Robert Khuzami, the former head of enforcement at the U.S. Securities and Exchange Commission, is joining Kirkland & Ellis LLP.
Mark Filip, a partner in charge of Kirkland’s government enforcement defense and internal investigations, said Khuzami will help immediately in securities enforcement defense, advising boards and companies and counseling financial institutions on securities regulations. He will complement the firm’s general white-collar, internal investigations, and private class-action securities practices, Filip said yesterday in an interview.
Khuzami, 56, will be joined by Kenneth Lench, who served as one of his lieutenants at the SEC and headed a unit that scrutinizes financial instruments such as mortgage-backed securities and collateralized-debt obligations, Filip said.
Khuzami, a former federal prosecutor and top lawyer at Deutsche Bank AG, took over the SEC’s enforcement division in 2009 under Mary Schapiro, who was hired as chairman to help restore the agency’s image after it was battered for missing Bernard L. Madoff’s Ponzi scheme. Khuzami carried out the biggest shakeup in the enforcement unit’s history, eliminating management layers, expanding investigators’ powers and creating five specialized units to police Wall Street.
He held the position for about four years before stepping down and was replaced in February by his deputy, George Canellos. Mary Jo White, who became the agency’s chairman in April, named a co-chief of enforcement, Andrew Ceresney, to serve alongside Canellos.
Under Khuzami, the SEC filed more than 150 cases related to the financial meltdown, including 65 actions against senior corporate officers, the agency said in January. His investigators took aim at lenders who generated subprime mortgages as well as Wall Street traders and investment banks that bundled the home loans for investors.
That record was criticized by some lawmakers, judges, investors and at least one commissioner who said the SEC should have held more top executives accountable for practices that led to taxpayer bailouts of financial institutions including Bank of America Corp. and Citigroup Inc.
“It’s a very strong record,” Khuzami told Bloomberg Television in a January interview. “We are leaving no stone unturned in pursuing misconduct arising out of the financial crisis.”
He said that many of the ill-fated investment decisions made before and during the financial crisis didn’t amount to securities fraud. He also defended the agency’s policy of not requiring firms to admit wrongdoing when settling allegations, saying such a stance would lead to protracted litigation and drain the enforcement program of resources.
He oversaw some of the biggest settlements in SEC history. Goldman Sachs Group Inc. agreed in July 2010 to pay $550 million over claims it misled investors about a mortgage-linked investment; Citigroup reached a $285 million settlement and JPMorgan Chase & Co. forfeited $154 million for their roles in similar deals.
Kirkland, based in Chicago, is a 1,600-attorney firm with 10 offices in the U.S., Europe and Asia.
Filip said he was one of the lawyers who helped recruit Khuzami, who he said was pursued by many firms and spoke to as many as 30 Kirkland partners over several months.
With each meeting Khuzami grew increasingly comfortable with Kirkland, in part through his connection to partners Henry dePippo and Michael Garcia, who Khuzami worked with at the U.S. Attorney’s Office in New York, Filip said.
The firm has a “good structure nationally and internationally,” so that Khuzami felt he “isn’t coming in and having to reinvent the wheel,” Filip said. At the same time, the firm offered “enough of a greenfield that Rob felt he could grow,” he said.
Khuzami’s move to Kirkland was reported earlier by the New York Times.