By Mark S. Nelson, J.D.
Northwestern University announced the passing of former Pritzker School of Law dean and one-time SEC chairman David Ruder. A Pritzker School of Law tweet linked to a Northwestern Now article that characterized Ruder as a "brilliant leader" who also was the William W. Gurley Memorial Professor of Law Emeritus, having served the school since 1961. Ruder was appointed chairman of the SEC during the latter years of the Reagan Administration and served in that role from August 1987 to September 1989. Ruder passed over the weekend at age 90.
As a newly confirmed SEC chairman, Ruder would deal with the market crash of October 19, 1987, which has been variously blamed on program trading. Under Ruder, the SEC would implement circuit breakers to reduce the risk from certain trading practices that could sap markets of needed liquidity in times of crisis.
Members of the current Commission issued a public statement reflecting on Ruder’s work at the SEC: "Notably, those who served with him often remark on his intelligence, candor and love for the Commission. More importantly, as Chairman Ruder would have wanted, and as he so often did, they have focused on instilling those characteristics and values in others. David set a fair and effective path for future generations that has stood the test of time."
In the years after Ruder left the Commission, he would testify before Congress many times, including on the need for targeted accounting reforms following the collapse of Enron. For example, Ruder began his testimony before the Senate Banking Committee in February 2002 by observing that despite the actions of a few regarding Enron and other companies, the U.S. accounting system was generally "strong and reliable." The February 2002 panel included other former SEC chairmen Arthur Levitt, Richard Breeden, Harold Williams, and Roderick Hills, collectively representing a 26-year period in the SEC’s history spanning five presidential administrations from President Ford to President Clinton. Testimony from this and other panels would lead to the creation of the Sarbanes-Oxley Act of 2002.
With respect to what would become the Public Company Accounting Oversight Board, Ruder told the Senate Banking Committee that an independent audit regulator could be designed to take advantage or some of the work already done at that time by the American Institute of Certified Public Accountants’ Public Oversight Board. More specifically, Ruder said: "A new, separate audit supervisory board should be modeled on the private sector Financial Accounting Standards Board—FASB—and perhaps on the self-regulatory system of the NASD. The Board should be subject to oversight by the SEC, which in turn should cooperate with the Board in the investigative area. The Board should be composed entirely of public members, not associated with the profession." Ruder added that such a board should be independently funded so that the persons it would regulate could not withdraw financial support if they disagreed with the standards to be imposed on them by the board.
Upon leaving the Commission, Ruder returned to Northwestern where he led efforts to provide continuing legal education through the Corporate Counsel Institute and the Ray Garrett Jr. Corporate and Securities Law Institute, both of which are held annually in Chicago, and the Securities Regulation Institute held annually in San Diego typically during late January. Anyone who has attended these events will recall Ruder’s nearly constant presence at the many panel discussions.
Ruder was originally from Wausau, Wisconsin. He completed his undergraduate work at Williams College before obtaining a law degree from the University of Wisconsin.