When Mary Schapiro announced in November that she was planning to step down as chairman of the Securities and Exchange Commission, many pundits expected that her replacement would offer an even greater focus on enforcement.
President Barack Obama's nomination this afternoon of Mary Jo White, a former prosecutor and U.S. Attorney in Manhattan, validates those predictions. Once confirmed by the Senate, White will take charge of the Commission from Interim Chairman Elisse Walter.
“As a young girl, Mary Jo White was a fan of the Hardy Boys,” Obama said. “As an adult, she's built a career the Hardy Boys could only dream of. Over a decade as a U.S. Attorney in New York, she helped prosecute white collar criminals and money launderers. In the early 1990s, she brought down John Gotti, the head of the Gambino crime syndicate, and she brought to justice the terrorists responsible for bombing the World Trade Center and American embassies in Africa. I'd say that's a pretty good run. You don't want to mess with Mary Jo.”
At the announcement, White said she looked forward to working with the SEC's “extremely dedicated staff” to “protect investors and ensure the strength efficiency and transparency of our capital markets.”
“The SEC has long been a vital and positive force for the markets and has a lot of hard and important work ahead of it,” she said.
That White wasn't among the many names rumored to be under consideration may signal that the Administration intended to expand its focus beyond the usual suspects steeped in the culture of either Wall Street or Washington. In fact, as chair of the litigation department for the law firm Debevoise & Plimpton, White has often been on the other side of the regulatory fence, with a practice that concentrated on internal investigations and the defense of companies and individuals accused by the government of involvement in white-collar corporate crime or SEC and civil securities law violations.
Among White's notable, high-profile cases at Debevoise & Plimpton:
- Representing the for-profit hospital chain Hospital Corporation of America in the Department of Justice and SEC insider-trading investigation of former Senate Majority Leader William Frist.
- Defending holding company Artemis S.A. and its chairman, Francois Pinault, in connection with an investigation by the U.S. Attorney for the Central District of California into Executive Life Insurance Company of California and the acquisition of its junk bond portfolio and insurance business by Artemis. A civil resolution was reached with Artemis with no criminal charges filed.
White's shift to “defense” came after a notable career as U.S. attorney for the Southern District of New York from 1993 to 2002. The only woman to ever hold that post, she oversaw a staff of more than 200 attorneys.
White's lengthy résumé contains numerous professional associations that were likely considered as part of the nomination process. She has served on the board of the Nasdaq exchange and on its executive, audit and policy committee. As a member of the Council on Foreign Relations, her international perspective could prove valuable amid the many cross-border issues the Commission, its counterparts at the Commodity Futures Trading Commission, and banking regulators face, among them extraterritorial derivatives regulations, international implications of the Dodd-Frank Act, and the global Basel III banking accord.
Named a leading trial lawyer in the influential Chambers Global guide to “The World's Leading Lawyers for Business,” White's peers described her as “a recognized superstar” in the white-collar crime arena and as someone who “devotes a great deal of personal attention to a case whilst spinning a thousand plates,” a skill set that may come in handy for an agency frequently overwhelmed by the Congressional mandates of the Dodd-Frank Act and JOBS Act.
White's selection, although initially surprising, has been met with praise.
Rick Firestone, a partner in the Washington, D.C. office of the law firm McDermott Will & Emery and a former associate director of the SEC's Division of Enforcement, agrees that the nomination sends a message that “the SEC will continue to be a tough cop on Wall Street.”
“She will bring a prosecutor's mindset to the SEC and a reputation for being tough on white-collar crime. Her appointment will be a shot in the arm for the enforcement program,” says Daniel Goelzer, a partner at Baker & McKenzie and former SEC general counsel and founding board member of the Public Company Accounting Oversight Board. “At the same time, the Commission has a long to-do list of regulatory challenges coming out of Dodd-Frank, the JOBS Act, and the financial crisis. Dealing with those is going to have to be a top priority.”
"White was a tough, smart, no nonsense, broadly experienced and highly accomplished prosecutor,” said Dennis Kelleher, president and CEO of Better Markets, an investor advocacy group. “She knew who the bad guys were, went after them, and put them in prison when they broke the law. That's what must happen if integrity and investor confidence is to be restored in our securities markets. Wall Street is a high crime area, and White brings the right skill set to restore the rule of law. If the SEC does that, Wall Street, Main Street, our economy, and our country will prosper."
“To me this pick is really bulletproof,” says John Stark, who heads the Foreign Corrupt Practice Act practice group of Stroz Friedberg, a digital risk-management and investigations firm. He was an attorney for nearly 20 years in the SEC's Enforcement Division, the last 11 of which as founder and chief of its Office of Internet Enforcement. It was there he had the chance to work with White and her staff while she was a prosecutor.
“She has real-world experience, and that perspective is always going to add value,” he says. “She is used to working with fewer resources than everyone else, but still hitting it out of the park. That experience will bode well for her at the SEC.”
“I don't think investors will have a better advocate in this world than White,” Stark adds. “To handle a fairly unwieldy organization, you have to be the kind of person who will attract major talent. I have no doubt she will attract extraordinary people from the get-go. A large influx of talent will find its way to the SEC because of her.”