President Barack Obama named Mary Jo White, a white-collar defense attorney and former U.S. Attorney, as the new chairwoman on Thursday. But worries on Wall Street that her appointment will usher in a new era of stricter enforcement may be overblown, according to one financial services veteran.
If the Senate confirms White, she will succeed current SEC Chairman Elisse Walter, the White House said in a Thursday afternoon. Walter—who was appointed in December following Mary Schapiro’s departure from the agency—was expected to serve until her term expired later this year. No word on whether White’s nomination will change the timeline for Walter's expected departure.
White—who served as U.S. Attorney for the Southern District of New York for nine years until entering private practice at Debevois & Plimpton in 2002—has experience on both sides of the aisle. In addition to her time as a federal prosecutor, White has also defended Wall Street heavyweights, including former Bank of America head Kenneth D. Lewis over the bank’s 2009 acquisition of Merrill Lynch.
White’s experience as a prosecutor may help her quickly adapt to the new responsibilities, said Byron Bowman , general counsel for compliance consulting group Fi360, noting that many prosecutors are quick studies and are able to rapidly learn a lot about a subject.
Further, Bowman noted that many of past SEC chairmen who came in through places other than the traditional channels acted as a “breath of fresh air.”
Worries that White’s background could mean an uptick on the enforcement side of things may also be overblown, he said, predicting that White’s experiences would lead to objective leadership.
“She has for 10 years been working on the defense side of the equation,” said Dan Goelzer, a Baker & McKenzie partner and a former general counsel of the SEC. “I would think that she would be a balanced view,” he added.
In fact, her days managing the U.S. Attorney’s office may come in handy, Bowman said, saying that White’s experience meant she knows what is needed, especially in properly picking individuals to fill recently vacated positions, including head of the SEC’s enforcement division, Robert Khuzami.
But some received the news of the nomination with much more apprehension, including Patrick Cotter, partner of Barnes & Thornburg LLP’s White Collar Crime Defense Practice Group. After previously working with White, Cotter saw the choice as a clear warning shot to the financial services industry.
“Mary Jo’s appointment is an unmistakable message to the financial markets that the administration intends to fire all their guns,” Cotter said. “It’s their last term and they’re going to go for it.”
“What it means is that the cost of making a mistake is going to go up,” Cotter said. He expects the agency would be tougher to work with when his clients got in trouble.
Further, Wall Street could expect the SEC under White’s leadership to take a pretty harsh line when setting policies such as the pending proposed fiduciary duty standards, Cotter said.
“There’s a little more hope that we will have a firm fiduciary standard,” echoed John Ritter of the National Association of Personal Financial Advisors, an organization for fee-only advisors.
“If we just get some level of consistency across the industry…that’s certainly a step in the right direction,” Ritter said, who serves as the chair of the NAPFA’s industry issues committee.
The Financial Planning Coalition also saw White’s nomination as ushering an era of protecting investors, saying that the organization was hopeful that White would bring a “consumer-first” approach to the SEC.
“In nominating Mary Jo White to lead the SEC, President Obama made a strong statement in support of investor protection,” the coalition said. “The years of experience Mary Jo White has in prosecuting white-collar criminals is a testament to her commitment to safeguarding investors and the public.”
Goelzer agreed that White would likely want to push forward with a uniform fiduciary standard, but added that right now the SEC commissioners were split on the issue, making the next commissioner appointment a key factor in how the rulemaking would shape up.
But with Obama tapping White to lead, Goelzer noted that it was more than likely that the president would look for another person from the “investor protection camp.”
Meanwhile The Financial Services Institute’s president, Dale Brown, also said he was looking forward to working with White, especially on helping to create an effective and efficient fiduciary standard.
“An experienced and effective SEC chair, collaborating with investors and the industry, is critical to fulfilling the SEC’s mission of investor protection and maintaining fair, orderly and efficient capital markets,” Brown said. “FSI congratulates Mary Jo White on her nomination as chair of the Securities and Exchange Commission.”
