SEC Chairman Plans to Hire Steven Peikin to Run Enforcement Division -- Update
May 26 2017 - 5:30PM
Dow Jones News
By Dave Michaels
WASHINGTON -- Securities and Exchange Commission Chairman Jay
Clayton will hire a former prosecutor and veteran litigator from
his former law firm to run enforcement at the markets regulator,
according to people familiar with the matter.
Steven Peikin, who has worked for years at Sullivan &
Cromwell LLP where Mr. Clayton was a partner before entering
government, will become co-director of the enforcement division,
the people said. Stephanie Avakian, who has served as the SEC's
acting enforcement director, is likely to remain at the commission
as co-director.
The decision to hire two top managers for the SEC's enforcement
division would ease some of the issues created by Mr. Peikin's past
work for Wall Street. Mr. Peikin has done high-profile defense work
for Barclays PLC and Goldman Sachs Group Inc., including a stint
where he helped represent Goldman during a U.S. Senate
investigation of its trading and warehousing of key manufacturing
commodities such as aluminum. Under SEC ethics rules, he would be
barred for one year from supervising any cases that affect Goldman
or other clients of Sullivan & Cromwell.
Mr. Peikin, a graduate of Harvard Law School, leads the criminal
defense and investigations group at Sullivan & Cromwell. His
work as both a government lawyer and defender of big banks could
spark criticism from Democrats who mistrust the SEC's revolving
door. Former colleagues say his background as a prosecutor should
ease any concerns that he would take it easy on companies and
financial executives.
From 1996 to 2004 he was an assistant U.S. attorney in
Manhattan, where he oversaw the Southern District of New York's
securities and commodities task force. During that era, Mr. Peikin
earned headlines for his prosecution of star technology banker
Frank Quattrone, who was convicted of obstructing a government
investigation and witness tampering, although an appeals court
later threw out the judgment.
Mr. Peikin's experience as a prosecutor spanned the period when
the government pursued several major executives for accounting
fraud. Mr. Peikin participated in the prosecution of WorldCom Inc.
Chief Executive Bernard Ebbers, who was convicted and sentenced to
25 years in prison, according to a disclosure in a 2005 New York
Law Journal article that he wrote.
"He has a lot of experience and encyclopedic knowledge of the
securities laws, and I think he's going to be aggressive and tough
without being unhinged," said Aitan Goelman, a former enforcement
director for the Commodity Futures Trading Commission who worked
with Mr. Peikin when both were federal prosecutors.
More recently, Mr. Peikin was part of the defense team for
futures trader Michael Coscia, who became the first U.S. trader
criminally convicted of spoofing, a fraudulent trading strategy.
Spoofing, which became illegal under the 2010 Dodd-Frank Act,
involves placing orders that one doesn't intend to fulfill, in an
effort to trick other traders into altering their prices in a
direction that benefits the spoofer. Mr. Coscia's case is now
pending before a federal appeals court.
Former SEC Chairman Mary Jo White, who stepped down in January,
also recruited co-directors of enforcement when she took over
leadership of the regulator. The move made it easier for her choice
as enforcement director, Andrew Ceresney, to join the agency
because he, too, faced the need to recuse himself from working on
cases that involved clients of his former law firm, Debevoise &
Plimpton LLP. Ms. White also worked at Debevoise & Plimpton
before taking over the SEC, which she ran from 2013 to early
2017.
Ms. Avakian joined the SEC in 2014 as deputy director of
enforcement under Mr. Ceresney. She became acting director after
Mr. Ceresney returned to Debevoise as co-chairman of its litigation
department.
While it is unusual for a new SEC chairman to retain a director
hired by a predecessor, Ms. Avakian is viewed by SEC staff
attorneys as a strong manager who would provide continuity and
understanding of SEC procedures that Mr. Peikin lacks, since he has
never worked at the agency.
It isn't clear how soon Mr. Clayton plans to announce the
decision. He has already hired other SEC directors who historically
have a lower profile than the director of enforcement.
One question facing Mr. Peikin and Ms. Avakian will be how they
leverage the SEC's powers to extract big financial penalties from
corporations that settle claims of wrongdoing. Speaking to the
Senate Banking Committee in March, Mr. Clayton suggested that
regulators could achieve more by suing individuals rather than
fining companies.
--Michael Rothfeld contributed to this article.
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
May 26, 2017 17:15 ET (21:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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