WASHINGTON -- John Fedders, the enforcement chief of the Securities and Exchange Commission, has offered to explain his involvement with the Southland Corp. now that he is under grand jury investigation.
In a letter to chairmen of the Senate and House committees that oversee the SEC, Fedders said Tuesday he is no longer bound by the attorney-client privilege that up to now kept him from telling what he knows about the case.
The reason he is not bound, Fedders said, is that he has learned he 'has become the subject of the grand jury inquiry' into charges Southland tried to bribe New York state tax officials. Fedders represented the company as legal counsel before his appointment to theSEC in 1981.
In legal parlance a 'subject' is anyone involved in the Southland case and does not mean Fedders himself is accused of illegality or is among the central targets of the investigation.
But the change in status is enough, the government's top Wall Street policeman wrote, to relieve him of the attorney's obligation to a client not to reveal what the client does not want revealed.
'I have always wanted to testify. Now I am free to testify,' Fedders wrote.
He said he was certain 'my own conduct was entirely correct and lawful and that my testimony on all occasions was truthful.'
One subcommittee moved quickly to take him up on his offer. A spokesman for the House energy and commerce subcommittee on investigations said it will schedule a hearing at which Fedders can testify 'within the next two weeks.'
Fedders' previous refusal to discuss the case in public led to strong criticism from Rep. John Dingell, D-Mich., chairman of the House subcommittee.
After getting no information from Fedders, Dingell asked the Justice Department for information on Fedders' two appearances so far before the grand jury investigating the Southland case.
Before being appointed as the head of enforcement for the agency that regulates securities trading, Fedders was assigned by his law firm, Arnold and Porter, to represent the Southland Corp., the owner of the chain of 7-Eleven convenience stores.
Southland pleaded innocent in federal court in Brooklyn to charges of conspiring to bribe New York tax officials to fix tax cases involving the chain of stores.
Dingell has indicated he wants to know if Fedders aided in attempts to cover up the alleged violations as counsel for Southland.
Specifically, Dingell wants to know how much Fedders knew of an alleged 1977 questionable payment of $96,500 that was turned up by Southland in an internal probe but which was later stripped from a summary of the investigation.