Don't sell out the SEC

With the imminent arrival of the new Reagan administration, there is speculation on the part of some business lobbies about major "housecleanings" at the industry-related regulatory agencies -- an inclination to throw the "old order" out as part of the changeover to the new administration and new Congress. One area where we hope the Reagan transition effort -- and indeed the US business community -- will exercise great caution in undertaking any major "housecleaning" is at the important US Securities and Exchange Commission.

The SEC, which dates back to the very inception of the New Deal in the early 1930s, is the nation's primary watchdog agency regulating the securities industry. Although regarded as one of the nation's finest independent federal agencies, the SEC has not escaped the public antiregulatory mood of the past few years.

The current chairman of the SEC, Harold Williams, was appointed to his five-year term by President Carter back in 1977. Traditionally, however, the incoming president has the option of selecting his own chairman. And in fact, William Casey, who is spearheading Mr. Reagan's transition team and was his campaign manager, was chairman of the SEC under President Nixon.

Will Mr. Reagan be tempted to replace Mr. Williams? Any step along that line would quickly send widespread tremors through Wall Street and the financial community, and would by itself quickly say much about the new administration's approach towards the business community. The reason, of course, is the yet unfinished agenda of Mr. Williams and the current leadership of the SEC -- an agenda that Mr. Williams says he would like to complete. Among issues facing the SEC:

* Should there be substantial changes in the controversial Foreign Corrupt Practices Act, enacted to check bribery and other corrupt abuses by US firms engaged in overseas trading? Mr. Williams says he would favor some changes in the legislation, but not a "de facto repeal."

* How should the SEC go about encouraging a streamlining of the many rules and regulations affecting US firms, particularly regulations inhibiting smaller firms from raising needed investment capital?

* To what extent should firms be required to engage outside directors for their boards -- whether voluntarily, as now, or through a mandated legislative approach?

* How to ensure that the SEC fulfills its proper "enforcement" functions against firms? The enforcement division has been cut back during past months.

Given the deliberation and careful planning that have already characterized the Reagan transition effort, we fully anticipate that the new administration will move with equal care in its consideration of the SEC. At a time when numerous opinion polls disclose public misgivings about the power and influence of corporations, it is paramount that the SEC retain the sense of excellence and commitment to public well-being that have marked its recent years under Mr. Williams.