Ken Leighton 11:30 a.m., Dec. 14
Wall Street lawyer to head SEC?
Bloomberg says Mary Jo White in line to head securities agency
"Obama is not going to clean up financial corruption by pinning a sheriff's badge on Wall Street's protector-in-chief." Thus speaks San Diego attorney Gary Aguirre about today's report from Bloomberg News that Mary Jo White is under consideration to head the Securities and Exchange Commission (SEC). Aguirre, who won a big lawsuit against the SEC, and was exonerated by two Congressional committees and the SEC's own investigative team, now represents whistleblowers who challenge wrongdoing inside the agency that was created in the 1930s to protect the public from Wall Street, and now protects Wall Street from the public.
Mary Jo White epitomizes the method by which Wall Street lawyers control the so-called regulatory agency. The method is called the "revolving door." There are two ways the scam works: 1. A big Wall Street law firm will represent a crook who has stolen money from the public in a securities scam. The law firm gets its client off the hook by dangling a $2 million-a-year job in front of the SEC lawyer who is in charge of the case; 2. When the SEC is looking for someone to head its enforcement branch, it will choose a Wall Street lawyer who represents the crooks, rather than someone inside the agency who sincerely wants to chase bandits.
If President Obama names Mary Jo White to head the agency, she would represent both sides of the revolving door phenomenon. She was the U.S. Attorney for the Southern District of New York, which is responsible for policing Wall Street. Then she joined the law firm of Debevoise & Plimpton, which defends securities miscreants, among other things. If she went back to a government role, she will have come full circle, and Americans would be justified in having even more cynicism about the agency than they have now.
Gary Aguirre has had personal experience with her. After a successful law career in San Diego, he retired, but got restless. He boned up on securities law and joined the SEC. He had excellent reasons to believe that a now-defunct hedge fund had talked with John Mack, formerly associated with the hedge fund, about an upcoming acquisition. The hedge fund made a bundle betting on the acquisition. Aguirre thought that Mack should be interviewed. Mary Jo White covertly contacted top people in the SEC on Mack's behalf. Aguirre was fired. Mack went on to head Morgan Stanley. The two Congressional committees and the SEC's own investigator vindicated Aguirre, who won the suit against the agency. Now, according to Bloomberg, White might rejoin the government. If she is indeed a candidate, I for one hope this story will be repeated and repeated and repeated in the vetting process.