"A LOOK AHEAD"
THE OPENING PAGES OF THIS SPEECH AND OTHERS, GIVING A PERSONAL IMPRESSION OF RAY GARRETT, JR., HAVE BEEN GRACIOUSLY PROVIDED BY HARVEY L. PITT.

An Address by
Ray Garrett, Jr., Chairman
Securities and Exchange Commission

Presented before
THE MUTUAL FUNDS AND INVESTMENT MANAGEMENT CONFERENCE
Hotel del Coronado
March 14, 1974
San Diego, California

I am very glad to be with you tonight. There are times -- more than I care to admit -- when I speak these words to satisfy a guest's duty of politeness, and if I were Pinocchio, my nose would have grown an inch longer, and if I had to say this in a filed statement with the Commission, Stanley would be suing me. But one does not have to search his conscience for sincerity when he says that he is glad to be in this wonderful room, on this lovely island y the bay, surrounded by such pleasant company.

It does seem a pity, though, after listening to all those speeches for the last several mornings, and playing all afternoon, and now here all full of good spirits and good food, with the gals all gussied up and looking so pretty and so ready for better things, that you have to endure one more speech. You re very nice to put up with it.

I didn't get to Mexico City, but Virginia and I got to Newport Beach the year before, and Scott Hodes and the others who plan these affairs had a better idea for this festive occasion Instead of pompous rhetoric, we had a dancing contest. It was no contest as far as I was concerned -- or as far as anyone else was concerned, except Tom Hawekotte, who won. Now Tom is an impressive dancer of a certain sort, as most of you surely know, but the fix was in on that contest. Tom won with the assistance of a transparent fraud, a barely-concealed impostor. Still, it was a happier idea that post-prandial elocution.

However, since by force of circumstances we are involved with each other for these few moments, with mine the task of advancing our thought without impeding our digestion, I do have a few things to say of a rather general nature. I would like to talk about the present state of our securities markets and what attitudes we should have to their future. Contrasted with the more technical problems discussed with such competence and/or authority by other speakers at this conference, my subject seems a bit superficial, but quite suitable for a Chairman. When I was a division director, I much preferred that Chairmen limit their public utterances to great thoughts of the broad and hazy variety and not go fumbling around in my territory -- unless, at least, they spoke only from a text carefully prepared by me.

Allan Mostoff may be disconcerted that I am not using much of the text so carefully prepared by him and his staff at my request. But rather than assure him at the outset that I will keep my unauthorized remarks broad and hazy, I prefer to let him listen and worry.

It is no secret that there is much debilitating doubt and fear abroad in most segments of the securities markets, obviously not excluding mutual funds and their principal underwriters and investment advisers. The general state of morale in the industry is low, not just from the press but from what industry people tell me, from the way that they tell it, and, often, from the looks on their faces as they come into my office.

I don't mean to sound callous and lacking in sympathetic understanding when I say that some days I feel as though I am conducting a counseling, or perhaps a consoling, service. Sometimes when patience runs a bit thin toward the close of the day, I am inclined to remind a visitor that I have troubles of my own and things are tough all over.

On such occasions, in respect of some visitors, I am tempted to hand out TS slips. I wonder how many of you older fellows remember that friendly advice so common in the Army of World War II when a soldier was having a hard time -- or at least telling everyone within range what a hard time he thought he was having and how unjust it all was. If you wanted to be really helpful to such a gallant warrior, you would advise him to go see the chaplain and get a TS slip. Even in these bawdy times I feel constrained to translate the initials as standing for "tough stuff".

But frail as human nature often is, including mine, I do not mean in any sense to make light of the concerns of industry members who take the trouble to communicate their views and fears to the Commission, and all of us at this end are of like mind. Of course, we would prefer to have the communication in friendly and properly deferential terms.

Last fall I received a short but incisive commentary on our work. A gentleman from Mississippi wrote to tell me of the outrageous practice, which he believed to be prevalent, of companies leaking out material inside information to selected analysts for managers of large institutional investors. My correspondent called my attention to a recent magazine article making the same point and then observed --

"It's too bad you biased, yellow-livered sons-of-a-bitch haven't got
the guts to do something about it. If you don't get the message of
this commentary you are beyond redemption."

This is the kind of hang-in-there-baby cheering that really gives you a lift. Incidentally, in addition to impugning our ancestry in that familiar phrase, his curious use of the plural suggests a degree of consanguinity among the Commissioners which is not only not the case but unique in my experience with mass pejoration.

Well, it's a citizen's undoubted right to tell off those idiots in Washington, and it is important for us to know the effects of our actions and inactions. Just as the physician wants to know where it hurts, and the chef at least ought to want to know how it tastes, we want to know the effects of our behavior on persons whom we regulate. It is more helpful, if less fun, when the expressions of dissatisfaction are more constructive than my friend from Mississippi, but we pay some attention to them all....

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