With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge.
White, who was sworn in last week, has already provided a few signals about what that might be. During her
One of her first steps, said four people familiar with her plans, will be to put the mission in the hands of a trusted lieutenant, long-time protégé
“There isn’t the same obvious focus like we had following the financial crisis,” said
Ceresney, who was a prosecutor under White when she served as U.S. Attorney for the
The period included nine-figure settlements with
To be sure, the SEC hasn’t completely finished its probe of misconduct tied to the financial crisis. Investigators have signed so-called tolling agreements with executives and banks to extend the five-year statute of limitations on those cases. Also, the SEC has said its investigation into insider trading at hedge funds is continuing.
All the same, the number of such cases still in the pipeline has dwindled, and in recent months, the enforcement staff has formed teams to reevaluate how they are organized and what kinds of misconduct are most ripe for investigation. One consideration is whether to dismantle or reorient some of the specialized units that were formed three years ago by
“We have only seen the SEC be active against accountants with the Chinese reverse merger cases,” said Cox, referring to a string of cases involving
The SEC has also struggled in recent years to show it has a grasp on increasingly fragmented markets dominated by electronic trading. While the agency has an investigative unit devoted to market abuse that recently brought novel cases involving exchanges and trading platforms, the area is still relatively unexplored, Sporkin said.
“Market structure is the clear future focus of the agency,” he said. “The investigations and resolutions of market structure issues today, such as high-frequency trading, the effect of dark pools on price discovery, and data latency, will help guide the new commission in formulating policies and writing rules.”
Ceresney, 41, graduated from
He served as a member of the securities and commodity fraud task force and major crimes unit in the
After taking office, Ceresney and White will both be expected to recuse themselves in cases involving many of Wall Street’s biggest players, since those firms were often clients at Debevoise. To address this, Ceresney may share the enforcement director role with acting chief Canellos for as long as a year, the people familiar with the matter said.
“It’s hard to decide when you start your tenure in a job like that, how to set your priorities, because it’s not easy to predict what’s going to come your way,” said
When Khuzami joined the agency in 2009, the SEC was being pilloried for failing to stem practices that contributed to the financial crisis and for missing Bernard Madoff’s multibillion dollar fraud. Within a year, he eliminated a layer of management, created specialized units and set up a system to triage and vet the scores of tips coming into the agency.
Since then, the agency has touted record numbers of enforcement actions as evidence that Khuzami’s overhaul made division more efficient and productive.
Those gains, however, came mainly from a jump in routine administrative proceedings against people who had already been found guilty of fraud and delisting of delinquent companies — actions that require minimal investigation compared to original cases. Excluding those cases, the number of new actions in 2011 and 2012 trailed output in 2009, the year before the division was restructured.
Ceresney faces the challenge of appearing aggressive even as the pipeline of cases slows. For the first half of this fiscal year, the number of cases is about 23 percent lower than last year.
“When Khuzami took over, the SEC was in a different place,” said
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