Sunday, March 9, 2014
WASHINGTON - Mary Jo White, the first former prosecutor to serve as chairman of the Securities and Exchange Commission, has pledged to run a "bold and unrelenting" enforcement program at the agency charged with regulating Wall Street.
SEC Chairwoman Mary Jo White, seen at a Senate Banking Committee hearing in March, is the first former prosecutor to run the agency that regulates Wall Street.
Andrew Harrer/Bloomberg News
With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge.
White, who was sworn in last week, has already provided a few signals about what that might be. During her Senate confirmation hearing, she said she intends to focus on high-frequency and automated trading.
She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years.
One of her first steps, said four people familiar with her plans, will be to put the mission in the hands of a trusted lieutenant, long-time protege Andrew Ceresney.
"There isn't the same obvious focus like we had following the financial crisis," said Thomas Sporkin, a former SEC enforcement lawyer who is now a partner at law firm BuckleySandler. "It will be a challenge for him to define his legacy."
Ceresney, who was a prosecutor under White when she served as U.S. Attorney for the Southern District of New York, will inherit an enforcement division that has spent the past four years largely focused on misconduct linked to the collapse of housing prices and ensuing financial market turmoil of 2008.
The period included nine-figure settlements with Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup. The agency also brought historic insider trading cases against Raj Rajaratnam and units of Steven A. Cohen's SAC Capital Advisors.
The SEC hasn't completely finished its probe of misconduct tied to the financial crisis.
Investigators have signed so-called tolling agreements with executives and banks to extend the five-year statute of limitations on those cases. Also, the SEC has said its investigation into insider trading at hedge funds is continuing.
All the same, the number of such cases still in the pipeline has dwindled, and in recent months, the enforcement staff has formed teams to re-evaluate how they are organized and what kinds of misconduct are most ripe for investigation.
One consideration is whether to dismantle or reorient some of the specialized units that were formed three years ago by Robert Khuzami, who stepped down as enforcement director this year, the people said.
George Canellos, acting head of the division, said in February that investigators are looking into new ways of detecting accounting fraud, an area that has seen fewer enforcement actions in recent years.
The SEC has also struggled in recent years to show it has a grasp on increasingly fragmented markets dominated by electronic trading.
While the agency has an investigative unit devoted to market abuse that recently brought novel cases involving exchanges and trading platforms, the area is still relatively unexplored, Sporkin said.