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  Speech

Remarks by Richard G. Ketchum
Chief Executive Officer, NYSE Regulation, Inc.

William O. Douglas Award Presentation at ASECA Annual Dinner
Washington, D.C.
February 6, 2009


In accepting this award, I am terribly aware of the significance of this year.  On the one hand, the celebration of the SEC’s 75th anniversary gives one the opportunity to reflect back on the extraordinary achievements of the Agency in promoting the world’s most efficient capital markets through clear disclosure, market integrity, and transcending all, the protection of investors.  On the other hand, our country today faces the most complex, broad ranging, economic downturn experienced by any of us in our lives, with calls made by the Obama Administration for a fundamental rethinking of our system of financial regulation.  Beyond that, we seem to be exposed daily in the press and in other statements to caricatures and even parodies of the SEC that are fundamentally so distortive as to make the Agency unrecognizable.

This is certainly not the place for a serious analysis of these issues, but I do want to reflect on what made my time at the SEC an extraordinary experience, and through that, try to begin to define the unique soul that makes the Agency special.

The first of these is leadership.  During my time as Director of the Division of Market Regulation, I worked for three remarkable Chairmen of the SEC; John Shad, David Ruder, and Richard Breeden.  I suspect that everyone in this room from my generation would agree that these three Chairmen were dissimilar in numerous ways.  Yet each defined themselves by their willingness to take positions on contentious issues no matter what the political fallout.  Whether it was John Shad supporting increased transparency of the over-the-counter Nasdaq market in the face of the determined deregulatory focus of the early Reagan years to David’s call for a reexamination of the impact of low margin requirements on the stability of the equities markets and the illogic of two different agencies setting those disparate leverage levels, to Richard’s call for the common sense merger of the SEC and CFTC and refusal to cave to international pressure to adopt capital standards that did not properly address leverage and risk for illiquid securities: If each of these sound like they echo the issues raised by the implosion of our financial markets in the last year, it’s because they do!  Most importantly, each of these decisions, while politically difficult, demonstrated that these three Chairmen, and the talented Commissioners who served with them, including Aulana Peters and Chairman Schapiro who are here tonight, had the courage to lead.

Second, beyond the Commission itself, the essence of the SEC during my time was found in its people.  Throughout my time as Director, I served with an amazing group of colleagues in other Divisions.  The knowledge and skill which they brought to the managing their Divisions was exceptional, but expected.  What made them a joy to work with was the collegiality and caring they showed to each other and the recognition that the commitment to achieve our common goal of investor protection could best be achieved by working closely together.  They combined that collegiality, however, with tremendous creativity and a willingness to reconsider the regulatory structure they inherited and make changes to modernize or simply make it work better.  While these leaders were too numerous to list, a special mention deserves to go to Linda Quinn.  Though she passed away decades too early, she fundamentally transformed the offering environment through rule 144A and Regulation S at a time where acting too slowly could have had terrible consequences.  Yet no one was more effective at gaining input from others at the Commission or from practitioners to ensure that she made the right decisions and no one was more supportive of my program.  I miss you Linda.

Finally, throughout my time in Market Regulation I served with remarkable professionals.  Market Regulation, or as it is known now as Trading and Markets, is a quirky (maybe for this generation), geeky place.  But, what I truly loved about the place was its passion.  A desire to truly understand what make markets and the industry tick combined with an unswerving passion to advance investor protection and market integrity.  Again, there is one person I would like to single out.  While most of us immersed ourselves in that passion for a few years or a decade or so and then left in order to chase a new challenge, or finance our kids’ education, a few stayed. Bob Colby deserves special mention.  Bob, your encyclopedic knowledge, wisdom, and sense of humor have served the SEC and investors incredibly.  As you retire from the SEC, I just want to say, thank you.

Leadership, the courage to take an unpopular stand, collegiality, willingness to reexamine the regulatory framework when  necessary, a fundamental commitment to understand the industry we regulate and first and foremost, a passionate commitment to make sure everything the Agency does furthers investor protection, that to me, describes the very essence and soul of the SEC.  An essence, if I may offer, that is seldom duplicated by other regulatory agencies in the U.S. or around the world.  Which leads me to this simple thought.  To the extent that many of us participate in the ongoing financial reform debate that we speak out firmly: “whatever changes occur in the next few months with respect to the SEC – change it, make it better, grow it, even merge it, but that essence of the SEC cannot die.”

I believe I can make that statement with comfort tonight because I am so confident in Mary Schapiro’s leadership.  No one better than Chairman Schapiro, in this difficult time, can ensure that the SEC will make the changes that the times call for, but will never lose sight, even for a second, of the SEC’s unwavering commitment to place investors first.

Let me close with a paraphrase of my parting words when I left the SEC.  Sometime in the future, if someone asks me, “Where did you come from, what made you who you are, and what formed your beliefs?” as long as the SEC retains its passion for ensuring market integrity, for understanding the business it regulates, and continues to stand, first and foremost, for investor protection, my answer will always be, “Where do I come from?  I come from the SEC.” 

Thank you very much for this wonderful honor.