By MICHAEL SMALLBERG
This week's release: Statements filed between 2006 and 2010 by former Securities and Exchange Commission (SEC) employees who went to work for Wilmer Cutler Pickering Hale and Dorr, LLP (WilmerHale) and returned to appear before the SEC on behalf of WilmerHale's clients within two years of leaving government.
Agency: Securities and Exchange Commission
Document Dates: 2006 – 2010
President Obama announced this week that he is nominating Daniel M. Gallagher, a partner at Wilmer Cutler Pickering Hale and Dorr, LLP (WilmerHale), to serve as a Commissioner at the SEC.
The announcement fits in nicely with the SEC's efforts to recruit "more staff with specialized expertise and real world experience." At the same time, Gallagher's nomination also serves as the latest example of the revolving door between the SEC and the securities industry, and the particularly cozy connections between the Commission and WilmerHale, aka "SEC West."
A few months ago, Matt Taibbi ran down the list of WilmerHale alumni who had recently been named as senior officials at the SEC: General Counsel Mark Cahn; Deputy General Counsel Anne Small; Division of Corporation Finance Director Meredith Cross; and Enforcement Division Chief Counsel Joseph Brenner. You could also add SEC Deputy Secretary Cathy Ahn and Associate General Counsel Jeffrey Singdahlsen to the list. And if confirmed as Commissioner, this would actually be Gallagher's second time going to the SEC after working for WilmerHale.
But the revolving door spins in both directions, and, not surprisingly, WilmerHale is also the home of numerous former SEC employees, many of whom are listed in POGO's recently released SEC revolving door database. As described in last week's FOIA Friday, our database includes statements filed between 2006 and 2010 by former SEC employees who returned to appear before the Commission on behalf of outside clients within two years of leaving government.
Our database includes 28 statements filed between 2006 and 2010 by six former SEC employees who identified WilmerHale as their new employer: former Enforcement Director Stephen Cutler; former Regional Director Randall Lee; former Enforcement Branch Chief Patrick Murphy; former Enforcement Division Special Counsel Laurie Stegman; and two former employees, one from the Enforcement Division and one from the Office of General Counsel, whose names were redacted in the statements provided to POGO.
According to their statements, these former employees appeared before the SEC or communicated with SEC staff on issues such as: a "Commission inquiry relating to fee-based brokerage accounts"; a "voluntary request for information from the Division of Enforcement dated February 6, 2009"; SEC v. Patel, et al., a civil fraud action filed by the SEC against ten former officers and employees of Entersays Networks, Inc., for a "scheme to fraudulently inflate revenues"; and SEC v. Espuelas, et al., a civil injunctive action filed by the SEC that charged eight former StarMedia Network executives for their roles in the company's "overstatement of revenue."
In our accompanying report, we provided a list of the top recruiters of former SEC employees ranked by the number of former employees who identified these firms as new employers—WilmerHale was tied for #4 with 6 former employees. We also listed the top recruiters ranked by the total number of statements mentioning these firms—WilmerHale was tied for #5 with 28 statements.
We also described a report by the SEC Office of Inspector General (OIG) regarding the Commission's investigation of Allied Capital, which was represented by none other than WilmerHale:
In another report, the OIG investigated the SEC's handling of a feud between Greenlight Capital President David Einhorn and Allied Capital, which began in 2002 when Einhorn alleged that Allied was overvaluing its assets. Two former employees in the SEC's Enforcement Division—whose names were redacted in the OIG report but were later identified by The Wall Street Journal as Joan Sweeney and William McLucas—were representing Allied in its meetings with the SEC. According to the OIG, an Associate Director in the SEC's compliance office who knew Sweeney declined to refer the case to Enforcement, stating he would give the benefit of the doubt to any former SEC employees: "If you’ve known somebody or even if they didn’t really know them but you know they worked here…Well, they should hopefully be doing the right thing."
Finally, we pointed out that WilmerHale is one of many firms that advertises its extensive roster of former SEC employees; you can even search WilmerHale's website for attorneys with former government experience.
As we told The Blog of Legal Times yesterday, we have no reason to question Gallagher's qualifications to serve as an SEC Commissioner; however, we are deeply concerned by the "public perception that the SEC could be biased toward [WilmerHale] and the clients it represents."
For more background on POGO's investigation, be sure to check out our report, Revolving Regulators: SEC Faces Ethics Challenges with Revolving Door.
Michael Smallberg is a POGO Investigator.
Comments