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SEC Chief Stays Cool Under Fire

October 21, 1987

David S. Ruder, a soft-spoken, bespectacled business law professor from Chicago, rode herd on one of Wall Street's wildest days in history--less than three months after taking over as chairman of the Securities and Exchange Commission.

During a conference of the American Stock Exchange on Monday morning, Ruder confessed he was more accustomed to an orderly college classroom.

Moments later, he found himself surrounded by TV cameras and a tight knot of jostling reporters, anxious to know if he was considering calling for a trading halt.

Ruder held his own. He avoided being pinned down on specifically what actions he was considering, but vowed: "I'm not afraid to say that there is some point, and I don't know what that point is, that I would be quite anxious to talk to the New York Stock Exchange about a temporary, and very temporary, halt in trading."

The halt never came despite an unprecedented decline in prices. John J. Phelan, chairman of the New York Stock Exchange, said if Ruder had asked, he would have stopped trading.

Ruder was born in the year of the Great Crash: 1929. When he was five months old, the market plunged 12.8% as measured by the Dow Jones average of 30 industrial stocks. That day--Oct. 28--became known as Black Monday.

Fifty eight years later Ruder was dealing with a stock decline that surpassed Black Monday in terms of percentage decline. By the time trading was over Monday, the index was down by 508 points on volume of more than half a billion shares. It closed at 1,738.74, 22.6% below Friday's close.

Ruder, before he came to Washington, was an academic with little experience in the sharp-elbowed world of Wall Street trading and Washington politics.

Born in Wausau, Wis., he graduated in 1951 from Williams College in Massachusetts and in 1957 from law school at the University of Wisconsin, where he was editor of the law review.

He worked for a Milwaukee law firm until 1961, when he joined the faculty of Northwestern University School of Law. He left academia in 1971 for a five-year stint at a Chicago law firm, rejoined Northwestern as dean of the law school and returned to a professorship in 1985.

When President Reagan nominated Ruder for the SEC chairmanship in June, those familiar with his writings said his opinions suggested a conservative man who prefers to let the market work unimpeded if possible.

Sen. William Proxmire (D-Wis.), chairman of the Senate Banking Committee, said then: "I'm somewhat concerned with his ideological views. . . . It may color his attitude--kind of let the markets roll with a minimal amount of regulation. . . . We need a very strong hand at the helm of the SEC, and I'm concerned whether Mr. Ruder has the force to put that into effect."

But, Ruder, at Monday's impromptu news conference, reaffirmed, "I have a responsibility . . . to protect the market from aberrational activity."

However, he cautioned, "There may not be much that can be done to prevent the markets from reflecting true economic conditions."

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