5. Preference is given to veterans over non-veterans in selecting candidates rated in the "outstanding" group. Special attention is called to applications of minority group individuals and women in this category, in accordance with our affirmative EEO action plan. 6. As with all other professional and technical positions, appointments and promotions to positions at GS-5 to GS-11 are recommended by the Division/Office Director concerned and approved by the Personnel Officer when all legal and regulatory requirements have been met. Appointments and promotions to GS-12 and above are approved by the Executive Director. LAW GRADUATE STATISTICS Approximate number of 1972 graduate applications received- Number waiting to be sworn in (have passed exam). Total Percentage passing Bar (based on information currently available). Total 450 43 35 5 3 43 93 7 100 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C., May 30, 1973. Hon. HUGH F. OWENS, Acting Chairman, Securities and Exchange Commission, DEAR MR. OWENS: The Wall Street Journal reported on Friday, May 25, 1973, the appointment of a new General Counsel for the Securities and Exchange Commission. This appointment strikes me as unusual as the Commission itself lacks a Chairman who conceivably might wish a voice in the selection of a new General Counsel. I, personally, and the Subcommittee as a whole are extremely concerned about the process by which independent regulatory agencies select and promote their staff. I would therefore appreciate being advised of certain matters pertaining to the selection of Mr. Lawrence E. Nerheim as General Counsel. First, please advise me whether the Commission approved this selection and the date of such approval. If available, please include a copy of any Commission minute recording a meeting and reflecting the decisions of the individual Commissioners. Also, indicate which of the Commissioners met with and interviewed Mr. Nerheim; dates of such interviews, and a statement of their duration would be helpful. Secondly, I am concerned because of information coming to my attention that prior to selection by the Commission, Mr. Nerheim's appointment was passed upon by officials of the White House. Please advise me clearly whether anyone on the White House staff, the Committee to Re-Elect the President, or the Inaugural Committee suggested Mr. Nerheim's appointment in the first instance or thereafter endorsed his selection or in any other way participated in the selection process. This would include, if appropriate, the withholding or granting of some form of endorsement. In the event other names were furnished to the Commission or were submitted by the Commission for approval, please identify those whose names were furnished. Thirdly, it is my understanding that the position of General Counsel has been vacant since August 4, 1972 when the General Counsel, Mr. Cook, became Director of the Division of Market Regulation. On Wednesday, May 16, 1973, Mr. Cook resigned and no one has at this time been named to succeed him as Chairman. Under the circumstances, the selection and appointment of a General Counsel without the participation of the next Chairman raises question in my mind about the selection. Please explain to me the need for making this appointment at this time. Finally, a brief biographical sketch of Mr. Nerheim together with a description of his experience with the Federal securities laws should be furnished for the Subcommittee's files. Your cooperation with the Subcommittee in this matter will be appreciated. Sincerely, HARLEY O. STAGGERS, Chairman, SECURITIES AND EXCHANGE COMMISSION, Hon. HARLEY O. STAGGERS, Chairman, Special Subcomittee on Investigations, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. STAGGERS: In response to your letter of May 30, 1973, regarding the appointment of Lawrence E. Nerheim as General Counsel of the Commission, I am enclosing a memorandum I prepared setting forth the events surrounding the appointment as I recall them. I believe the memorandum covers most of the questions raised in your letter, particularly those regarding the need for making the appointment and the process by which the Commission approved the selection. I have not discussed your question regarding White House clearance. I was aware on May 18, when I began canvassing the other Commissioners, that the White House personnel office had given its approval to the appointment, as is customary in the case of all "non-career executive" and Schedule C appointments in order to obtain approval of the assignment from the Civil Service Commission, but I do not know whether there were other names supplied to former Chairman Cook by the White House or whether other persons outside the White House made personal endorsements of Mr. Nerheim. I wish to emphasize, however, that in connection with the Commission's ratification of Chairman Cook's decision, we were certainly not guided by any directions from the White House, and in fact no political consideration whatsoever entered into our informal discussions and deliberations. For the Commission. Enclosure. MEMORANDUM HUGH F. OWENS, The chronology of events in connection with the notification of employment of Mr. Nerheim is as follows: On Friday, May 18, 1973, two days after his resignation, former Chairman Cook called me and said that he was sending down to me by his secretary a memorandum submitted by Mr. Lawrence E. Nerheim containing pertinent biographical data and information pertaining to his qualifications. Mr. Cook told me at that time that he had had a personal interview with Mr. Nerheim and had been very much impressed by his demeanor in general and his knowledge of the securities laws and the workings and activities of this Commission. He stated further that he had satisfied himself as to the integrity of Mr. Nerheim and the professional reputation that he had in his community. When I received the biographical data, I was equally impressed by Mr. Nerheim's credentials, a copy of which is attached hereto as you requested. It so happened that I received a call from a good friend in Minneapolis that day wishing me good luck in my new duties and expressing hopes for the continued well-being of the Commission under the rather trying circumstances under which it was operating vis-a-vis the publicity relating to Mr. Cook's resignation as Chairman. I asked him if he knew Mr. Nerheim and he said that he knew him very well and, in fact, occupied an office two floors above the offices of Mr. Nerheim's firm. He spoke very highly of him, both personally and professionally, and said that his firm was one of the most outstanding in the Twin City area. During the course of the day, I contacted Commissioner Herlong personally and informed him of my conversation with former Chairman Cook and then made a separate call on Commissioner Evans in his office for the same purpose. We were all in agreement, individually and collectively, that Mr. Nerheim was an eminently qualified man and that it would be well to go ahead with the assurances of employment that he had, in fact, been given by then Chairman Cook at the time he advised Mr. Nerheim of his selection. We also noted that the position of General Counsel had been vacated since August of 1972. Commissioner Loomis was away from the office all day on the 18th attending an American Law Institute session here in Washington. I contacted him, however, the first thing on Monday morning, May 21, and his reaction was the same as that evidenced by Commissioners Herlong and Evans. We also determined among us to give permanent Administrator status to Jack H. Bookey, who for a period of some two months had been Acting Administrator of our Seattle Regional Office. We determined further that, in light of the unfavorable publicity, it would probably be helpful to give a public "business as usual" image by announcing Mr. Nerheim's appointment and also help dispell our morale problem here by announcing at the same time the appointment of Mr. Bookey as permanent Administrator of the Seattle Regional Office. No formal action of the Commission or minute to that effect was taken because we considered the action as more or less not only a non-objection but an affirmation of an action taken by the former Chairman pursuant to his prerogatives prior to his resignation. When Mr. Cook selected William D. Moran as permanent Administrator of our New York Regional Office and Lee A. Pickard as Director of the Division of Market Regulation, no formal action of the Commission was taken in this regard, nor has it ever been in such instances in the past. All of the Commissioners were, individually and collectively, depending upon the occasion, simply giving evidence of either strong affirmation or non-objection. The point that I do wish to emphasize is that the four Commissioners, acting individually and collectively, were doing so with the thought that we were getting, from the standpoint of the welfare of this agency, an eminently qualified man for General Counsel. We still feel so. HUGH F. OWENS, BIOGRAPHICAL AND PROFESSIONAL RÉSUMÉ OF LAWRENCE E. NERHEIM Personal: *Born Minneapolis, Minnesota. February 28, 1935 *Three children, Ages 13, 10 and 6 *Residence: 5701 Grace Terrace Edina, Minnesota 55435 Phone: 612/9414412 Business Address: 300 Roanoke Building Minneapolis, Minnesota 55402 Phone: 612/339-9501 *Church: Colonial Church of Edina (Community Congregational). Chairman, Church Reorganization Study Committee; Past Chairman, Board of Deacons. Education: *Minneapolis Public Schools. *Augsburg College. Minneapolis 1952-1954. *University of Minnesota 1954-1959. Bachelor of Arts cum laude (major: arts and law) University of Minnesota, June 1956. *Bachelor of Laws (now Juris Doctor) cum laude-University of Minnesota Law School, June 1959. Law School class rank: 5th. *Member of national honorary legal society. Order of the Coif. *Editorial Board, Minnesota Law Review 1956-1958. *Clerk for Associate Justice LeMoy Matson, Minnesota Supreme Court 19581959. Business: *Attorney, law firm of Haversock, Gray, Plant, Moody & Anderson, Minneapolis, Minnesota, a firm of 39 lawyers. *Became associated with firm upon law school graduation, June 1959, and became a full partner on January 1. 1966. *Specialization: Corporate practice with primary emphasis on federal and state securities laws. Professional Organizations: Member: *American Bar Association. *Section of Corporation, Banking and Business Law of the American Bar Association. *Minnesota State Bar Association. *Hennepin County Bar Association. *Executive Committee, Securities Regulation, Hennepin County Bar Association. Other: *Member of University of Minnesota Law School faculty (part time) Member of Board of Directors, Billy Graham Evangelistic Association, *Member of Board of Directors of various corporations. *Lecturer, on securities law topics, Continuing Legal Education. Committee of Minnesota State Bar Association, 1966, 1968, 1969, 1970, 1971 and 1972. *Lecturer, Hennepin County Bar Association. *Lecturer, Forum on securities aspects of Acquisitions and Mergers, University of Minnesota School of Business (1969). *Lecturer, on securities laws, Minnesota Society of Public Accountants, 1970. August, 1972. Hon. JOHN E. Moss, 2400 VIRGINIA AVENUE NW., Washington, D.C., June 25, 1973. Chairman, Subcommittee on Commerce and Finance, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: In a recent letter Commissioner Owens sent to Chairman Staggers regarding SEC employees who had previous Executive Office experience or employment with the Committee to Re-Elect the President (CRP), there is an important point that needs clarification. The point I want clarified concerns me. From January to October of 1972 I served as Chairman of Citizens for John Price and Good Government. This was a paid position for only two months (January and February), during which time a group of Mr. Price's friends were considering helping him run for Congress in New York State. Mr. Price subsequently chose not to run for office himself but did manage President Nixon's re-election campaign in the county of Queens in New York City. The important point I would appreciate you and your colleagues bearing in mind is that at no time was I an employee of "CRP" and that all activities engaged in by me after the "Price for Congress" effort were as an unpaid volunteer in a local New York City campaign. I am sure you can realize that since my return to government service as a career employee, my interest is to completely divorce myself from any political reference that could unfairly affect my career. Sincerely, THEODORE C. BARREAUX. U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Mr. CHARLES KING MALLORY, DEAR MR. MALLORY: At the hearings on Title I of H.R. 5050, 93rd Cong., 1st Sess. (1973), a letter dated June 1, 1973, from the Commission to Chairman Stag gers was placed in the hearing record. This letter contains information about certain Commission personnel who came to the agency from the executive branch. the Committee to Re-Elect the President or the 1973 Inaugural Committee (collectively referred to hereafter as the "executive branch"). A copy of that letter is attached. Since these individuals appear to have been hired while you were the acting executive director of the SEC, the Committee has directed me to ask you to supply to it additional information. With respect to each individual listed in the letter will you please supply to me the following information: (1) Whether such individual was referred by the executive branch to the Commission for employment; (2) If so, the name of the person or persons in the executive branch making the referral; (3) The substance of any communications between the SEC and the executive branch concerning (a) the particular position in which the individual should be placed; (b) the particular grade and/or step the individual should be assigned; and (c) the ability of the Commission to refuse employment to any of these individuals; (4) The name of any other individuals referred by the executive branch to the Commission since October 1, 1972, who were denied employment by the Commission. It is my understanding that you will soon be leaving the Commission's employ, and I request that you supply the Committee this information prior to your departure. Sincerely, JOHN E. Moss, Chairman. Subcommittee on Commerce and Finance. SECURITIES AND EXCHANGE COMMISSION, г. JOHN E. Moss, Chairman, Subcommittee on Commerce and Finance, Committee on Interstate and Foreign Commerce, U.S. House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your letter of June 20, 1973 concerning our letter of June 1 relating to certain Commission personnel who came to the agency from the "executive branch" as defined in your letter. In connection with the first-listed individual in our letter of June 1, 1973, I understand that this individual had known Chairman Casey for some time, and his employment was arranged directly with Chairman Casey, without a referral from the executive branch. In connection with the second-listed individual, her name was referred to the agency by a Mr. Robert Reisner, who asked that we consider her for a secretarial position working for a principal, with no reference as to the grade and/or step she might be assigned, and asked that we give her the highest priority consideration for a position. As in all referrals of candidates to the Commission from the executive or legislative branches, we considered that the Commission had total and complete ability to refuse employment within the provisions of applicable law, Civil Service Commission and other regulations. In connection with the third-listed individual, his employment was directly authorized by then Chairman Casey. There may have been a telephone call to Mr. Casey from a member of the White House staff concerning this individual, but no one here, including the individual in question, knows whether or not this occurred. The individual applied directly to Chairman Casey. In connection with the fourth-listed individual, her name was referred to the agency by a Mr. Paul L. Gomory, Jr. who asked that we consider her for a position of executive secretary, etc. at a GS-11 or 12 grade, and asked that she be given the highest priority consideration for a position. Again, the Commission considered that it had total and complete ability to refuse employment, within the provisions of applicable laws and regulations. In connection with your request for the names of other candidates referred by the executive branch since October 1, I believe that you will agree that it would be unfair to these people to publicize their names in this way. Our records reveal that 30 individuals were referred to the Commission by the executive branch since October 1, 1972 who were not employed by the Commission. If you would care to inspect our files on these individuals here at the Commission, we will be pleased to make arrangements for you to do so. I trust that this information satisfies your request and that you will advise us of any additional information that you might require. Sincerely, C. KING MALLORY, Acting Executive Director. Mr. Moss. Commissioner Owens, Commissioners Loomis, and Evans, gentlemen, we are happy to have you here. |