Stock Holdings May Pose Problem : Conflict Concern Raised Over Reagan’s Nominee to Head SEC

President Reagan’s pick to be the new chairman of the Securities and Exchange Commission has vast stock holdings, and a key Senate panel is worried about his potential conflicts of interest, according to Senate aides.

Financial disclosure documents filed with the government, copies of which have been obtained by Reuters, show that Northwestern University Law Professor David S. Ruder has a net worth of at least $2.7 million and possibly as much as $6.1 million or more.

Between $1.5 million and $3.7 million of that is in the form of publicly traded stocks and bonds, according to the documents, which describe Ruder’s varied holdings in terms of ranges rather than precise values.

The 58-year-old Republican, was nominated by Reagan on June 17 to the top SEC job, succeeding John S. R. Shad who resigned last month to become ambassador to the Netherlands.

Senate aides said Ruder’s extensive holdings will be an issue at his confirmation hearings, scheduled for Wednesday before the Senate Banking Committee.

The aide said that senators will address at the hearing the adequacy of Ruder’s suggested plan for dealing with the conflict-of-interest question.

Ruder, in a separate disclosure report prepared for the Senate committee, said he planned to place “all but a few securities held by my wife and me” into diversified trusts.

“To the extent required by the SEC’s regulations or applicable law, I will recuse (excuse) myself from matters involving companies whose securities are held by me or my wife and which are held for the benefit of myself or my wife,” he said.

“I will recuse myself on a case-by-case basis from other matters as necessary to avoid the appearance of impropriety, despite the lack of actual conflict,” he added.

But he said that he planned to participate in SEC matters involving stocks held on his behalf in a blind trust, as is permitted by law. Investors in blind trusts do not have control over where their money is placed and they cannot know where it is invested.

Ruder gave no indication in the documents which stocks he planned to keep out of a blind trust or why.

Among the holdings in Ruder’s extensive portfolio are several blocks of stocks in individual companies whose value exceeds $100,000, including W. W. Grainger, K mart, Masco and Sara Lee.

Ruder also disclosed that he will not participate in any SEC matter involving the Chicago law firm of Schiff, Hardin & Waite, the Chicago accounting firm of Grant Thornton, and the Chicago stock brokerage firms of William Blair & Co. and Harris Associates, all firms for which he apparently provided consulting services.

The SEC has extensive regulatory powers over accounting firms and brokerages as well as companies with publicly traded securities.

Other Ruder consulting clients include the Business Roundtable, an influential corporate lobbying group that frequently testifies in SEC hearings, and Household Finance, a consumer finance firm whose corporate parent is listed on the New York Stock Exchange.

Another client is Skadden, Arps, Slate, Meagher & Flom, a prominent Wall Street law firm that specializes in defending large corporations from hostile takeovers.

The Roundtable, Household Finance and Skadden Arps each paid Ruder more than $5,000 in consulting fees during 1986.

However, Ruder gave no indication in his financial reports that he would withdraw from matters involving these firms.

Ruder said he planned to take only a two-year leave of absence from his job at Northwestern’s law school, and intended to resign the SEC chairmanship at the end of Reagan’s term in January, 1989. “I am uncertain whether I also will submit my resignation as a commissioner of the SEC,” he added.

Under law, the five SEC commissioners serve fixed terms, but the chairman is picked from among them by the President and can be replaced as chairman at any time.