(Bloomberg) -- Roberta Karmel, the first woman to serve on the US Securities and Exchange Commission and a critic who said the agency too often tried to make policy through enforcement actions, has died. She was 86.

She died on March 23 at her home in Hastings-on-Hudson, New York, the New York Times reported, citing her son, Solomon Karmel. The cause was pancreatic cancer.

Founded in 1934 to protect investors who had been hurt in the Great Depression, the SEC had only male commissioners through its first four decades under seven presidents. 

President Jimmy Carter, a Democrat, changed that in 1977 by selecting Karmel, a securities lawyer and partner in the New York firm of Rogers & Wells who had previously worked at the SEC’s New York office. Carter nominated her to fill a seat that had been vacated more than a year earlier by A.A. Sommer Jr.

While under consideration for the post, Karmel was interviewed by both Carter and Harold Williams, the SEC chairman at the time. Both men, she said in a 2009 retrospective for Business Law Today, made clear their hopes that she would “constrain an enforcement staff that many in the private sector then thought was out of control.”

A longtime attorney for Wall Street firms, Karmel took the view that the SEC was improperly using the embarrassment of public investigations to secure settlements of cases it might not win in court. This perceived abuse of its powers and the bringing of ill-advised novel cases threatened to lessen the regulator’s credibility with the courts and the public, she later wrote.

Her pro-business positions put her at odds with the SEC’s then-chief of enforcement, Stanley Sporkin, for whom she had earlier worked in the agency’s New York office. 

Karmel’s frequent dissents broke with the tradition of a united front in announcing decisions. In her 2014 memoir, she said her debates with the SEC enforcement staff “often degenerated into shouting matches.”

“My views were contrary to the way in which they had thought for many years,” she said in a 2005 oral history interview. “I’m sure they felt, ‘Who is this newcomer coming in and trying to change commission policy?’”

One of her first and best-known dissents involved the SEC’s practice of issuing reports criticizing corporate conduct even when the commission found no grounds to bring an enforcement action. 

In a 1979 case involving an Ohio tile maker called Spartek Inc., Karmel said the commission was overstepping its authority by criticizing conduct it disapproved of but didn’t have authority to punish.

‘Regulation by Prosecution’

“Karmel’s dissent was part of a broader criticism she famously advanced,” UCLA Law Professor James J. Park wrote in a 2022 paper. “The SEC had developed a tendency to engage in what she called ‘regulation by prosecution’ – using enforcement actions to expand its authority and develop law, rather than petitioning Congress to act or passing an administrative rule subject to notice and comment procedures.”

A New York Times story in February 1979, 18 months into her term, reported that Karmel had “emerged as the most conservative member” of the five-person commission. The story said Karmel was amused by that categorization because she considered herself a traditional liberal, with viewpoints aligned with those of the Carter administration.

“When you express what you strongly believe is right, you always run the risk of offending some people,” she told the Times.

After leaving the SEC in 1980, she wrote Regulation by Prosecution: The Securities and Exchange Commission Versus Corporate America (1982). She served as a public director of the New York Stock Exchange from 1983 through 1989, only the third woman to hold such a post. 

She became a professor at Brooklyn Law School in New York in 1986 while keeping her hand in private practice as a part-time partner at a large New York law firm, Kelley Drye & Warren. She wrote dozens of articles on securities regulation, including a bi-monthly column in the New York Law Journal.

The SEC, in a March 26 statement on Karmel’s death, said, “Her legacy lives on through her students, many of whom have served or are currently serving at the SEC. Our hearts go out to her family and all whose lives she impacted.”

Roberta Sarah Segal was born in Chicago on May 4, 1937, to Jacob and Eva Segal. Her father was a lawyer. 

She grew up in Chicago and went to Austin High School, which sent few students to prestigious colleges. She was admitted to Radcliffe College, now part of Harvard University. Following her sophomore year there she married Paul Karmel, with whom she would have four children: Philip, Jonathan, Solomon and Miriam.

She graduated from Radcliffe in 1959 with a degree in history and literature. Over the cautions of her father, who said law firms were unwilling to hire women, Karmel entered law school at New York University on a full scholarship. 

‘The Pregnant Enforcer’

She got her law degree in 1962 and began her career in the SEC’s New York office in the enforcement division, where rose to assistant regional administrator and was known as “the pregnant enforcer” because she had three children during her six-plus-year stay.

In 1969 she joined New York law firm Willkie Farr & Gallagher. She left in 1972 for Rogers & Wells, a firm headed by former Secretary of State William P. Rogers that was facing a sex discrimination suit and was looking to hire women. 

The firm’s political connections helped bring her to the attention of the Carter administration when it was looking for a woman to name to the SEC.

Karmel said she had made clear to the White House that she was not willing to relocate her family to Washington for more than two years. She served two and a half years before stepping down and returning to New York, and Rogers & Wells.

Her husband died in 1994. The following year she married S. David Harrison, a widower with a son and daughter. He died in 2021, according to the Times.

Karmel said sexism did slow her rise in the legal profession. She wasn’t considered for judicial clerkships, a gateway to top jobs and pay. Few law firms responded to her interest in becoming a lawyer. One that did said it had already hired a woman and didn’t need her.

In her 2005 oral history interview, Karmel recalled that even Carter, while interviewing her in the White House, asked her “something that I think now would be illegal in an interview, and maybe was then, but he meant it very kindly.”

“He said, ‘Oh, I see you have four children. Do you think you’re going to have any more?’ And I said, ‘I don’t think so. I’m 40 years old and it seems to me that four children are enough at my age.’”

To young women who sought out her advice, Karmel said she urged them to make sure they have “a full life.”

“And that means not only a full life as a lawyer, but also a full personal life, and that probably means something different for every individual,” she said in 2005. “For many women it is having a family, for other women it may be other kinds of social interaction outside of their careers.”

(Adds SEC statement in 17th paragraph.)

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