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happens thousands and thousands of times in this country today. The only requirement is full disclosure.
These individuals wanted me in this business. I put my share of the money up. They knew my relations with them because they were there, and there wasn't any conflict of interest at all. There was nothing unethical.
STATEMENT OF EDWARD J. BRADY
Mr. Brady. My name is Edward J. Brady, practicing attorney in the city of New York.
I have been involved in this case for 14 years, and I think I have more knowledge than anyone else here. I think it should be brought before the committee that this contract which was entered into in 1959 had been reviewed in subsequent years by the largest law firm in Houston, Tex., the Vinson, Elkins firm. They should be footnoted in the financial statements of Peat, Marwick & Mitchell for a period of 8 years.
When this letter was written, it was in the heat of a bitterly contested lawsuit in which one of the defendants committed suicide. It was one of the last methods which the defendant's lawyer had of trying to upset the orderly process of the lawsuit.
This contract had been in existence for many years, had been reviewed by many large firms without it ever being attacked until this letter was written to the receiver.
Senator PROXMIRE. All right.
Senator PROXMIRE. I understand Mr. Van Brunt has charged you made a great deal of this money without putting any money into it. You told us this afternoon you put in $400,000. Would you provide some documentary evidence of your investment?
Mr. Casey. Here is a tabulation from my tax return. I just happen to have it here.
Mr. Van Brunt made a totally baseless charge which he didn't prove
anywhere. He sent it in to the vice chancellor. The vice chancellor wasn't excited about it. I never had to establish this.
Senator PROXMIRE. Well, would you provide the committee with documentation of your assertion that you invested $400,000!
Mr. Casey. I will provide that, yes. (See p. 693.)
Mr. BRADY. May I say, Senator, that first of all the letter was sent by the firm of Van Brunt to Ty Colson, who was the attorney for the receiver. After the letter was received, I, as the plaintiff's lawyer, met with the lawyer for the receiver and people involved in the transaction, and we came to the conclusion that the letter was worthless.
I also was instrumental in negotiating a settlement with Bill Casey concerning this problem, because we had to get rid of this contract prior to December 31, 1966, because the corporation, if it didn't liquidate by that date, would suffer severe tax consequences.
This letter had to be reviewed by a lot of independent people and also in a receiver's report which he filed at the liquidation of this corporation.
Mr. CASEY. Senator, I would like to nail down one point, if I can. I don't think anyone wants to keep carrying this on any more than they have to.
It so happens that last week I asked Mr. Brady, who is right here, to go through my tax returns for the years in question and to tabulate how much I had put into this venture. This is his tabulation. He can tell you it is $395,000 or something like that—in the area of $400,000– and perhaps Brady's statement would dispose of this question right now. I will subsequently be happy to give you canceled checks or copies of tax returns or whatever you
need. Senator PROXMIRE. That is fine. That is the kind of information that we want, and I think it is most helpful if you have it available.
The only observation I would like to make, Senator Brock said earlier, he didn't see the relevance of the part of the transcript I read in the colloquy Mr. Casey had with Mr. Garfield.
I think it does show that Mr. Casey on this occasion had a short fuse, became violently angry; he has testified that he didn't engage in violence, but there is some dispute on that; and I think this does have some bearing on his qualifications to be the Chairman of the Securities and Exchange Commission.
Senator BROCK. If the Senator will yield, it also shows a man of integrity is going to respond when his integrity is challenged; and I, too, would rise to such a challenge, and I think the Senator would himself. I see no grounds for bringing this into the hearing. I think it is a mark of respect that I say for the man, that he has some spark and is willing to stand up in his own defense.
I see no relevance to his qualifications as SEC Chairman. Senator PROXMIRE. We had some talks with Mr. Leon Cherne today about Wild Bill Donovan, who was the head of the OSS. I am not sure Wild Bill Donovan would be my choice for the SEC. He has fine qualities just as Mr. Casey does.
That is why I am wondering if we should not take into consideraation a man's temperamental qualities when we consider his qualifications for a quasi-judicial position.
Senator BROCK. If you could document a history of rash or irrational acts, I would consider it relevant. But the recitation of just one incident shows no pattern whatever.
Senator TOWER. Everybody has a short fuse under the right circumstances at some time in life, and I subscribe to what Senator Brock has said.
I admire his restraint of not having hit anybody, since he has been in high school.
I have been in a few brawls since that time myself. I might say I have lost every one of them.
The CHAIRMAN. That is what you get for being a Republican in Texas.
Senator TOWER. I think he shows a very long fuse, indeed, to have acted with such restraint, and good humor through all of these hearings.
The CHAIRMAN. By the way, I think it might be well for the record to show this deposition was taken in the office of Mr. Casey, and, if I read the record correctly, even the stenographer was a man, I suppose that may have lifted some of the usual restrictions. Anything else?
Senator BENNETT. Mr. Chairman, I would like to ask for a clarification.
Senator Proxmire has asked for a demonstration of the amount of money that was put into this Beacon Land Co. and I didn't quite understand his last comment. Is he willing to accept Mr. Brady's statement, or is he going to insist that the candidate bring in his canceled checks?
Senator PROXMIRE. Well, I haven't seen the statement. I want to look at it. I think the likelihood is that I would accept it if it is a report of the tax returns of Mr. Casey, and Mr. Casey is a man of great intelligence and so is Mr. Brady, and I presume they would be able to give me documentation on the basis of this form you have.
I would like to look at it, however.
Mr. BRADY. One thing you have to look at with regard to private investments in oil deals, you have production payments in great amounts that exist, and it is kind of hard to produce canceled checks.
Senator PROXMIRE. Well, there is every likelihood this would be fine, but I would like to look at it.
The CHAIRMAN. Is this being offered for the record ?
Mr. Casey. Senator, I would like to ask my statement submitted to the committee, be made a part of the record.
The CHAIRMAN. Without objection, that will be done (See p. 45).
Senator BROOKE. Mr. Chairman, I would like to commend Mr. Casey for not using any SEC personnel in the preparation of his presentations before this committee during these long days; the fact that he has fully cooperated with this committee; the fact that he has agreed to make public the transcript; that he refreshed his own recollection by virtue of using that transcript and the manner in which he has answered questions before the committee with all candor.
Mr. Casey. Thank you very much, Senator Brooke.
(Whereupon, at 7 p.m., the hearing in the above matter was adjourned.)
SCRIBNER, HALL, CASEY,
THORNBURG & THOMPSON,
Washington, D.C., February 9, 1971. Hon. John J. SPARKMAN, Cs. Senate, Washington, D.C.
DEAB SENATOR SPARKMAN: I wish at this time to set forth the steps I am taking to remove possible conflicts of interest and the policy I intend to pursue with respect to the investments of myself and my family should I be confirmed as Chairman of the Securities and Exchange Commission. This policy is of course subject to amendment at the suggestion of your Committee.
I and my family have through savings, investment and entrepreneural effort over the last 25 years accumulated holdings of stocks, bonds, cash, real estate and ownership of two businesses in the publishing and information field. In addition, I am a partner in law firms in New York and Washington.
Effective the date I am sworn in as a member of the Securities and Exchange Commission, I intended to take the following steps:
1. Withdraw from my law firms and have my name removed from the firm names of Hall, Casey, Dickler & Howley, of New York, and Scribner, Hall, Casey, Thornburg & Thompson, of Washington, D.C. I will dispose of my interest in these firms for a fixed sum which will represent my partnership capital and an additional fixed amount which will represent the agreed value of the business these firms have on hand as of the date on which I assume office. These firms will then owe me a fixed amount of dollars which will be paid to me over two or three years as agreed between me and my partners.
2. Dispose of all interest in two publishing and information businesses. One business, owned by a trust for my wife and daughter, creates and maintains books and loose leaf services on legal, tax, corporate and investment matters which are published and distributed by a subsidiary of Prentice Hall. The shares of this business will be exchanged for shares of Prentice Hall. As a result, a trust company will hold for the benefit of my wife and daughter less than 18 of 1% of the outstanding shares of Prentice Hall. The other business (Research & Documentation Corporation) publishes two magazines, Monthly Digest of Tax Articles and Monthly Digest of Legal Articles, publishes books on law and public affairs, operates a research and document procurement service in Washington and does computer programing. This business will be sold for cash to individuals, including employees, among whom may be my brother, who has been the President and general manager of this business for the past 14 months. I should explain that these businesses are being disposed of because between 5% and 10% of their revenue can be attributed to the dissemination of information which is related to the Securities and Exchange Commission. Although only legal and factual information is published and disseminated and this activity contributes to the disclosure and regulatory purposes of state and Federal securities legislation, I have decided that my family ownership and control as well as my working relationship with these businesses should be terminated.
3. All stocks and bonds belonging to me, my wife, my daughter and a trust for my wife and daughter will be disclosed to and recorded with the Director of Personnel of the SEC in accordance with established procedure. In addition, report will be made of every transaction in any security within 5 business days. The complete list of our holdings is being submitted to the Senate Banking & Currency Committee.
Any securities purchased during my period of service with the Securities and Exchange Commission—other than government bonds—will be exclusively on the initiative and at the discretion of Cheswick, McRae & Co., investment advisers, who, with their predecessor firm, have had full discretion to manage my portfolio of marketable securities for the last 10 years. If, for any reason, my relationship as a client of this firm should be terminated, I will assign full discretion to manage my investments to another qualified investment adviser or to a trust company. In all events, instructions will be given to strictly observe the regulations of the Securities and Exchange Commission in the purchase and sale of securities and in the reporting of all transactions.
Upon withdrawal from my law firms, resignation of my directorships and disposal of my business interests, my only source of current income will be my government salary and dividends, interest and rents on my investments. I trust that the foregoing plan meets with your approval. Respectfully yours,
WILLIAM J. CASEY.
SECURITIES AND EXCHANGE COMMISSION,
Washington, D.C., February 8, 1971. Hon. JOHN J. SPARKMAN, U.S. Senate, Washington, D.C.
DEAR SENATOR SPARKMAN : I was visited today by Mr. William J. Casey whose nomination to be a member of the Securities and Exchange Commission is presently pending before your Committee. He exhibited to me several tabulations listing investments held by himself and members of his immediate family. He discussed with me whether or not his retention of these investments would conflict with any statutory provision or rule of the Commission applicable to such matters.
Insofar as such investments represent government securities, real estate or other properties which are not securities, the rules, in general, do not apply to them. With respect to securities, the Commission's rules contain a substantial number of restrictions on the purchase by members and employees of the Commission of securities of various types but, with certain exceptions, do not generally restrict the retention of securities acquired by a member or employee before becoming such.
I understand Mr. Casey either conducted or had a substantial interest in two small publishing business but that these have been, or are in the process of, being sold.
On the basis of my review, I am of the opinion that the retention by Mr. Casey as a member of the Securities and Exchange Commission and of the other securities investments listed on the tabulation above referred to would not vio ate any statute administered by the Commission, or any other statute of which I am aware, and it would be consistent with the rules of the Commission. Sincerely,
PHILIP A. LOOMIS, Jr.,