Mary Jo White
Note: This story has been updated.
Which Mary Jo White will show up as the new chair of the Securities and Exchange Commission—the tough-as-nails former federal prosecutor who made the corporate deferred prosecution agreement into an art form, or the now-fervent defender of corporations against government investigations? Probably both, say former SEC officials who know her well.
President Barack Obama’s nomination of White on Thursday still must be approved by the Senate. But some media outlets were already hailing her as a signal to Wall Street that the SEC is serious about prosecuting wrongdoing.
But Columbia University law professor Harvey Goldschmid, a former SEC commissioner as well as one-time SEC general counsel, thinks White will bring both sides of her legal career to the job. She served as the U.S. attorney in Manhattan for nine years until 2002, and since then has led the litigation defense practice at Debevoise & Plimpton in New York. She’s also served as a director of the NASDAQ stock exchange.
Calling her appointment “terrific,” Goldschmid is someone who knows her well—and in fact taught her at Columbia years ago. “She is tough and she’s pragmatic, with a first-rate mind. She is going to be demanding and will put up with no nonsense, but she’ll be fair,” he insisted.
Harvey Pitt, former SEC chairman from 2001 to 2003 and now chief executive of the global consulting firm Kalorama Partners, also has known White for many years. “I think she is brilliant, thoughtful, creative, and balanced,” he said, “and will make an excellent SEC chairman.”
Pitt, who was appointed by President George W. Bush, said it’s too early to tell how White might come down on certain issues, such as some controversial rules that are pending at the agency.
“I can say with confidence, however, that she will consider all sides of an issue, provide fair consideration of competing viewpoints, and will listen carefully to the views of her colleagues on the commission before she decides how she will approach any particular issue,” Pitt predicted.
David Kornblau, a 10-year SEC veteran who served as chief litigation counsel in the enforcement division, thinks White will be a vigorous enforcer. Kornblau is a one-time head of global regulatory affairs at Merrill Lynch and now a partner at Covington & Burling. "The policymaking role will be different for her, but she'll master the issues," he said. "What she'll bring new to the table is she's congenitally opposed to inaction and delay, and that has often characterized the commission. My guess is Mary Jo is just not going to tolerate that."
Jordan Thomas, a former assistant director of the SEC's enforcement division who served under at least four different agency chairmen, thinks White will bring courage and fearless leadership to the job.
"The chairman affects the culture of the organization," Thomas said. She will "inspire the staff to be more aggressive and more daring. If Mary Jo White looks you in the eye and says, 'We are going to take you to trial if you don't settle,' people will believe her, because as a prosecutor she consistently had the courage to bring high-profile, high-stakes cases."
White would be the first ex-federal prosecutor to head the SEC. But corporate defense attorney Lawrence Finder isn’t scared of her “tough new sheriff in town” image. In fact, Finder said the two sides of White’s career will help her balance the competing interests she’ll face.
Finder, a former U.S. attorney in Houston who is now a corporate defense attorney at Baker & McKenzie, observed, “As a prosecutor, you tend to see everything in black and white. But once you become a defense attorney in private practice, you realize there’s a lot of grey.”
Finder said a corporate defense attorney better understands that bad business judgment or reckless behavior is not necessarily criminal. “Seeing both sides is a benefit,” he said, “and she now has a wider perspective. I think it was a well thought-out selection.”
White has made some similar statements. As part of a panel last February at the New York University School of Law, White took part in a debate over why more financial institutions have not been prosecuted over the 2008 financial collapse.
“We must distinguish what is criminal from what is reckless behavior or bad business decisions and not bow to the frenzy,” she said then. “I worry the frenzy overrides reason and judgment sometimes.”
Later in the debate, which included former New York attorney general Elliott Spitzer criticizing the lack of enforcement efforts, White said, “You don’t want that in the system—that kind of pressure. You don’t want the search for scalps to be the metric for success. Politics doesn’t belong in this space at all.”
In a statement Thursday, New York attorney general Eric T. Schneiderman praised her appointment, saying, “Her outstanding record of bringing white-collar criminals to justice speaks for itself. She is a tough, experienced prosecutor, which is exactly what the SEC needs right now to restore investor confidence.”
Veta Richardson, president and CEO of the Association of Corporate Counsel, said the group will be watching closely to see what White's areas of focus will be. "We see that she has a rich, multi-dimensional background that will help inform the priorities that she sets," Richardson said. "We would project that she brings a nice balance."
Better Markets, a Washington, D.C.-based nonprofit group that promotes the pubic interest in financial markets, echoed that sentiment. Dennis Kelleher, the group‘s president, said, “Wall Street is a high-crime area, and Mary Jo White brings the right skill set to restore the rule of law on Wall Street. If the SEC does that, Wall Street, Main Street, our economy, and our country will prosper.”
Besides enforcement duties, White must also oversee the passage of new regulations and Congress-mandated financial reform. Three potential new rules are being discussed: The Volcker rule to curb banks from making risky speculative investments; new restrictions on money market funds; and a requirement for transparent corporate campaign contributions.
As Pitt pointed out, no one knows what White’s positions will be on these controversial reforms.
See also: “Obama chooses former top NYC federal prosecutor to lead SEC,” The National Law Journal, January 2013.
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