Hiring the Harasser

An old Wall Street gag had it that the Mafia once turned down a seat on the American Stock Exchange for fear of picking up a bad reputation.

Amex, which dates from the California gold-rush days, prospered for decades as a place where speculative stock buyers could find action that was unavailable on the relatively staid Big Board of the New York Stock Exchange. Inevitably, Amex's high appeal led to some lowdown practices. One series of stock frauds, unearthed in 1961, was the work of the father-and-son team of specialists Gerald A. and Gerald F. Re, both of whom served five-month jail terms. Exchange President Edward T. McCormick later resigned under fire after his dealings with the Res came to light. Following up on the Re scandals, the SEC launched a 1961-62 investigation of the exchange and reported a wide range of "prolonged abuses" by Amex insiders.

The SEC report also led in effect to the 1962 appointment as Amex president of Edwin D. Etherington, now 41, a lawyer with a soft smile and a hard eye. So well did Etherington do in tightening up the American Stock Exchange's loose ways that he was an odds-on choice to move over to the Big Board to succeed President Keith Funston, who is expected to retire soon. But Etherington upset all this last month by accepting a position as president of his alma mater, Wesleyan University.

No Embarrassment. Last week Amex named a new president. He is the ex-SEC man who was largely responsible for Amex's reformation: Ralph S. Saul, 44. After World War II service as a Navy gunnery officer, Saul got degrees from the University of Chicago ('47) and Yale Law School ('51), served a brief stint as a legal assistant to New York's then-Governor Thomas E. Dewey and a longer one as a corporate lawyer with RCA Victor. He joined the SEC in 1958 as its $12,770-a-year associate director of the Division of Trading and Markets. It was while he held that post that he headed the investigation that led to many Amex reforms.

Saul resigned from the SEC last year, became a vice president of Minneapolis-based Investors Diversified Services Inc., which manages the world's largest investment-fund group (assets: $5.3 billion). He happily agreed to accept the $80,000-a-year job as president of Amex, and felt no embarrassment about his new role of investigator-turned-president. After all, said Saul, in the reformed Amex "nothing lingers from 1961-62." It was that image which Amex directors sought to keep by hiring the man who had harassed them.

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