Casey at the Bat

To head the Securities & Exchange Commission, the overworked agency that polices the stock market, President Nixon wanted someone who knew Wall Street from all its angles. The man he chose in February, William J. Casey, a tough-sounding Wall Street tax attorney and onetime Nixon speechwriter, not only knew all the angles but had personally played a few of the wider ones. Casey, 58, is a law partner of former G.O.P. Chairman Leonard Hall and describes himself as "an investor for venture capital." He frequently buys into little-known companies or products in hopes of hitting the jackpot. To judge by his self-estimated annual income of $250,000, he has come out on the winning side more often than not.

Some members of the Senate Banking Committee were bothered by complaints that Casey may not have always played fair. Though his nomination was tentatively approved for full Senate vote in February, the committee reopened its hearing to probe further into Lawyer Casey's rather active life in court --as a defendant. Last week Casey showed up at the second committee session smiling confidently. He took to the witness chair for nearly four hours to argue that his record of legal battles was entirely normal for a man in "an active business career."

Casey was a defendant in three civil cases between 1962 and 1965. The first that came to light involved plagiarism. Casey said that when he headed the Institute for Business Planning, the tax publishing branch of Prentice-Hall, Inc., an editorial employee had copied 21 pages from an author's manuscript and used it in a tax manual. A jury awarded $41,450 to the author, but he agreed to an out-of-court settlement for half that amount, possibly because he feared an appeal by Casey.

A second lawsuit, still pending, involves the acquisition of California's S.O. Systems Inc. by Kalvar Corp. of New Orleans. Casey's law firm was counsel to Kalvar, and he was a director as well as executive-committee chairman of the company. Dissident Kalvar shareholders have charged that Casey and other officers and directors made misleading statements about S.O. stock, overestimating its value. The plaintiffs also contend that Casey and others arranged for S.O. Systems shareholders to hold their vote on the deal in New Orleans instead of California, where the state corporation commissioner was considering an investigation of the acquisition. To that, Casey testified: "The two or three men who controlled the firm were grown-up men who decided they did not need the assistance of the California corporation commission regarding an offer they had to sell the stock, and they decided to go to New Orleans to handle the matter there quickly."

The third suit charged that Casey helped to sell unregistered stock on the basis of over-optimistic information. The information was contained in a letter sent out on behalf of Advancement Devices Inc., of which Casey was once chairman, director, major shareholder and counsel. In the 1962 suit, an investor charged that he had bought the stock after reading the puffy letter; he sought $10,000 in damages, settled for $8,000. Last week Casey conceded that the letter had been "outrageous" but insisted that he had not seen it before it was mailed by the man whom he had selected to sell the stock.

Failure to Forewarn. A majority of committee members were convinced that Casey was acceptable as chairman of the sensitive SEC. By a vote of 9 to 3 --the same margin as the first time --they recommended his approval. A trio of liberal Democrats cast the nays. Committee Chairman John Sparkman declared that Casey's opponents had presented no evidence "to prove he isn't fit to be chairman."

Even so, Casey displayed a lack of judgment in failing to forewarn the President of his potentially embarrassing background. Casey's White House supporters, notably Peter Flanigan, who is Nixon's top-level recruiter and link to Wall Street, served the President no better by missing or overlooking that background during a routine check. The most important lesson may be that the two stockholder suits would not have been filed against Casey had he confined himself to acting as counsel for the companies and not served simultaneously as an officer and director. Partners in some top corporate law firms are reviewing the practice of allowing their members to become directors of client companies. The roles of supposedly disinterested counsel and financially involved board member may well hold conflicts of interest.

This file is automatically generated by a robot program, so reader's discretion is required.