In the latest swing of the regulatory revolving door, Bill McLucas, the SECs recent enforcement chief, and Martin Kuperberg, former head of the SECs New York City office and most recently chief of the NASDs key New York office, have left for positions on the other side of the fence.

McLucas, a 20-year SEC veteran who spent the last nine years as enforcement chief, recently joined Wilmer Cutler & Pickering, a Washington D.C.-based law firm with specialties that include representing securities firms in anti-trust and SEC enforcement cases. The law firm already boasts a host of other top SEC alums, including the late Arthur Matthews, the SECs former enforcement deputy; Mary Ann Smythe, formerly head of the SECs Division of Investment Management; and Brandon Becker, former SEC director of market regulation.

Like other alumni, McLucas now will defend the firms he once regulated. Ethics rules require him to wait one year before representing any entity back to the commission. The rules further prohibit his representing any client on matters he personally investigated while in the SECs employ, but do not apply to matters he indirectly supervised.

McLucas says he would not be allowed to handle anti-trust work for firms accused of collusion on the Nasdaq market, for example. Wilmer Cutler & Pickering currently is representing a major firm in that case.

SEC alumni are required to file letters with the secretary of the commission, who determines whether individual case material is off-limits. Alumni must recuse themselves from such cases. Those records are not available to the public, according to an SEC spokesperson.

In the early 90s, McLucas handled one of the most famous cases in SEC history: the Prudential-Bache limited partnership cases, in which he procured one of the largest settlements ever levied. Ironically, Prudential-Bache was represented in the matter by Gary Lynch, McLucas former SEC boss who handpicked him as his successor at the agency. Some say Lynch wielded considerable influence in the case, and that despite the record fine and settlement the SEC let Prudential-Bache off easy. No criminal indictments or individual punishments have ever been directed at the former top brass at Prudential-Bache. McLucas told this magazine last year that the agency basically ran out of time in pursuing former executives at the firm.

That time limit stems from another well-known case developed during the McLucas reign--the Patricia Johnson case. The SEC hit Johnson, formerly a PaineWebber branch manager in California, with a six-month suspension and fine claiming she failed to supervise a broker who diverted money from clients in the wake of the 1987 market crash. Johnson appealed, and in 1996, a Washington, D.C., appeals court found in her favor, ruling that the SEC was subject to a five-year statute of limitations in certain enforcement cases.

The Pat Johnson case isnt going to pose a fundamental barrier, McLucas says. A five-year statute of limitations is not a bad discipline for a government to be subjected to. The issue the government might have to be worried about is where the misconduct or violations are covered up and cant be reasonably discovered.

The SEC could be running up against the five-year problem with the Nasdaq case. Press reports this year have suggested the SEC might soon take action against some individual traders and dealers, but so far the SEC has taken no further action since its 1996 settlement with the NASD. The study that first suggested Nasdaq market makers might be colluding was first publicized in early 1994. The SEC began investigating later that year.

Meanwhile, after just two years into his job as the head of the NASDRs District 10 office in New York City, Kuperberg called it quits and has accepted a job as compliance and regulatory group director at Merrill Lynch.

Hailed by some as a skilled regulator in his prior role as senior regional director at the SEC, Kuperberg received little praise regarding his brief and stormy tenure at the NASD. The important NASD District 10 office suffered from turmoil in the wake of the SEC settlement. The SECs investigation of the NASD uncovered a number of wrongdoings by the SRO, and specifically targeted the New York NASD office for several regulatory lapses.

Kuperberg was brought into a difficult situation and never developed rapport with his [NASDR enforcement] staff, says Bill Singer, a securities attorney and former NASD regulator who admired Kuperbergs work at the SEC. He was perceived as a former SEC administrator and never became known as a friend and advocate of [the NASDR] staff. At the NASDR, enforcement staff can no longer simply prosecute the bad guys, in a one-dimensional role, Singer adds. At the NASDR, you're dealing with members who have needs that are not illegal or violative. All of the sudden, you're confronted with the need to accommodate attorneys that represent those firms. Staff employees get pushed and pulled between regulatory and proprietary [roles].

Singer believes Kuperberg, who is not a lawyer, will be successful in his new role at Merrill Lynch--as a reviewer and regulatory problem spotter. His reputation with the SEC could also make him an effective advocate for his new employer.

Kuperberg, through a spokesperson, declined comment.