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Last updated: January 24, 2013 7:57 pm
US President Barack Obama has nominated Mary Jo White, a former federal prosecutor and prominent corporate defence lawyer, to lead the Securities and Exchange Commission.
Ms White brings a long record of enforcement experience to the role. She worked for nearly nine years as the US attorney in Manhattan, where she gained recognition prosecuting white-collar crime and international terrorism. She was the first woman to hold the post, which made her the top federal law enforcement officer in New York’s southern district.
During her tenure Ms White oversaw high-profile prosecutions, including cases against the perpetrators of the 1993 World Trade Center bombing, those responsible for the bombings of US embassies in east Africa, and John Gotti, the boss of the Gambino crime family. Since stepping down as US attorney in 2002, she has led the litigation department at Debevoise & Plimpton, a Manhattan law firm.
Mr Obama referred to Ms White as one of the “cops on the beat to enforce the law” as he formally nominated her in a press conference.
“You don’t want to mess with Mary Jo,” said Mr Obama. “Mary Jo does not intimidate easily.”
Since the 2008 Madoff scandal, when the SEC missed numerous red flags that could have caught the fraud years before it imploded, the regulator has been battling to restore its reputation as a fierce enforcement agency. It has brought dozens of cases against banks and mortgage lenders for actions linked to the financial crisis but has been criticised for settling for big fines while not pursuing senior executives.
The post will be a challenge for Ms White as the role of SEC chairman has become increasingly political, both within the agency and in its dealings with Congress. The SEC faces daunting tasks, including implementing Dodd-Frank rules and taking on weaknesses in market structure, which have hurt the integrity of US equity markets and played out in botched initial public offerings and wild swings in the stock market.
Carl Levin, a Democratic senator from Michigan who chairs the subcommittee on investigations, said: “Ms White has proven an excellent public servant and an able prosecutor. I hope to hear from her about her commitment to fully implement the critical financial reforms that arose out of the last financial crisis.”
While known as smart and hard working, Ms White lacks technical knowledge of equity and swaps markets. A person close to her said she was smart enough to know the areas where she was weakest and would recruit experts to head division posts.
“Mary Jo White’s appointment as chair of the SEC plays to the commission’s function as an enforcer as opposed to a supervisor,” said Cornelius Hurley, a law professor at Boston University and former lawyer to the Federal Reserve board of governors. “While her appointment presages a new era of muscular enforcement, time will tell whether that comes at the expense of the commission’s equally critical oversight responsibilities.”
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Ms White is regarded as logical and tough and is revered by prosecutors and defence attorneys around the world as among the best in her field. Senior executives under investigation have frequently sought her advice, including Ken Lewis at Bank of America, as well as big banks including JPMorgan Chase.
While some suggested Ms White’s announcement indicates that the SEC will be more aggressive in enforcement, it may not turn out that way. As someone who has sat on both sides of the court, she might be a harsher judge of the SEC’s cases, rejecting those that are weaker and not clear-cut.
“She’ll no doubt be aggressive, given her background but she knows how to distinguish between fraud and mistakes,” said Aaron Marcu, a former prosecutor who is now a defence lawyer.
Isaac Boltansky, policy analyst for Compass Point Research & Trading, said Ms White would be more of a “transitional figure” who would move the SEC from its “largely ineffective role as a prosecutor of crisis-era cases” to an agency focused on completing Dodd-Frank rule-writing.
“We do not view [Ms] White’s nomination as indicative of an ideological shift towards prioritising enforcement at the SEC,” Mr Boltansky said.
He said those who had hoped for a nominee who would push for comprehensive equity market structure reforms would probably be disappointed.
Congressional aides said Ms White’s candidacy had been championed by Charles Schumer, the Democrat from New York who sits on the Senate banking committee.
Some Democratic lawmakers were in favour of Ms White because of her background as a former federal prosecutor. But they also were uneasy about her selection because of her record defending large financial groups in US government enforcement matters and her lack of experience working on securities regulation and policy, the aides said.
Having an SEC chairman with extensive prosecutorial experience can be a good thing. With the justice department repeatedly giving large financial institutions a pass on prosecutions, the SEC is the last line of defence for individual investors
- Chuck Grassley, Iowa’s Republican senator
“Having an SEC chairman with extensive prosecutorial experience can be a good thing. With the justice department repeatedly giving large financial institutions a pass on prosecutions, the SEC is the last line of defence for individual investors,” said Chuck Grassley, Iowa’s Republican senator. “It will be important to determine Ms White’s experience in working with and cultivating co-operation from Wall Street whistleblowers.”
Mr Schumer said on Thursday Ms White’s nomination would be “easily” confirmed by the Senate.
SEC service runs in Ms White’s family. Her husband, John White, a corporate lawyer at Cravath Swaine & Moore, led the SEC’s division of corporation finance under then-chairman Christopher Cox.
Mr Obama announced the nomination on Thursday afternoon, when he also renominated Richard Cordray to lead the Consumer Financial Protection Bureau.
“In just the past year, [Mr] Cordray and the CFPB have made remarkable progress in strengthening consumer protections,” the White House said.
Additional reporting by Richard McGregor in Washington and Shahien Nasiripour in Fort Myers, Florida
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