SEC, House Panel in Secret Talks on Nasdaq
The chairmen of the Securities and Exchange Commission and the powerful House Commerce Committee have gone to exceptional lengths in recent days to keep secret the nature of a closed-door meeting last week, raising the possibility that the two have reached a compromise in a fight over rule revisions that would profoundly change the Nasdaq Stock Market.
Neither side will comment on whether a deal has been hammered out, although Mike Collins, a spokesman for the Commerce Committee, said there could be an announcement related to Nasdaq as early as today.
SEC Chairman Arthur Levitt met Tuesday with Rep. Thomas J. Bliley Jr. (R.-Virginia) and hand-delivered a letter to him.
In what appeared to be an unusual scramble last week, spokespersons for both men first categorically denied to The Times that the letter existed, and then the two sides pointed the finger at each other about why what would normally be a public document wasn’t being disclosed.
Bliley in June began pressing Levitt to back down on aggressive proposals made last September to change Nasdaq trading rules to give investors access to better prices. For big Wall Street firms that act as middlemen, the rules would cut profits. The firms have hired a well-connected lobbyist and persuaded Bliley to take up their cause. Levitt has already signaled that he may be willing to phase in the rule changes rather than implement them all at once but, by all outward indications, he has otherwise stood firm. Bliley has continued to pressure Levitt to back down and demanded answers to a long list of questions. The elusive letter hand-delivered by Levitt on Tuesday contained his answers.
The contents of the letter still haven’t been disclosed, but the response from the public officials when questioned about it has created some mystery. On Wednesday, Jennifer Scardino, Levitt’s chief spokeswoman, twice said “no” when asked if Levitt had sent any letter to Bliley that week. Late that night, a reporter received a phone message at home from Scardino stating that there was such a letter after all. She said she had decided to alert the newspaper because she believed some lobbyists might be leaking it. The next day, she admitted that she had known of the letter when she first spoke with the reporter. Scardino suggested that a copy could be obtained from Bliley.
But after checking, Bliley’s personal press aide, Bill Dolbow, told The Times, “There is no letter.” Dolbow added that Levitt “never responded” to Bliley’s questions.
However, Collins, the spokesman for Bliley’s Commerce Committee, soon confirmed the letter’s existence too, after learning that the SEC had already done so. Collins urged a reporter not to quote Dolbow. Collins contended that Bliley’s staff had only just learned of the letter.
Still, both the Commerce Committee and the SEC refused to give The Times a copy, and each blamed the other for the secrecy.
Levitt aide Michael E. Schlein said that as a matter of standard SEC practice on communications to Congress, it was up to Bliley to make it public. However, Commerce Committee spokesman Collins said Bliley couldn’t because “Commissioner Levitt asked the chairman [Bliley] to keep the letter confidential between them.”
When asked about it, this seemed to come as news to Schlein. “I’m not aware of any such request,” he said. Schlein added that “it’s odd” that Collins would say that, and emphasized that Bliley’s decision whether to release the letter “is up to him.”
But Schlein later called back to say that he had just learned that Levitt had in fact “asked Bliley to treat it confidentially.” Asked to explain why, Schlein said, “I don’t know.”
Scardino insisted that she hadn’t deliberately misled The Times about the existence of the letter. She said a reporter must have misunderstood her during their first conversation. Collins denied that Bliley’s staff had tried to mislead a reporter.
