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TheStreet Open House

Ex-SEC Chief Who Busted Milken Says Lay Off Schapiro

NEW YORK ( TheStreet) -- Securities and Exchange Chairman Mary Schapiro has received some stinging criticism during her tenure, including from me , but David Ruder, a Northwestern University law professor who was in charge of the Commission from 1987-89, leapt to her defense in a recent interview.

When asked if Ruder had any criticism of Schapiro, he replied "Hardly. She has been exceedingly active and positive in her entire approach. She has caused the Commission to be reorganized. She's caused a reorganization in the enforcement staff. She has made an effort to bring financial people and economists into the commission. She's been very cooperative in the banking regulation part of the Dodd Frank matters. Even with very limited resources, she has caused the Commission to promulgate an enormous number of rules that are required to be adopted under Dodd Frank."

Former SEC Chairman David Ruder

Critics of the Commission, such as Columbia University securities law professor John Coffee, have argued it has been too willing to settle lawsuits it has brought. Instead, Coffee contends showing it has the resolve to try and win a cases would force defendants to accept tougher settlements.

Few would appear to know this better than Ruder, however, since he helped the government win what has perhaps been its highest profile indictment against a Wall Street executive in decades, that of Drexel Burnham Lambert junk bond chief Michael Milken.

"I told our staff to use whatever resources were necessary to fight Drexel and Michael Milken's lawyers, and we did so but we suffered from not being able to bring as many other cases as we could and by having to expend our resources that way. So I think the assumption that the SEC is soft because it seeks settlement is just not right," Ruder says.

Coffee says Ruder "is entitled to his views. I do not want to criticize him, even implicitly. His tough stance against Milken saved the SEC' s reputation and he deserves credit for his firmness."

-- Written by Dan Freed in New York. Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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