Remarks by Chairman Arthur Levitt
            U.S. Securities and Exchange Commission
          American Bar Association House of Delegates
         San Francisco, California -- August 6th, 1997



     Members of the House of Delegates, thank you for the
privilege of addressing you this morning.  I came to speak
briefly on a matter of real concern in our municipal bond market.
It is the practice known as "pay-to-play," in which contributions
made to elected officials influence the award of municipal bond
contracts.  In the case of lawyers, such contributions can open
the door to designation as bond counsel, special counsel, and
even counsel to the underwriters.

     Let me be clear about one thing from the start: Lawyers
didn't create this system.  But lawyers can help end it.

     Some may think that by standing before you and raising
issues of ethics, I'm acting as if I were Moses when he came down
from Mt. Sinai.  I have no illusion that I am holier than any
person in this room -- and lest anyone else harbor that illusion,
let me take this opportunity to shatter it:  I spent a good part
of my life in the securities industry, and like many bond
lawyers, over the years I found myself attending fundraisers for
candidates I didn't know or support, and in some cases couldn't
even vote for.

     But the insidious thing about pay-to-play is that no single
person can end it -- you will simply be excluded from the
process, and your competitors will get all the work.  The only
way to end pay-to-play is through collective action.  That is
what investment bankers did in 1993, when they adopted a
voluntary ban on the practice -- and that is what I am here today
to ask you to do as well.

     As you may know, I'm not a lawyer.  But I have a healthy
respect for what you do.  Forty percent of the SEC's staff are
attorneys.  This remarkable assembly of legal talent has taught
me something about the honor, dedication, and moral probity to
which the entire legal profession aspires.

     Of all the people I have been privileged to know in my life,
the one I admire most was a lawyer -- my late father, Arthur
Levitt.  He served 24 years as New York State Comptroller after
many years as an attorney in active practice.  These two
experiences left him with profound respect for lawyers,
especially municipal lawyers.

     I share that respect -- and I strongly believe that acting
to end pay-to-play can only enhance public respect for the
profession.  Few issues present as clear a contrast between right
and wrong.

     And few issues have claimed the support of so many leading
members of the bar: from Judge William Webster, Chancellor
William Allen, former Secretary of State Cyrus Vance, and former
Attorney General Elliot Richardson, to the deans of 47 of our
nation's law schools, including Columbia, Harvard, Michigan, and
Yale.

     I hope my words to you this morning illustrate that it is
not cynicism about the bar that has brought me to San Francisco,
but rather optimism; not doubt about your integrity, but rather
faith in your willingness to do the right thing.

     In a few moments you will have a chance to send pay-to-play
down the road to its demise.  I want to thank the Section Heads
and the New York City Bar for their work together to craft this
measure.  They faced a forest of complexities, and they have cut
a trail.

     Throughout our history, leaders have emerged from our legal
community to mobilize others for vital reforms.  Your leadership
is needed again today.

     I have no wish to demonize anyone -- those on the other side
of this issue are good lawyers, too.

     But this is not a time for good lawyers -- it is a time for
great lawyers.  I ask you to join in this cause.  Thank you.

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