New SEC Chairman Mary Jo White is expected to appoint one of her longtime right-hand men, Andrew Ceresney, as her enforcement chief, according to reports.
His appointment follows the departure of Robert Khuzami, who revamped the division in the wake of the financial crisis with a record number of enforcement cases – although some longtime officials in the unit reportedly have lately been complaining of low morale and a falling number of marquee investigations, according to the New York Times.
The S.E.C. enforcement division has indeed brought forward a number of big and far-reaching insider-trading cases in recent years: Key cases have included the insider trading charges against Galleon Group’s former head Raj Rajaratnam and many of his colleagues and business contacts, a more recent investigation into SAC Capital, and earlier this month, a case against a senior partner at the accounting firm KPMG.
Ceresney and White certainly go back a long way: Ceresney served as the new SEC chief’s longtime lieutenant both as a corporate defense lawyer at the law firm Debevoise & Plimpton and between 1998 and 2003 as a securities fraud prosecutor under White, who was the Manhattan U.S. attorney. Ceresney will be joining yet another friend in his new position, since he is expected to temporarily share the S.E.C. role with George S. Canellos, who became the commission’s interim enforcement chief earlier this year when Robert S. Khuzami departed the agency. Canellos, who is reportedly a friend and former colleague of Ceresney, is widely expected to return to private practice before the end of President Obama’s second term.
In the meantime, critics continue to highlight the potential conflict of interest inherent in the SEC’s appointments of lawyers who shuttle back and forth between government and private practice. During his time with top law firm Debevoise, Ceresney represented several large banks and their top executives, including Kenneth D Lewis, the former top chief of Bank of America who was under the spotlight during the bank’s takeover of Merrill Lynch.
Both Ceresney and White will likely be barred from getting involved in cases relating to their former clients at Debevoise, including JP Morgan, the Wall Street Journal reports.
Still, dealing with conflict of interest is certainly not a new issue at the SEC: Ceresney’s predecessor at the head of the SEC’s enforcement unit, Robert Khuzami, excluded himself from any involvement in cases relating to his former employer, Deutsche Bank.