At the time of Cary's appointment as SEC Chairman, SEC Trading and Exchange Division Director Philip Loomis and Associate Director Ralph Saul had nearly concluded their investigation into trading abuses by Gerald F. Re and Gerald A. Re, two American Stock Exchange brokers. The SEC insisted on their immediate expulsion from AMEX membership. Cary approved the Trading and Exchange Division recommendation for a complete study of "the rules, policies, practices and procedures of the American Stock Exchange."
Over the next year, Cary and the SEC investigative team gathered information that demonstrated a serious lack of effective self-regulation by the AMEX. Cary delivered the 127-page American Stock Exchange Report, which detailed "manifold and prolonged abuses," to the AMEX Board of Governors on January 5, 1962, not to demand immediate SEC regulation, but instead to encourage the AMEX to reform itself from within.(7)
As the SEC monitored and encouraged the AMEX at each step, the American Stock Exchange began to take substantial steps to address its internal problems. By 1963, at the urging of the SEC, it had completed a thorough internal reform of its practices.
(7) Robert Bedingfeld, "S.E.C. Finds Many Abuses In the American Exchange," New York Times, January 6, 1962, 1.
