Robert Khuzami, the head of enforcement at the SEC, has announced he will resign after almost four years in the job and after setting a record for number of cases filed. The announcement comes shortly after the resignations of other high-profile SEC figures.
‘Rob’s leadership and bold ideas transformed and reinvigorated the enforcement program,’ says Elisse Walter, who succeeded Mary Schapiro as chairman last month, in a statement.
‘Under his direction, the division not only produced record results, but embraced changes that in the years to come will enable the talented staff to better protect investors through increased efficiency, expertise and strategic focus.’
Schapiro, general counsel Mark Cahn and Meredith Cross, the director of the division of corporation finance, all resigned at the end of 2012 in a leadership shake-up.
Cahn was replaced by Geoffrey Aronow, a four-year veteran of the enforcement division at the Commodity Futures Trading Commission, while Cross was replaced by her deputy director, Lona Nallengara.
As head of his department, Khuzami oversaw the filing of 735 SEC enforcement actions in the fiscal year 2011, an all-time record. In fiscal 2012, the SEC filed 734 such actions. In the two fiscal years combined, the SEC filed 293 enforcement actions involving investment advisers, a record for a two-year period.
Cases filed against broker-dealers increased by 60 percent in 2011 and by a further 19 percent in 2012. Since the start of fiscal year 2010, the SEC has filed 180 enforcement actions related to alleged insider trading, involving 430 people and an estimated $900 mn in illegal profit.
The highest-profile part of Khuzami’s job was likely that of prosecuting misconduct stemming from the financial crisis, which the SEC says Khuzami made a priority. His division charged more than 150 people, including 65 CEOs, in relation to misconduct during the crisis, the SEC says.
The cases have resulted in $2.68 bn in ‘financial relief’ for harmed investors, and 36 people have been barred from serving as corporate directors or working in the securities industry, according to an SEC press release.
During the early part of his tenure, Khuzami oversaw a restructuring of the enforcement division that the SEC called the ‘most significant in the division’s history’.
The restructuring included the creation of special units across the US to focus on investment advisers and private funds, large-scale trading abuse, bribery of foreign officials, and mortgages and other structured products.
The division also created an Office of Market Intelligence to handle the more than 30,000 tip-offs the SEC receives each year, and set up the Office of the Whistleblower.
