Boca Raton, Fla. — Congress will move to restrict takeovers and junk bond financing in the aftermath of the Ivan Boesky insider trading scandal, Securities and Exchange Commission chairman John Shad predicted Friday. ``I do believe there will be a number of bills to restrict takeovers and financing,'' Mr. Shad said in a speech before an industry group.
But the head of the government agency that regulates the securities industry contended that any new laws regarding takeovers and junk bonds should be considered on the merits, and not in the light of the Boesky scandal.
Mr. Boesky, one of the biggest and best known of Wall Street's speculators, pleaded guilty to a criminal charge of insider trading Nov. 14 and paid a $100 million penalty in one of Wall Street's biggest scandals on record. Insider trading is the illegal use of confidential company information in stock trading.
In his remarks to the convention, attended by about 1,000 members from the securities industry, Shad made no new disclosures about the insider trading cases, and even played down the significance of the events.
He said he did not believe the insider trading cases would have a long-term effect on investment. Wall Street was hit by a record selloff as details of the scandal were unveiled. But he noted that the stock market climbed back up to a record levels in the weeks afterward.
Shad said he believes that insider trading is not the driving force behind the record wave of mergers and takeovers that have taken place in the past two years.