VOL. 37 | NO. 4 | Friday, January 25, 2013
Top white-collar crime prosecutor to lead SEC
WASHINGTON (AP) — President Barack Obama on Thursday nominated Mary Jo White, a former U.S. attorney who built a reputation prosecuting white-collar criminals, terrorists and mobsters, to lead the Securities and Exchange Commission. The agency has a lead role in implementing changes on Wall Street.
Obama also named Richard Cordray to stay on as head of the Consumer Financial Protection Bureau. The president used a recess appointment last year to bypass congressional opposition and install the former Ohio attorney general as head of the bureau. That appointment expires at the end of this year.
White spent nearly a decade as the U.S. attorney in Manhattan, handling an array of white-collar crimes and complex securities and financial fraud cases. She brought down mobster John Gotti and won convictions in the 1993 World Trade Center bombing and the 1998 bombings of two U.S. embassies in Africa.
Obama said that experience makes White well-suited to implement legislation he championed to change the behavior on Wall Street.
"I'd say that's a pretty good run. You don't want to mess with Mary Jo," Obama said at the White House. "As one former SEC chairman said, Mary Jo does not intimidate easily, and that's important because she has a big job ahead of her."
If confirmed by the Senate, White would take over the SEC from Elisse Walter, who is serving out the rest of former SEC chairwoman Mary Schapiro's term. Schapiro resigned in December.
In 2000, White led the criminal prosecution of more than 100 people — including members of all five New York crime families — accused of strong-arming brokers and manipulating prices of penny stocks. At the time the action was called one of the biggest crackdowns on securities fraud in U.S. history.
White's office also won a record $606 million in restitution from the securities arm of the Republic New York Corp. bank in 2001. That year, the bank pleaded guilty to conspiring with an investment adviser to hide hundreds of millions of dollars in losses from Japanese investors.
Cordray has run the consumer bureau since last year. Senate Republicans had opposed Cordray, as well as the concept of the consumer bureau.
Before she was elected to the Senate last fall, Sen. Elizabeth Warren, D-Mass., conceived of the idea of a consumer protection bureau. Obama considered naming her as commissioner, but her nomination would likely have run into deep opposition on Capitol Hill.
White, 65, heads the litigation department at law firm Debevoise & Plimpton.
She was the first woman to hold the position of U.S. attorney in Manhattan, one of the most prestigious positions in federal law enforcement. During her tenure from 1993 to 2002, White won convictions of white-collar criminals, drug traffickers and international terrorists. The most notable conviction was Ramzi Yousef, mastermind of the 1993 World Trade Center bombing.
She led the prosecution of Gotti when she was acting U.S. attorney in Brooklyn in 1992. Gotti died in prison in 2002.
If confirmed by the Senate, White would be the first prosecutor to head the 79-year-old SEC. Most SEC chairmen have come from Wall Street or the ranks of private securities lawyers. The choice of White is likely intended to bolster the agency's enforcement profile in the aftermath of the financial crisis.
White's background differs sharply from that of Schapiro, who guided the agency in the four years after the crisis. Schapiro worked at the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority, the securities industry's self-policing organization. Some consumer advocates have said Schapiro's experience as CEO of FINRA made her more likely to seek compromise and less likely to aggressively pursue misconduct.
During Shapiro's tenure, the SEC reached major settlements with the biggest banks on Wall Street, including Goldman Sachs, JPMorgan Chase and Citibank. But critics said the penalties were small compared with the banks' revenues. And they complained that no senior executives were held accountable.
White would be expected to give high priority to expanding the enforcement efforts.
At the same time, much of the pressing work facing the agency involves writing new rules. The SEC is seeking stricter rules for money-market mutual funds and must get into shape the so-called Volcker Rule, which would bar banks from making certain trades for their own profit.
As head of litigators at Debevoise & Plimpton, White has represented a number of financial institutions likely to have crossed swords with the SEC in enforcement cases. Her clients also included former Bank of America CEO Ken Lewis, whom she represented in a 2010 civil lawsuit by then-New York Attorney General Andrew Cuomo accusing Lewis of misleading shareholders in the bank's merger with Merrill Lynch.
White also represented the largest U.S. hospital chain, HCA, in the insider-trading investigations by the SEC and the Justice Department of former Senate Majority Leader Bill Frist, R-Tenn., whose family owned HCA. The investigations were closed in 2007 with no charges filed against Frist.