Obama Names Former Prosecutor Mary Jo White as SEC Chairman
White, a partner at law firm Debevoise & Plimpton LLP in New York, would succeed Elisse Walter, who took over as SEC chairman when Mary Schapiro stepped down last month. Obama also re-nominated Richard Cordray as director of the Consumer Financial Protection Bureau.
The nominations will ensure the laws and rules put in place after the financial crisis are used to protect investors and families, Obama said at the White House.
“It’s not enough to change the law, we also need cops on the beat to enforce the law.” he said. “You don’t want to mess with Mary Jo.”
The appointment of White will be a departure for the SEC, which has typically been run by lawyers steeped in financial policy-making and the securities industry. Her relative inexperience in those areas, along with her work defending corporate clients including Ken Lewis, the former chief executive officer of Bank of America Corp., could draw criticism from some lawmakers and advocates for investors.
White, 65, was U.S. attorney for the Southern District of New York from 1993 to 2002, and won the conviction of four followers of Osama bin Laden for the 1998 bombings of two U.S. embassies in Africa.
Under her direction, prosecutors won convictions for the 1993 World Trade Center bombing and a failed plot to blow up the United Nations headquarters and other New York landmarks. During that time, she supervised Robert Khuzami, the SEC’s outgoing enforcement director, and George Canellos, his deputy.
“The Obama administration would be sending a message that the SEC will continue to be a tough cop on Wall Street,” Rick Firestone, a former SEC attorney who is now a partner at law firm McDermott Will & Emery, said in an e-mail. “Her extensive experience in private practice gives her balance and a deep understanding of Wall Street and the issues in our capital markets.”
Still, White, who has served on the board of the Nasdaq Stock Market Inc. (NDAQ), could face questions over her lack of policy experience as the SEC grapples with a packed rule-making agenda, including changes in regulations for money-market mutual funds and the Volcker rule ban on banks’ trading with their own funds.
Her work as a defense attorney for some of Wall Street’s biggest names could also raise concerns among lawmakers. She represented Lewis during an SEC probe of claims that Charlotte, North Carolina-based Bank of America didn’t disclose bonuses that Merrill Lynch & Co. paid to executives before buying the brokerage. The bank settled the claims for $150 million; Lewis wasn’t accused of wrongdoing.
In 2011, White was hired by News Corp. (NWSA) to defend its independent directors against claims related to the company’s role in phone hacking by News of the World, its former U.K.- based tabloid.
In recent years, the SEC has been faulted by lawmakers, judges and investors for failing to bring more cases related to the financial market turmoil that peaked in 2008. White said last year that prosecutors shouldn’t allow public anger to influence investigations.
“You should be aggressive where there is a crime,” she said at a New York University School of Law event in February 2012. Prosecutors must not “fail to distinguish what is actually criminal and what is just mistaken behavior, what is even reckless risk-taking, and not bow to the frenzy,” she said.
White also surfaced in an SEC controversy when she worked on behalf of Morgan Stanley (MS) to vet John Mack before he was named CEO of the investment bank. She sought information in 2005 from then-SEC enforcement director Linda Thomsen about what an insider-trading probe of hedge-fund manager Pequot Capital Management Inc. revealed about Mack’s involvement.
An SEC inspector general’s report issued in 2008 questioned whether Thomsen should have shared information about a potential target with White. The agency later informed Mack and Pequot that it had closed the investigation and wouldn’t pursue any action against them.
Schapiro stepped down from the SEC’s top job last month and was succeeded by Walter, who spent the past four years at the agency as a commissioner. Walter was able to become chairman without going through a second Senate confirmation and can stay in the job through the end of this year.
White’s husband, John W. White, from 2006 to 2008 was head of the SEC’s division of corporation finance, which is responsible for disclosure policies, under Republican SEC chairman Christopher Cox. He’s now a partner at law firm Cravath Swaine & Moore LLP.
The re-nomination of Cordray to lead the consumer bureau will come a year after Obama placed him in the job with a recess appointment that bypassed Senate confirmation. The president took the step after Senate Republicans blocked the nomination while seeking changes to the agency’s funding and structure.
The agency, an independent watchdog for consumers that was created by the Dodd-Frank Act of 2010, has taken actions in such areas as homeowner protection, credit-card deception, debt collection and student lending.
The appointment of Cordray, who was Ohio’s attorney general before joining the consumer agency, expires at the end of this year. Obama said Cordray’s “earned a reputation as a straight- shooter” and that the Senate has “no excuse” for not acting on his nomination.
Jay Carney, the White House spokesman, told reporters at a briefing today that he “wouldn’t want to predict an outcome” on Cordray’s Senate confirmation hearing. There should be “no objection to him based on substance,” Carney said, adding that past Republican opposition was the result of “political considerations.”
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