A senior statesman among securities lawyers, Edward Fleischman has worked in the field for more than 50 years. He served as a Commissioner of the Securities and Exchange Commission from 1986 to 1992. Before that, he practiced securities law for 26 years at New York's Beekman & Bogue. He resumed private law practice in 1992.
Fleischman has chaired the ABA Business Law Section Committee on Professional Responsibility and the Business Financing Committee, as well as the Securities, Commodities, and Exchanges Committee in the Administrative Law Section and the International Securities and Capital Markets Committee in the International Law Section.
Why did you specialize in securities work?
That wasn't really a decision to make. I reported for work at the magnificent sum of $125 a week in the middle of the summer of 1959. It was the old New York law firm of Beekman & Bogue. The firm had hired me to be trained as a litigator, but in those intervening months between hiring and starting, the small issuer and medium-sized issuer IPO market had really taken root and started to fly. Since the firm had several clients which were then major broker-dealers and underwriters with inclinations for the IPO market, the firm's focus shifted substantially into the IPO market during those months and during the months immediately following my reporting for duty. Very shortly, it became evident that the place the firm was going to be able to use me most and best and the area that I really enjoyed was securities, and that's what happened. And it didn't change. That IPO market went on, got hotter, and hotter, and hotter until Memorial Day 1962. But for those first three years it was a lively place to be.
How did your transition from private practice to working at the SEC come about?
I was at a lunch or a dinner sometime the winter of 1985 when Ken Bialkin, who was then, if not the Chairman of the Section, certainly on the ladder to become Chairman of the Section and still to this day is one of the real water carriers for elephants in that particular parade. Ken said to me, "Would you think about becoming an SEC Commissioner?" Because there was a vacancy. The lawyer sheets were full of speculation [about who would be appointed]. I said "Gee, I have never thought about it but, sure, let me just go home and check with my wife." It was that second conversation in which basically my wife said it would mean overturning our lives completely. And I said "Yes, you are right about that. But it ain't going to happen, so why not try?"
And we did. We followed Ken's advice right to the then Chairman of the SEC and explained in the letter why I thought I would be a good candidate for him to consider and it went on from there, through step after step after step until the end of the story, which was an annual meeting of the ABA including the Business Law Section in Washington that summer. I was extraordinarily bored one morning and I walked out and called back to New York to my secretary and she said, "I am glad you called. The White House wants you," just about an hour from the time we were speaking.
So I did what you would do in that circumstance: I showered, changed my clothes, grabbed a cab and got over to the executive office building. And the assistant to the president for this kind of thing said, "The end of the long story, Ed, is we've picked you."
What was it like to be an SEC Commissioner?
My time there was a little more than six years long, and I think at least at the time it was about double what an average length of stay was of an SEC Commissioner. My time there really split into three different pieces. The early years were truly exhilarating. First of all because of the job and the market conditions and what was going on all around us, but mostly because the then Chairman really cared about what his Commissioners thought. And shortly after he left, a year and a half later, the market break of '87 happened and that phase was extraordinarily exciting because I was the one person at that level of the SEC who actually had substantial experience in futures market as well as the securities market, and it was the intersection of the futures and securities market to which the break was attributed by a lot of people. So I had the opportunity to make a relatively exciting contribution and after that, a couple of things happened, including the fact that my wife was diagnosed with leukemia. This is now two years after the market break and the excitement died away and the last year and a half, two years were, let's say, disappointing. The opinions I had then were, I thought, no less valuable, but they weren't being solicited anymore and they weren't being heard even when they were volunteered. So those were the three different phases of my Commissionership.
What has been the most fulfilling moment in your work so far?
I spent a great deal of time as an SEC Commissioner considering the relationship of the organized bar to the SEC and the SEC to the organized bar. I spoke on that subject to the Federal Regulation of Securities Committee on three or four occasions and to other bar groups as well. But I think the most fulfilling moment to me was at an annual meeting at Atlanta, in which I really said what I had to say about that subject, critical in both directions, speaking about the standards for the SEC and the standards for the bar and that relationship between them. I was greeted by my peers with a standing tribute. I remember that to this day, although it is now 30 years later.
What are three essentials that every business lawyer needs to know?
Subject matter knowledge--that has to be first. Second, the atmosphere and the boundaries imposed by the regulators--or a single word: compliance. The last and perhaps the most important, because the others will be useless otherwise, is the ability to communicate that knowledge and that compliance sensitivity to the client and persuade the client that the lawyer does have an understanding that makes him or her very much worth listening to, even if the advice is not what the client wants to hear.
Why did you get involved in the ABA and in the Section?
It had become apparent to me that the opportunities for real learning were not only in the books and not only in the law reports, but equally so in the interaction with others who were practicing in the same field. And it seemed to me that those opportunities were particularly outstanding in the ABA Business Law Section. It took me a couple of years at that time to be accepted into membership on the Federal Regulation of Securities Committee. You didn't just say "I want to join." You had to be considered and approved.
How have you been involved in developing young lawyers in the Business Law Section and in the profession?
I sought to mentor people by pointing out to them the advantages that I thought I had found, and encouraging people--encouraging lawyers younger than I--to join the Business Law Section and the appropriate committees. I have found it for myself very much worthwhile and I have passed that message on to more than one generation of young lawyers.
What has been the highlight has been of your work as a Business Law Section Advisor?
The opportunity to participate in various panels on what I might call ethical issues. I'm old enough so that people are willing to let me pontificate and that's what people do with ethics issues. At the recent meeting in Las Vegas, they had me on two panels and I much enjoyed them as a matter of fact. Some of it is very interesting and very provoking. Some of it is extraordinarily frustrating. It's hard to get your hands around ethics; it's much easier to get your hands around substantive issues.
Describe the work that's being done by the Federal Regulations of Securities Committee.
Within the last few weeks, since the passage of what's called the Jobs Act, the Chairman of the Committee has made it his business to focus the attention of Committee members all around the country on the regulatory developments under the Jobs Act. The Q&A being put out by the SEC, the client memos being put out by the firms of which individual members of the Federal Regulation of Securities Committee are themselves associates or partners, so that everybody can have at least access to what's suppose to be a very major change in the approach to securities regulation. But that's just an example. Because if you look at the other work being done by various sub committees, there's much breadth in the work of the Committee.
Describe the relationship between the SEC and the ABA Business Law Section.
There is no formal relationship. It's a relationship that's fraught with both cooperation and difficulty. But it is a relationship of professional colleagues. That is to say, a relationship between persons within the SEC who had come to know lawyers at the private bar who are members of the Business Law Section and between members of the Business Law Section who have come to know persons who are Commissioners or who are on the staff of the SEC. So it's not a formal relationship, but the senior members of the staff and occasionally even a Commissioner or the Chairperson of the SEC will come to the meetings of the Business Law Section or of the Federal Regulation of Securities Committee. The same thing is true with the derivatives area and they will participate, not in the sense of slugging it out, but in the sense of making views known to the people who are laboring in the vineyards.
How has your involvement in the ABA shaped your work as a lawyer?
Before I went to the SEC, my involvement in the ABA gave me a fair amount of insight into the issues facing the SEC over those years and into the way the SEC could be expected to react to those issues. Some of that I'm sure came from private practice, but most of it came from involvement in the ABA and in the ABA committees.
What is a commonality among most successful business lawyers you know?
Creativity, insight, expertise. If I think of the great business lawyers that I've known and in particular those who are practicing today, those three traits are the fundamentals.
How has the SEC evolved?
It's become more bureaucratic; it's become more regulatory; and it's become--I think it's fair to say--less open to opinions that originate outside the Commission and outside the city of Washington, D.C.
What challenges does the SEC face in the next decade?
I'm not sure that the future ones are a lot different from the challenges faced in past decades. The SEC is always challenged by a temptation to believe that it has all the answers; that is, if there's a problem, there must be a regulatory solution. I'm a Reagan appointee to the Commission so I don't believe either that it has all the answers or that there has to be a regulatory solution to every problem.
How is public sector work different from private practice?
The difference is in the identification of the client. The entire legal regulatory system, with all its many facets--our society as a whole--is your client when you're in the public sector, as opposed to the interests of entities, organizations or individuals who are your clients when you're in private sector. That makes a great deal of difference.
Who is your idol in the legal profession?
Holmes, Brandeis, and Cardozo--the great common law lawyers. Because that's the foundation, the way of thinking that you have to learn. It's worth going back to Holmes to understand how the law, even in a regulatory area, even in the administrative law area, how the law develops, how it evolves and what its goals and directions can be and should be.
What are your interests outside of the law?
Reading, the theater, small boat sailing.
Who has been your most influential teacher?
Outside the law it was a professor at Harvard who went on to teach at Columbia for many years. He was a professor of Russian history in the nineteenth and twentieth centuries and he supervised my thesis, which had to do with a particular event of Russian history in the nineteenth century. Within the law, it would have been a corporate senior partner at Beekman & Bogue named Bertrand Kohlmann, who died now 40 years ago. He was the most influential teacher I've ever had. He was a perfectionist, but very much a pragmatic practitioner of the law.
What is the best idea you ever had?
The realization in the mid '70s that this wonderful law firm in which I practiced simply couldn't survive, despite the reputation and despite the abilities of its partners, without a substantial merger, which would involve geographic expansion. I pursued that particular idea for a number of years with people whom I had met through the Section. It finally came to fruition.
What is the most unique thing about you?
I'm an archivist, otherwise called a pack rat, with a huge personal library of regulatory materials, particularly SEC materials, that I have acquired over the years from lawyers who are older than I, from publishers in the field, from second-hand book stores, from all kinds of places. I would be delighted to make that library available to some law school that could use it, but in fact what I'm finding is that paper and print are out of fashion. I don't know what I am going to do with my library. It will be a shame to burn it but it may happen.