Following the departure last month of Mary L. Schapiro from the chairmanship of the Securities and Exchange Commission, Enforcement Division Director Robert S. Khuzami has also signaled his intention to leave the agency as early as January, according to media reports.
Khuzami informed SEC Chairman Elisse Walter of his decision earlier this month, according to Bloomberg, which cited three people with knowledge of the matter. The departure was also reported late Thursday by The Wall Street Journal.
Khuzami is advocating that George S. Canellos, who was named deputy director of the division in April, replace him, according to Bloomberg.
An SEC spokeswoman declined to comment.
Khuzami arrived at the Commission in 2009 as the agency was attempting to right itself after failing to stop a Ponzi scheme run by the disgraced New York financier Bernard L. Madoff. He replaced Linda Chatman Thomsen, currently a partner at Davis Polk & Wardwell LLP.
Khuzami’s tenure also coincided with the aftermath of the global financial crisis. Under Khuzami, the agency filed more than 130 cases resulting from the crisis, including 57 actions against senior individuals, according to Bloomberg. Goldman Sachs Inc. in 2010 agreed to pay $550 million to resolve allegations that it misled investors over a mortgage-backed investment.
Critics have nevertheless accused the agency and the Justice Department of failing to deliver accountability for the crisis, which drove the world economy into recession.
In addition to Schapiro’s, Khuzami’s reported decision to leave the SEC follows the announced departures of Chief of Staff Didem A. Nisanci on Dec. 12, General Counsel Mark D. Cahn on Dec. 5 and Corporation Finance Division Director Meredith B. Cross on Dec. 4.
Khuzami recently presided over the joint release with the Justice Department of guidance on complying with the U.S. Foreign Corrupt Practices Act, a law prohibiting foreign bribery that is enforced by both agencies and under which the volume of cases has grown markedly in recent years, drawing the ire of industry advocates.
Prior to joining the SEC, Khuzami served as a Justice Department securities fraud prosecutor in the Southern District of New York. He also assisted in the prosecution and 1995 conviction of Omar Abdel-Rahman, also known as the “Blind Sheikh,” for a conspiracy to perpetrate a series of bombings in New York City.
Khuzami also previously served at Deutsche Bank AG and at Cadwalader, Wickersham & Taft LLP.
Kit Addleman, former director of the SEC’s regional office in Atlanta and now a partner at Haynes and Boone LLP in Dallas, said Khuzami had shown a desire to make the SEC more effective.
“He brought innovation, he brought fresh ideas and a desire to change practices that slowed down vigorous enforcement,” said Addleman. She added however that the the period of reinvention had also seen events slow down within the division.
“I would think that the successor should focus on really energizing the staff. Things really do seem slow. It hasn’t picked up to the pace and frenzy of pre-market crash.”
Robertson Park, a former assistant chief of the Justice Department’s Fraud Section and white-collar crime prosecutor now at Murphy & McGonigle PC in Washington, D.C., said that given the level of anger over the financial crisis, Khuzami had faced a level of skepticism that was almost implacable.
Under Khuzami, the Enforcement Division developed a more “prosecutorial mindset,” said Park, and exhibited the attitude that “there are people that need to be punished.”
“I do think he transformed the culture of the enforcement branch,” said Park. “It has changed so that it is just more aggressive.”