The Security and Exchange Commission’s (SEC) director of enforcement position is now vacant: Robert Khuzami, who held the job from 2004-2009, left the agency last Thursday. Now speculation about who might replace Khuzami is growing.
Since assuming the chairmanship of the SEC, Elisse Walter has already tapped two internal commission staffers for vacant positions. Walter picked Lona Nallengara as her acting director of Corporation Finance—up from the position of deputy director for legal and regulatory policy. She also selected John Ramsay, previously the deputy director of trading and markets, for the position of acting director in that department.
All of this suggests that Walter will appoint George Canellos, currently deputy director of enforcement, to to the position of director of enforcement. Already critics of Khuzami are criticizing Canellos’ potential promotion.
NYT on Vacant SEC Position
Simon Johnson, writing for the NYT yesterday, argued that Khuzami’s departure represents a very real “turning point” for the SEC. Johnson argues that though Khuzami was once a “distinguished prosecutor” prior to his career at the SEC, in the end he was a bad choice because of his proximity to Deutsche Bank.
Although Canellos is not mentioned by name, Johnson implies that an internal selection might well lead to business as usual for SEC Enforcement. Instead of Canellows, Johnson recommends Neil Barofksy, not only for the director of enforcement position, but also for the SEC chairmanship itself.
The beauty of Barofsky, according to Johnson, is that he reserves no strong ties with Wall Street:
Mr. Barofsky understands the details and knows how to build an office that combines effectiveness and integrity with its own investigative capability. His reports will long stand out as beacons of clarity. (The TARP special inspector general reports are on the Web; the Barofsky reports are from February 2009 through January 2011.)
Another advantage to Mr. Barofsky’s appointment is that we would not have to fear that he would later rotate into a senior position on Wall Street. As he made abundantly clear in “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street,” Mr. Barofsky has burned all those bridges already.
Look for a decision regarding the vacant decision to come in a matter of days; the SEC frequently makes personnel decisions during holiday vacation.