In Turnabout, Former Regulators Assail Wall St. Watchdogs 

When former top government officials become white-collar defense lawyers, they still wield influence when they weigh in on enforcement matters.

I was attending the Securities Enforcement Forum, a gathering of top regulators and white-collar defense worthies. The marquee section was a panel that included Andrew Ceresney, the current enforcement director of the Securities and Exchange Commission, and five of his predecessors. Four of those former S.E.C. officials represent corporations at prominent white-collar law firms.

The conference turned into a free-for-all of high-powered and influential white-collar defense lawyers hammering regulators on how unfair they have been to their clients, some of America’s largest financial companies.

The critics have multiple complaints about the S.E.C.

Mr. McLucas and Ms. Thomsen assailed the S.E.C. for applying the “broken windows” theory to corporate crime. This theory, borrowed from the urban policing tactic, argues that crime is deterred when law enforcement agencies arrest people for minor infractions, like riding public transportation without paying the fare. The lawyers argued that the commission has focused too much on smaller infractions, like minor misrepresentations in corporate filings.

Mr. Khuzami and Ms. Thomsen raised questions about whether it was fair for the agency to use administrative proceedings to push its cases. Administrative hearings happen before a specialized court, without the usual rules and checks of a true proceeding in the courts.

“What you are hearing is a reaction to the fact that we have been quite aggressive with financial institutions and others,” Mr. Ceresney told me, assuring that the pressure “has zero impact” on S.E.C. enforcement.

This is how power and influence work in Washington. Former top officials, whose portraits mount the walls, weigh in on matters of enforcement. Now working for the private sector, they assail the regulatory “overreach.”

Source: NYT-In Turnabout, Former Regulators Assail Wall St. Watchdogs

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