You may have missed it among the orgy of SEC enforcement news this week, but over at the U.S. attorney’s office in Manhattan, the lead prosecutor of the Galleon Group insider-trading case is quitting—to start his own practice in white-collar defense.
Joshua Klein, an assistant attorney in the Southern District of New York for 10 years, had been taking point on the Galleon case since October when the Justice Department arrested Galleon founder Raj Rajaratnam on insider-trading. The case has exploded since then, with more than 20 arrests keeping plenty of lawyers and newspaper headline writers busy. The first plea-bargains seem likely to arrive any day now, although Klein may not be around to see them. He reportedly will be out of the U.S. attorney’s office by the end of next week.
Let me be clear that I don't know Klein, and don’t fault him one bit for wanting to pursue a line of work that pays him well for his talents. Most of us would do the same, especially if we had a family to raise. Nevertheless, he is a reminder of that revolving door between public and private law practice that Congress, regulators, and nattering nabobs in the media such as myself keep complaining about.
We see that door operating all the time, at all levels: from the young lawyers who do a stint at the SEC or at Justice to spiff up their resume and then crash the partner track at a big firm in Washington or New York; to heavyweights like Attorney General Eric Holder, who went from a high-level job at Justice during the Clinton Administration, to a high-level job at the law firm Covington & Burling, back to a highest-level job in the Obama Administration. Democrats do it, Republicans do it, and everyone wrings their hands about it.
In the Galleon case specifically, all indicators are that the prosecution will continue to hum along without Klein in particular as the lead prosecutor. But it does demonstrate yet again the dilemma regulators have with employee turnover: on a personal level it's often the correct move for the employee, and you can't begrudge him that—but in the whole it adds uncertainty to enforcement efforts.