SEC Enforcement Co-Chief Canellos Stepping Down After Four YearsJoshua Gallu
George Canellos, who played a key role in the U.S. Securities and Exchange Commission’s efforts to punish misconduct related to the 2008 financial crisis, is leaving the agency after more than four years.
Canellos, 49, will leave the SEC this month, the agency said today in a statement. Andrew Ceresney, who has shared the top enforcement job with Canellos since last year, will remain as the director of the division.
A former federal prosecutor, Canellos joined the SEC as head of its New York office in 2009 as the agency reeled from criticism that it missed Bernard Madoff’s multibillion-dollar fraud and failed to stem practices that fueled the credit crisis. He helped then-enforcement director Robert Khuzami implement the biggest reorganization in the division’s history.
“Every day, he brought to work an intense enthusiasm for our mission, extraordinary intellect and experience, and a total commitment to fairness and the public interest,” SEC Chairman Mary Jo White said in the agency’s statement.
Canellos played a central role in some of the agency’s biggest cases in recent years. He supervised an insider-trading probe that led to actions against Raj Rajaratnam, the founder of Galleon Management LP, Rajat Gupta, the former global head of McKinsey & Co., and more than 30 others. He also led the SEC’s pursuit of billionaire hedge-fund manager Steven A. Cohen and his firm SAC Capital Advisors LP.
Canellos played a prominent role in investigations related to the credit crisis. He spearheaded mortgage-backed securities cases that have resulted in $570 million in sanctions so far against companies including JPMorgan Chase & Co., Credit Suisse Group AG, Royal Bank of Scotland Plc and Bank of America Corp.
He also supervised a $150 million settlement with Bank of America for failing to properly disclose employee bonuses and financial losses at Merrill Lynch before shareholders approved a takeover of the brokerage in December 2008. That case drew increased attention after U.S. District Judge Jed Rakoff rejected an initial settlement of $33 million, calling it a “contrivance.”
Rakoff’s decision added to criticism from lawmakers and investors who said the SEC wasn’t doing enough to punish wrongdoing, particularly against top executives, related to the worst financial crisis since the Great Depression.
The SEC has brought actions against 70 senior corporate officers and ordered or obtained more than $3 billion over conduct related to the mortgage-market collapse and ensuing turmoil, according to the agency’s website.
Canellos also led the SEC’s part of a multi-agency investigation of a breakdown in internal controls at JPMorgan Chase & Co. that enabled actvities that led to a $6.2 billion trading loss. As part of the settlement, the SEC required JPMorgan to admit that it violated federal securities laws -- a policy shift enacted last year.
Before joining the SEC, Canellos was a litigation partner at law firm Milbank Tweed Hadley & McCloy for more than six years. Earlier in his career, he worked for nine years as a prosecutor in the U.S. Attorney’s Office for the Southern District of New York, where he spent time as chief of its major crimes unit and senior trial counsel for a securities and commodities task force.
Canellos, who holds degrees from Harvard College and Columbia University School of Law, hasn’t disclosed future career plans, the SEC said.
“The unparalleled skill, judgment, and sense of fairness that the SEC staff brings to every examination, investigation and case is the source of the commission’s greatest strength,” Canellos said in a statement. “I have been honored and inspired by the opportunity to work with them and will be forever grateful for and proud of the public service we have performed as a team.”