Overdrive by William F. Buckley Jr. Read Free Book Online

different from garden variety fraud, the use of the word has considerable intimidating power if the people against whom it is used are prominent other than in the securities business, as of course was the case with Catawba.
    Steve Umin, the learned family attorney in Washington, was greatly gratified that the SEC, when finally it framed its complaint against Catawba, did not use the first or third clauses. In not doing so, it acted conspicuously—i.e., it said in effect: Although certain practices followed by Catawba we allege to be in violation of the Securities and Exchange Act and the regulations promulgated under its authority, we specifically do not include, as among those violations, any intent to defraud.
    When the complaint was issued, together with the consent decree signed by my brother John (the only Buckley directly concerned with the litigation), what one might call the professional business press, most conspicuously The Wall Street Journal , gave it a routine story (the Journal ran it on page 17). But because my brother Jim and I are public figures and are stockholders of Catawba, notwithstanding that Jim has been essentially unaffiliated with Catawba since he was elected to the Senate in 1970, and that I hadn't had anything to do with Catawba since a brief spell in 1954, the New York Times gave the consent decree front-page treatment. It was hard, reading the story, to understand why it rated such prominent attention. (A headline accurately communicating its news might have said: "COMPANY OF WHICH JAMES AND WILLIAM BUCKLEY ARE STOCKHOLDERS/SIGNS THROUGH BROTHER WHO ONCE WAS COMPANY'S PRESIDENT/CONSENT DECREE WITH SEC AGREEING TO KEEP SEVERED/CATAWBA TIES WHICH WERE SEVERED IN 1978.")
    But a young reporter for Time mag, hoping for much much more, had devoted a great deal of effort to the whole complicated business, and when the SEC declined to move in a more stentorian mode, he undertook to do so himself, and persuaded his superiors to go along. Accordingly, two weeks ago Time devoted an entire page—not even in the business section, but under National News—to Catawba. The story said:
. . . the Securities and Exchange Commission, after a 3-1/2 -year investigation of Buckley-controlled oil and gas companies, last week portrayed the family's own business practices as unethical and even unlawful. In effect, it accused the companies of having defrauded stockholders to feather the family's nest.
    Now that story had an extraordinary effect on the new director of the Enforcement Division of the SEC. John M. Fedders had been for a number of years a securities lawyer, and had clients who had suffered from the arbitrariness of Fedders' predecessor, Stanley Sporkin—gone now, after Reagan's election, to the CIA, as chief counsel, where, one hopes, he will be instrumental in doing as much damage to the Soviet enterprise as he did to American enterprise. John Fedders, shown by Umin the article in Time magazine, joined in Umin's indignation and undertook to do something absolutely unprecedented in the history of the SEC. Fie wrote a letter and addressed it "To the members of the Buckley family." (It is perhaps prudent to add here that Mr. Fedders, unknown to me, is also unknown to my brothers and sisters—i.e., his spontaneous action was not motivated by particular attachments.) Fedders' letter read: "Your counsel have expressed to me their displeasure with the article in the November 16 issue of Time magazine. I am concerned with the impression left by the article that the Commission's complaint alleges that the Buckley family 'defrauded stockholders to feather the family's nest.'
    "Although the Commission's complaint alleges violations of Rule 10b-5 (2) under the 1934 Act and Section 17 (a) (2) of the 1933 Act, it does not allege that the described transactions were 'fraudulent.'
    "It is important that the results of the Commission's work not be misunderstood."
    What then happened is in part reconstruction, in part