for financial institutions on securities exchanges which the Commission has also been studying for approximately 8 years. Could you within the next week inform the committee in writing as to the exact dates on which we can expect the completion of these studies?

That is Senator Williams' question.

Mr. CASEY. I have to say to the Senator that I wouldn't be able to give him any accurate information until I had time to ascertain the exact status and the exact scope of these studies in consultation with the staff and the other Commissioners. But I will say to you, Mr. Chairman, that I will be prepared to do that as soon as I reasonably

can.

The CHAIRMAN. A fourth question:

Senator Williams, the Chairman of the Securities Subcommittee, has announced his intention to undertake a 2-year in depth study on the financial structure of the securities industry and the adequacy of self-regulation.

May I add there that it will require action from the full committee, however. He has talked with me about it and has told me that he would like to see that done. But that is a matter that would have to be authorized by the committee and cannot be authorized by any individual Senator.

What would the commission's attitude be on the Congress undertaking such a study and what degree of cooperation could the Securities Subcommittee expect?

Let me cut that question in two, because I don't think it is pertinent as to what the commission's attitude is on what Congress will undertake, but I am sure we could hope for the cooperation of you and of the commission in event such study is undertaken.

Mr. CASEY. Yes, sir, you can certainly count on my cooperation, and I am sure the full commission as well will be happy to cooperate. Senator PROXMIRE. May I ask on that question on past studies, I think Mr. Casey has made the proper answer, of course, he couldn't give us an answer in a week as to when these studies are going to be in with the deadlines, but at the same time I think Senator Williams is absolutely correct in stressing the fact that we have had delay after delay after delay. It has always been tomorrow. We didn't get these. And I would hope within sometime, within a while you would come up and indicate either what you need in the way of staff to get these studies done, something of that kind, so that we can get action. Mr. CASEY. Yes, Senator.

The CHAIRMAN. Any further questions?

Thank you very much, Mr. Casey.

Mr. CASEY. Thank you.

(Whereupon, at 11 a.m., the committee went into executive session.)

NOMINATION OF WILLIAM J. CASEY

TUESDAY, MARCH 9, 1971

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,

Washington, D.C.

The committee met at 2:15 p.m. in room 5302, New Senate Office Building, Senator John Sparkman (chairman of the committee) presiding.

Present: Senators Sparkman, Proxmire, Williams, McIntyre, Cranston, Stevenson, Gambrell, Tower, Bennett, Brooke, Packwood, Roth, Brock, and Taft.

The CHAIRMAN. Let the committee come to order, please.

We are expecting practically the full membership of the committee to be present. They all indicated they would be here except Senator Mondale. I am sure they will be coming in. We just finished a couple of rollcalls over there, but I think we will get started.

The purpose of this meeting of this committee today is to give Mr. William J. Casey of New York, who has been nominated by the President to serve as a member of the Securities and Exchange Commission, the privilege of presenting to the committee additional and supplemental testimony surrounding this committee's consideration for his nomination.

On February 10, Mr. Casey appeared before the committee and presented certain information to us at that time. At the conclusion of those hearings and following an executive session a request was made by a member of this committee that additional information be furnished to the committee concerning a civil suit Mr. Casey was involved in during 1960. That suit was Harry R. Fields v. William J. Casey and others (see p. 712).

Mr. Casey furnished the requested information to the committee. Subsequently it was learned that Mr. Casey had been involved in other civil matters. The request was then made that the hearings be reopened so that Mr. Casey might be given the opportunity to present testimony on these matters.

On Tuesday, March 2, the committee met in executive session and by voice vote agreed to reopen the hearings. The new hearing was set for today.

We have two witnesses to be heard this afternoon. There may be one or two others, but there are two that are quite definite. The first is the Honorable J. Braxton Craven, Jr., judge for the Fifth Circuit Court of Appeals of Asheville, N.C. Judge Craven was the presiding judge at the civil suit of Fields v. Casey. Judge Craver's appearance before the committee has been requested by a member of the committee.

57-426-71-3

The second witness, of course, Mr. William J. Casey. Mr. Casey has been given the privilege of calling any person he wishes to call as a witness.

I now ask Senator Proxmire if he would like to present a brief statement.

Senator PROXMIRE. Thank you, Mr. Chairman.

Mr. Chairman, I am glad that the committee has decided to reopen the hearing on Mr. Casey's nomination to be a member of the Securities and Exchange Commission. I also appreciate Mr. Casey's cooperation in supplying additional materials to this committee. Hopefully these hearings will provide still more information to assist the members of the committee in passing upon Mr. Casey's nomination.

At the outset I would like to make it clear that as far as I am concerned I do not believe this committee can function as a court of law for the purpose of retrying the cases in which Mr. Casey was involved. Moreover, the issue of legal liability is secondary to the question of ethical and responsive behavior. We cannot as a committee determine that he was or was not legally liable in these cases.

However, it is our duty as a committee to inquire into the facts of each case and make a determination as to whether Mr. Casey's behavior and judgment were the kind we have a right to expect in a man proposed for the charimanship of the SEC. At a time when our securities market is desperately in need of responsive regulation and reform we need a man at the head of the SEC beyond reproach. We need a man who can command the respect of the industry, the press, the Congress, and the public.

We need a man who has been scrupulously honest in his business dealings and is sensitive to the problems of conflict of interest in the securities industry. Above all we need a man fully committed to the goal of investor protection which has been the keystone of our securities laws and regulations over the last 35 years.

Whether Mr. Casey is such a man is for this committee to determine. We owe it to the 31 million members of the investing public to make that determination with care and responsibility.

The CHAIRMAN. Does any other member have any statement to offer at this time? If not, then I will ask

Senator BROOKE. Mr. Chairman, Senator Bennett has something. The CHAIRMAN. I am sorry, Senator Bennett.

Senator BENNETT. Just for the record, the committee has approved the nomination of Mr. Casey by a vote of 14 to 0, with one abstaining, hasn't it? Do you remember the vote? We voted to approve his nomination before this request came through, did we not?

The CHAIRMAN. There was only one member who did not support it. Senator BENNETT. Yes; one abstention. And that vote has not been rescinded, so that if we make a change today, we must go back and rescind our earlier vote. We are not voting for the first time on the nomination of Mr. Casey. His nomination has been approved by the committee.

Senator BROOKE. Mr. Chairman.

The CHAIRMAN. Senator Brooke.

Senator BROOKE. Mr. Chairman, it is unfortunate that additional hearings must be held on Mr. Casey's nomination to become Chairman of the SEC. However, there have been serious questions raised regard

ing his ability to command respect for the SEC at a time when the securities industry is recovering from what may well have been its most serious test in 40 years.

This committee is about to embark on a thorough investigation of the securities industry which is long overdue. We must have at the helm of the SEC a man whose integrity is unquestioned and who will have the ability to work with Congress in forging new securities law for the decades to come. I sincerely hope these questions will clarify issues that have been raised regarding Mr. Casey's ability to serve in this important position.

The CHAIRMAN. Anyone else? Then, Judge Craven, I will ask you to come forward.

While the judge is coming forward let me say I made a mistake in putting him down in my circuit court; he is in the Fourth Circuit Court of Appeals.

Judge Craven, we are very glad to have you, sir.

STATEMENT OF J. BRAXTON CRAVEN, JR., U.S. JUDGE, FOURTH CIRCUIT COURT OF APPEALS, ASHEVILLE, N.C.

Judge CRAVEN. Thank you, Mr. Chairman.

The CHAIRMAN. Do you have a statement to make?
Judge CRAVEN. Yes, sir.

The CHAIRMAN. Just be seated and we shall be very glad to hear it. Judge CRAVEN. On March 4, 1971, I wrote to Mr. Kenneth McLean, of the Banking Committee staff, that I was not sure what his "invitation" to testify meant. I told Mr. McLean that I neither support nor oppose Mr. Casey's nomination and I could not intelligently do either, since I know nothing of him, except my 9-year-old recollection of the Field case.

I told Mr. McLean that I had no affirmative wish to attend and testify at this hearing nor any reluctance to do so. Then I put this in the letter:

As a citizen and Government officer I am sensitive to my duty as I see it to give the Senate Committee any information I may have which the Committee deems germane to the nomination. If it is the sense of the Committee that it needs my testimony and that I should attend the hearing, I will gladly honor that determination. I would prefer being subpoenaed but a less formal request from the Committee will suffice to compel my attendance.

I got that less formal request in the form of a telegram, Mr. Chairman, from you saying that it would be very helpful to the committee for me to come and I am here in response to it (see p. 140).

I shall never forget holding court in the southern district of New York at Foley Square. I am not only from the fourth circuit but I practiced law in a town of 10,000 people, and New York still impresses me a bit. I held that term of court for 15 trial days during the last week of February and the first 2 weeks of March 1962.

I got the hives. I think it was a combination of the Field case and a suit against Tecon Corp., which, as I recall, was an Atlas Corp. subsidiary or joint venture for a $3 million commission on the construction of the Debenicon Dam in the country of Iran. Plus, perhaps, too much seafood.

Each of these cases lasted 7 trial days and went all the way to jury verdict. Both were uniquely interesting. The Tecon case if only because

$3 million is to me very interesting, and it was a "go for broke, winner take all" lawsuit with the amount of recovery agreed upon, $3 million or nothing.

What makes the Fields case especially memorable is the unique settlement agreement. In 5 years as a State trial judge and 5 years as a Federal trial judge, I have never participated in anything like it.

I don't suggest anything was wrong with it; it was just unique. In trying to remember something 9 years ago it is difficult to distinguish between actual recall and logical reconstruction of events. I will make the attempt but I do express the caveat that what I now seem to remember may be partially a reconstruction of what I now think must have occurred.

It is my impression that at least one of the lawyers representing the three defendants, Prentice Hall and the IBC Co., I have forgotten the name of it, and Mr. Casey, did not take the plaintiff's case seriously enough and seemed to me at the time to be absurdly overconfident of a verdict in favor of the defendants. I had the feeling, I think, from the beginning of the trial that it was going for the plaintiff and that the defense lawyers would have been wise to attempt settlement after the first day or so of the trial.

It is my impression that they made no such attempt. I don't recall any, or any that was brought to my attention.

I was not at all surprised by the jury verdict, although I do not now remember the amount of it.

By the way, Mr. Chairman and members of the committee, I am testifying without the benefit of having seen the transcript, which has now been opened. Perhaps some of you read it. I haven't seen it.

I entered the order by consent. Mr. Casey consented and the other defendants to open the record and type the transcript, but frankly, I wasn't enough interested in it to ask that a copy be sent to me, so I haven't seen it.

To repeat, I wasn't surprised by the jury verdict. I took home with me and yesterday my secretary found up in the attic of the post office building in Asheville, photostatic copies of docket entries made by an extremely capable deputy clerk whom I still remember very well, Rudy Laudante, of the southern district. According to the docket entries, the jury returned a verdict for plaintiff on the night of Wednesday, March 7. Nine years and 2 days ago. I have written in at approximately 10 p.m. The docket sheet also shows that a special verdict was returned and this accords with my memory and my invariable practice. Perhaps this is reconstruction rather than recall, but I should explain that North Carolina is one of the few States, I think, relatively few, that have traditionally employed the special verdict practice of litigation rather than the general verdict practice. So it was easy for me to switch from being a State judge to a Federal judge because I did the same thing I had been accustomed to doing.

The docket sheet also shows defendant's motion, all three of them, I think, motion to set aside the verdict, and it shows that I reserved decision on that motion until the next morning at 10:30 a.m. I do not think I had any intention of setting the verdict aside and it is my impression that I did not then rule upon it merely because it was late at night and we were all tired out.