The SEC's Top Cop

Businessmen charge he is too zealous. Ralph Nader calls him "a public servant who takes his public trust seriously." His own associates merely marvel that one man can do so much; a colleague says he routinely puts in 17-hour days, "going 90 m.p.h. all the way." Stanley Sporkin, 44, sees his task more simply: to throw a spotlight on wrongdoers. He heads the enforcement division of the Securities and Exchange Commission, which brings charges against companies for violations of securities laws and thus polices 9,000 public companies, 3,500 brokerage houses, 3,700 investment advisers and 1,300 investment companies. Though the SEC's traditional concern is to stop fraudulent or manipulative stock transactions, Sporkin has also interpreted his mandate to include forcing companies to disclose the facts about bribes, kickbacks and illegal political payoffs. If that view of how to protect stockholder interests causes complaints--and it does--Sporkin has the almost missionary morality not to mind.

To date, his 600-person staff has forced the disclosure of massive overseas payoffs by the likes of Gulf Oil, Lockheed, Northrop and United Brands. It has also encouraged more than 100 other companies to make voluntary confessions of unethical activities. And the end is not in sight. As a New York City securities lawyer puts it, "Stanley just cannot stand the thought that somewhere in the world someone is doing wrong and not being punished for it."

Machine-Gun Burst. Sporkin sees the violations as "a blight on our great economic system. We've got to stop it." He came by his love of justice from his father, a Philadelphia judge. After honing his business instincts by becoming a C.P.A. and a lawyer, Sporkin joined the SEC in 1962, quickly gaining a reputation as a fierce investigator. When the job of top cop came open, Sporkin was a natural for it. But neither his superiors nor his wife nor three children have ever been able to make him look like a businessman--or a lawyer either. Enveloped in a rumpled suit, with a stubby tie barely reaching the slope of his ample belly, Sporkin has the appearance of a Damon Runyon character who just finished an all-night poker game.

At work, Sporkin's style is feverish.

During one recent hour-long meeting, he mapped out a course in management fraud for Yale Law School (his alma mater) while rewriting some SEC legislation and fielding half a dozen phone calls. Sporkin has also been known to lean back in a meeting with high-powered business executives for ten minutes of closed-eye contemplation that uncannily resembles sleep--and then deliver a machine-gun burst of pointed questions.

Colleagues say Sporkin could easily triple his $37,800-a-year salary by going to work for a private law firm.

Because his job is so big and his budget so small--only $1.5 million a year --Sporkin has had to find shortcuts to save staff time and money. He has, for example, encouraged lawyers and accountants to watch for wrongdoing in the companies they serve, then report it to the SEC. Says Sporkin: "We get at least two or three tips a day from them."

Bribery at Home? When the wave of slush-fund and payoff scandals began to break, he also developed the idea of consent agreements. His bright young staff--average age is under 30--would collect evidence of wrongdoing and confront the companies with it. Then the corporations would continue the probe under SEC supervision, using untainted directors, lawyers and accountants to do the work. In the Gulf Oil case, the guilty company spent $3.5 million on its investigation.

Many businessmen feel Sporkin is overreaching his authority. Milton Freeman, who heads an American Bar Association subcommittee on SEC enforcement activities, insists that bribes, payoffs and political contributions are not "material" to stockholder interests --as long as dollar amounts remain relatively minor compared with company income. Says he: "If payoffs are being made overseas, and it's not hurting the company, it's no business of the SEC." Sporkin's reply: "What can be more important to stockholders than knowing how companies account--or don't account--for their money?"

Pressure is nonetheless building for Sporkin to go slow. In a recent letter to Senator William Proxmire, Commerce Secretary Elliot Richardson was worried about the SEC's "expansive definition of materiality," meaning its prosecution of bribery and kickback cases. That drew a sharp reply from SEC Chairman Roderick Hills, and Richardson backed off --at least temporarily. Characteristically, Sporkin wants to expand his job even further: "We've seen the worst of the overseas scandals but I'm afraid only the beginning of straightforward, old-fashioned bribery and embezzlement here at home. There's a lot of money out there that is unaccounted for that's sticking to people's fingers." Anyway, he says, he would much rather be accused of going too far than of doing too little.

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