Ease of movement between the SEC and the financial services industry increasingly has echoes in the UK
In an interesting and at times scatalogical article in Rolling Stone magazine, Matt Taibbi describes the frequency with which senior officials at the US Securities and Exchange Commission leave the agency and immediately go to work for the firms they have just been regulating, or for professional advisors to those firms. This is interesting in the UK context, given the numbers of senior Financial Services Authority and Serious Fraud Office staff who have recently left those organisations to work for lawyers, accountants and financial services firms.
“A recent study by the Project on Government Oversight found that over the past five years, former SEC personnel filed 789 notices disclosing their intent to represent outside companies before the agency – sometimes within days of their having left the SEC. More than half of the disclosures came from the agency’s enforcement division, who went to bat for the financial industry four times more often than ex-staffers from other wings of the SEC.
“Even a cursory glance at a list of the agency’s most recent enforcement directors makes it clear that the SEC’s top policemen almost always wind up jumping straight to jobs representing the banks they were supposed to regulate. Lynch, who represented Deutsche in the Flynn case, served as the agency’s enforcement chief from 1985 to 1989, before moving to the firm of Davis Polk, which boasts many top Wall Street clients. He was succeeded by William McLucas, who left the SEC in 1998 to work for WilmerHale, a Wall Street defense firm so notorious for snatching up top agency veterans that it is sometimes referred to as “SEC West.” McLucas was followed by Dick Walker, who defected to Deutsche in 2001, and he was in turn followed by Stephen Cutler, who now serves as general counsel for JP Morgan Chase. Next came Linda Chatman Thomsen, who stepped down to join Davis Polk, only to be succeeded in 2009 by Khuzami, Walker’s former protégé at Deutsche Bank…
“…Small wonder, then, that SEC staffers often have trouble getting their bosses to approve full-blown investigations against even the most blatant financial criminals.”
Mr Taibbi is the journalist who coined the famous description of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
UPDATE 11 February 2013: S.E.C.’s Revolving Door Hurts Its Effectiveness, Report Says – New York Times
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