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SEC’s New York Administrator Quits

September 29, 1987

WASHINGTON (AP) _ The Securities and Exchange Commission’s regional administrator in New York has quit following reports of staff friction at the office, the SEC’s most important operation outside Washington.

Kathleen A. Warwick’s resignation was effective Tuesday, said SEC spokeswoman Mary McCue, who declined to comment on the reported friction.

A former securities counsel for Mobil Corp., Ms. Warwick took over as head of the commission’s most important regional office in January. Rumors and press reports of staff morale problems have dogged Ms. Warwick for a few months.

The SEC’s New York office is crucial to the surveillance operations of the watchdog agency and has done much of the work in a widespread crackdown on illegal insider trading and other abuses on Wall Street. The office has about 200 staff, including about 40 lawyers in the enforcement unit.

All press calls to Ms. Warwick were referred by the New York office to Ms. McCue in Washington. Ms. Warwick did not immediately return messages left on her home-phone answering machine.

Ms. Warwick, in her resignation letter, dated Monday, told SEC Chairman David Ruder: ″It is my sincere wish that any controversy or misunderstanding resulting from internal matters or press reports, however erroneous I believe them to have been, do not reflect in any way on the Securities and Exchange Commission as an agency.″

A team of senior SEC officials from Washington had been conducting a review of the New York office, but Ms. McCue declined to discuss the officials’ findings or whether it was linked to Ms. Warwick’s resignation.

Sen. William Proxmire, D-Wis., chairman of the Senate Banking Committee, wrote Ruder shortly after he took charge of the SEC in August and asked him to look into the reported conflict. The letter was brief, said a source who declined to be identified, ″but it had the tone: Don’t get your chairmanship off to a bad start.″

James A. Clarkson III, director of regional office operations in Washington, will replace Ms. Warwick on acting basis. William R. McLucas will fill the No. 2 position in New York, also temporarily, with responsibility for enforcement operations, Ms. McCue said.

McLucas, associate director for enforcement in Washington, replaces Anne C. Flannery, who resigned effective Aug. 28 to return to the private practice of law.

Both men will continue with their current responsibilities, splitting their time between New York and Washington, Ms. McCue said.

″We want Jim and Bill to serve in those functions (in New York) on an acting basis to ensure the enforcement programs go forward,″ she said. ″We are actively looking to fill both positions. ... As they are filled, they will return to full-time duty in Washington.″

The Wall Street Journal, quoting unidentified New York SEC employees, reported last month that a major rift had developed between Ms. Warwick and her staff when she tabled an investigation growing out of the so-called Yuppie Five insider trading case.

The newspaper reported low morale in the New York office and said Ms. Flannery resigned after clashing over policy matters with Ms. Warwick.

The renewed investigation was said to involve several traders mentioned in depositions of the Yuppie Five, a group of young lawyers and investment bankers implicated in an illicit scheme to trade stocks based on inside information.

Other sources have said that Ms. Warwick’s management style contrasted sharply with that of her predecessor Ira L. Sorkin, who was known among his staff as extremely outgoing and accessible.

Under Sorkin’s tenure, the office’s enforcement division enjoyed wide- ranging autonomy to bring cases, but Ms. Warwick was said to have been much stricter with the enforcement staff.

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