mich.) to say: "I think you've given weak answers ... on this question of hostile takeovers."
But in an interview after the hearing, Riegle said he thought Ruder was "cautious" in his answers because he did not wish to offend staff members at the SEC with whom he will soon be working.
Ruder said he does not support a major overhaul of the nation's securities laws or the rules governing corporate takeovers.
Both Riegle and Senate Banking Committee Chairman William Proxmire (D-Wis.) said they would support Ruder's nomination.
"I hope you can show us how you will bring the kind of tough, vigorous enforcement of the securities laws that the country so urgently needs now," Proxmire said.
Referring to the biggest stock trading scandal in more than 50 years and the continuing SEC investigation, Proxmire challenged Ruder. "As a legal scholar, Mr. Ruder has chosen to criticize vigorous enforcement efforts. We need scholars who will do that and do it well. Vigorous enforcement is an act of choice for the SEC. It may decide to be vigorous. Or it may decide to be passive. Which will it be under Mr. Ruder? Show us you'll be a tough-minded enforcer."
Ruder, who indicated he would submit his resignation as SEC chairman when a new president is inaugurated in January 1989, said he made no promises to the White House about how he would respond to pending takeover legislation.
However, he told Riegle that White House officials had asked about his views on corporate takeovers.
Ruder said he does not favor proposals that would make takeovers more difficult by increasing the time period involved. He said stockholders own public companies and that they have benefited immensely from the premium prices paid in takeovers. He added that if states go too far in adopting legislation to block hostile takeovers, federal intervention should be considered.
Ruder said he opposed proposed legislation that would require investors to disclose their holdings in public companies once they reach 3 percent.
He said the appropriate level is 5 percent and that investors should have five days to disclose their holdings. He said investors should be required to freeze their holdings at 5 percent prior to disclosure. Currently, investors must disclose their holdings within 10 days of reaching 5 percent, but are free to increase their holdings to any level.
"There are not a great many other changes that are needed at this time," Ruder said when asked how he would alter federal securities laws relating to takeovers.
Ruder said that "it might be better" for Congress to wait until after the Supreme Court rules on an insider trading case involving former Wall Street Journal reporter R. Foster Winans before adopting a statutory definition of illegal insider trading.
On issues ranging from the constitutionality of increasing federal disclosure requirements for municipal bond offerings to the separation of commercial and investment banking, Ruder declined to express an opinion.