Careers

11:50 AM
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

Hiring Trends: Wall Street Regulators in Demand

High-ranking government officials continue to leave the CFTC, landing lucrative industry jobs.

The job market for regulators and high-ranking government officials appears to be booming! This week, Scott O’Malia announced he was resigning his position from the top derivatives regulator to seek other opportunities. O’Malia, 46, who served on the Commodity Futures Trading Commission for four years, plans to step down on Aug. 8. Many observers did a double take, because O’Malia is going to head the International Association of Swap Dealers (ISDA) -- the top trade association representing swap dealers -- the very industry he was regulating.

 Next Page: O'Malia's Legacy

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

Previous
1 of 6
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Greg MacSweeney
50%
50%
Greg MacSweeney,
User Rank: Author
8/6/2014 | 3:34:56 PM
Re: Conflict of Interest
A two-year gap after someone leaves a regulator will only guarantee one thing: no one will want to work for a regulator to begin with. If you were a life-long financial services execuutive, would you take a job at a regulator knowing that when your time was up you couldn't work in the FS industry for two years? Of course not.
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
8/6/2014 | 1:54:12 PM
Re: Conflict of Interest
You're points are well taken. If a regulator can't get a job for two years, he/she is at an economic disadvantage, so who would want the job as a regulator?  And this movement goes both ways. Many regulators have worked on Wall Street. Former. Treasuries Secretary Hank Paulsen, Robert Rubin, and Former CFTC ChairmanGary Gensler, all  were from Goldman Sachs. I agree that regulators have a right to take a job in the industry. But when they go from rulemaker one day, to fighting the regulations  they implemented the next day, it does seem odd. What do they believe in?

 Here is a recent example, announced today.

http://www.reuters.com/article/2014/08/06/cftc-ritter-idUSL2N0QC15O20140806
plashmet
50%
50%
plashmet,
User Rank: Apprentice
8/6/2014 | 12:58:43 PM
Re: Conflict of Interest
I don't have much of a problem with someone moving from regulator to industry or industry to regulator.  If I am a regulator, my priority would be to the organization I am working for and I should be evaluated on that.  If I can't take another job in the industry for which I have expertise for two years, who is paying that?  Tax payers?  Am I out of luck?  Aren't there already provisions in place with regard to confidentiality? Can you turn it the other way? Someone high in the industry can't work for a regulator (maybe, I don't know)?  How do the regulators get the best expertise?  If both parties know each other and understand the context of the others, perhaps there is a good chance for constructive collaboration so that the regulations that are created will be productive and protective.
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
7/31/2014 | 11:56:33 AM
Re: Conflict of Interest
The idea of a two-year break is probably to ensure that the government official no longer has the inside scoop and that their information has grown stale. I agree with you, that the former gov't offiical understands the inner thinking of the agency and future plans for rule making. Most definitely they bring insights to their new employer and that's why they're being courted and offered a lucrative salary to tempt them to jump ship.
Becca L
50%
50%
Becca L,
User Rank: Author
7/30/2014 | 11:39:13 PM
Re: Conflict of Interest
You're right, they are entitled to private sector jobs, but I understand the outrage. The high ranking officials are given all the inside scoop on the tools and initiatives, not to mention their long term plans. That information, human capital, is essentially handed over to the private sector when they switch jobs..It undermines a lot of the regulators' work, no?

For perspective, switch up the scenario: If a top executive at Coca Cola, privy to all the compan'ys new product rollouts and marketing strategies, switched over to Pepsi with two weeks notice, don't you think the shareholders would be going crazy?

I'm not so sure exactly two years is sufficient to ease the concerns of this "turncoat" behavior but it might be enough to ensure the people are not completely abrest of the regulators next moves. That way they're hired for their industry experience, not their up to date insider scoop.
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
7/30/2014 | 10:21:21 PM
Re: Conflict of Interest
Former CFTC Chairman Gary Gensler came down hard on the swaps industry, left the agency, and hasn't surfaced at another Wall Street bank. There are regulators who make a career of it; they are dedicated to this role.

On the other hand, they are entitled to seek employment outside of government in the private sector.  To avoid conflict of interest, would a two-year gap between government and the new position (such as Dennis Kelleher is suggesting) make a difference?
Becca L
50%
50%
Becca L,
User Rank: Author
7/30/2014 | 9:57:25 AM
Re: Conflict of Interest
Too true. It's unlikely a regulator is going to come down hard and fast on the industries if they're keeping future job opportunities in mind.
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
7/29/2014 | 1:57:15 PM
Re: Conflict of Interest
I agree, Jonathan. Regulators and industry may not see eye to eye and it's probably best if they don't so that they can be impartial.. Regulators are supposed to protect the public and create rules for  fair markets. When we see high level regulators taking jobs at industry associations, it makes the public wonder who's interests they were representing when they were in office.
Jonathan_Camhi
50%
50%
Jonathan_Camhi,
User Rank: Author
7/29/2014 | 1:08:37 PM
Conflict of Interest
This seems to continue a sad trend of the lines being blurred between regulators and industries they're supposed to regulate. Regulators and businesses shouldn't always get along on every issue. They should have a combative relationship at times over certain issues. That isn't going to be acheived without some separation between regulatory agencies and industry associations. When people leave one for the other, like in this case, it makes one wonder if there is enough separation between the two. It's very bad pr for the regulators when this happens too because it opens them up to accusations that they are on the side of the industry they should be regulating.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.