S.E.C.

Shortly before 3 o'clock one afternoon last week, swart Inquisitor Ferdinand Pecora stepped into the corridor of Washington's squat, ramshackle Federal Trade Commission Building, marched into the office of Commissioner James M. Landis. The first meeting of the new Securities & Exchange Commission was about to be held, a chairman elected. In an office four doors down the corridor waited Commissioners Matthews, Healy and Kennedy. Thirty minutes passed and Mr. Pecora did not join his colleagues to start business. Every few minutes Mr. Landis would step out, glowering darkly, hurry down to the other office to whisper a few words, hurry back to Mr. Pecora. At 3:30 he summoned Mr. Kennedy into his office, slammed all windows tight against newshawks' eavesdropping. For over an hour Commissioners Landis, Pecora and Kennedy argued loudly.

But closed windows were useless for keeping their secret because even the youngest and greenest reporter on the outside knew that Mr. Pecora was fighting tooth & nail against Mr. Kennedy's election as chairman. That job was morally Mr. Kennedy's because the President had given his good friend a five-year appointment, longest of any Commissioner. But there was open talk that Mr. Kennedy was a Wall Streeter, that he was not above a little stock speculation now and then.

Suddenly the Landis office door popped open and all three commissioners emerged smiling. Messrs. Kennedy and Pecora marched down the corridor side by side in step, turned into Commissioner Matthews' office. There the Commission settled down to elect Mr. Kennedy chairman.

Day after the election Commissioner Pecora left Washington for Manhattan, did not attend any more S.E.C. meetings all week. He was careful to explain, however, that he was simply winding up his personal affairs in Manhattan preparatory to moving to Washington to devote all his time to "putting the child on its feet."

In 100DEG weather Commissioners Landis & Kennedy spent a day scouting around for a building to house S.E.C., finally arranged with Secretary Ickes to move into the old Interstate Commerce Commission Building on Pennsylvania Ave. Chairman Kennedy summoned newshawks, delivered himself of a ringing statement against speculative profits: "The days of stock manipulation are in the past now. There will be little, if any, of this 'buy today and out Thursday' business from this time on. ... You can't rig the market any more. . . .

"I'm no sucker.... I never did so much in the market although I did do pretty well in the motion picture business. . . . My experience is that money made in speculation is negligible in amount when compared to the returns received by those who invest their money in gilt-edged securities and hold on to them."

Actually the Securities Exchange Act will not go into effect until Sept. 1, the deadline for registration of stock and exchanges. The Commission has no technical jurisdiction over any but registered stocks which are bought and sold in interstate commerce, cannot put its rules of fair practice into operation until registration begins. Its margin requirements do not take effect until Oct. 1. The S.E.C. will take over enforcement of the Securities Act of 1933, now under the Federal Trade Commission, Sept. 2. But lest pool operators try to make a killing before the Securities Exchange Law becomes effective, Chairman Kennedy announced that he would exert his "influence" to stop all trading irregularities.

Tame compared to Chairman Kennedy's threats was the Commission's first official ruling: none of the 200-odd clerks, office boys, stenographers and other employes it is about to hire may buy securities on margin or otherwise speculate on the market. They may buy securities outright but must notify the Commission of any such purchases within 48 hours.

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