David Meister has followed a well-trodden career path: moving from a partnership at a big law firm to a government agency in Washington, D.C. and back to the private sector.
Meister, 51, recently rejoined Skadden, Arps, Slate, Meagher & Flom as the director of the firm’s government enforcement white-collar crime group in New York. He represents financial institutions, and their boards, other corporations and individuals facing government enforcement actions.
But Meister, a Columbia Law graduate and a former Southern District assistant U.S. attorney, showed no reluctance in his previous job to wage legal battles against some of the biggest players in American finance.
Meister served as director of enforcement for the U.S. Commodity Futures Trading Commission (CFTC), for almost three years during which his 130-lawyer division brought record numbers of new enforcement actions.
The agency had been known as “the watchdog that didn’t bark.” But the Dodd-Frank Act of 2010 expanded its jurisdiction over swaps and other derivatives and increased the authority of the enforcement division.
Observers credit Meister, who helped write the rules that implemented CFTC’s piece of Dodd Frank, with taking an aggressive stance toward market manipulation that did not shy away from litigation.
Former CFTC chairman Gary Gensler, who hired Meister, said in a statement that he “brought energy, talent and expertise to our critical mission to protect the public from fraud and abuse and ensure market integrity.”
Meister himself told the New York Times that the enforcement unit he was leaving was “really in an upward trajectory, adding “there is a real energy in the agency.”
Q: What are the functions of the Commodity Futures Trading Commission?
A: The CFTC is the exclusive regulator of commodity futures and, post-Dodd-Frank, also the regulator of the swaps market. The CFTC promulgates rules to regulate the market for these products, known as derivatives. The agency affects policy, and enforces the Commodity Exchange Act and commission rules against manipulation and fraud, in addition to a host of other abusive practices and violations. The CFTC can bring actions in federal court or administratively, and can obtain a wide variety of sanctions ranging from financial penalties to bars on institutions and individuals from participating in the markets overseen by the CFTC.
The CFTC staff is organized into four main operating divisions: The Division of Enforcement (the largest, of which I was the director), the Division of Market Oversight, which oversees the exchanges and other trading facilities, the Division of Swaps and Intermediary Oversight, which oversees institutions such as banks and swap dealers that participate in the markets, and the Division of Clearing and Risk, which oversees the clearinghouses. The CFTC staff also houses a number of separate and smaller but very important offices, including those for the general counsel, chief economist, executive director, international affairs, legislative affairs, public affairs and data and technology.
Just as with the Securities and Exchange Commission, the commission itself is comprised of five president-nominated and Senate-confirmed members, no more than three of whom may be from the president’s party. The president nominates one of the commissioners as chairman.
The CFTC is headquartered in Washington, D.C., and has regional offices in New York, Chicago and Kansas City (Kansas City, until recently, was the locale for the Kansas City Board of Trade where many agricultural futures contracts were traded).
Q: How important are those functions compared to other regulatory agencies such as the SEC and the Federal Reserve?
A: The SEC and the Federal Reserve Board each play a part in the mosaic of regulatory oversight of the U.S. financial markets. Each are important, as are many other regulators in the U.S. and around the world. I don’t think you can say that any one government actor is more “important” than the other.
The CFTC plays a key role as a market regulator, as its footprint can affect anyone who participates in the futures, swaps and other derivatives markets. That includes not only all types of financial firms—futures brokers, securities brokers, banks, hedge funds and other asset managers—but also large non-financial corporations and municipalities that trade swaps and other derivatives, for example, to hedge risk or speculate on prices.
Q: How would you evaluate the agency’s performance leading up to the financial crisis?
A: Prior to the financial crisis in 2007/2008, the CFTC was largely sidelined in relevant respects by legal restrictions that limited the agency’s jurisdiction over key portions of the derivatives markets. Those restrictions had been in place since 2000. However as a result of the financial crisis, Congress adopted the Dodd-Frank Act and eliminated the restrictions that previously had prevented the CFTC from having authority over transactions that had been identified as fuel for the crisis. The Dodd-Frank Act, which took effect in 2010, was designed to lower risk and increase transparency, and provided the CFTC with the pen to write the rules to regulate the previously unregulated market.
Q: Has the agency become more aggressive since the crisis? Has it been given additional legal tools to play a more active role in preventing market disruptions?
A: The CFTC hasn’t necessarily become more “aggressive” than it was before Dodd-Frank, but the Dodd-Frank Act gave the CFTC the authority to regulate the swaps market, which has a notional value of hundreds of trillions of dollars. It also presented the CFTC with new tools to more broadly combat abusive practices. For example, the CFTC now has authority to prohibit any manipulative or deceptive practice in connection with commodity contracts, futures contracts or swaps. Previously the agency’s anti-manipulation and anti-fraud authority was more limited.
When I was with the CFTC, we brought an increased number of enforcement actions as compared to prior years, although I don’t think you can measure the success of an enforcement program by numbers of cases alone. In my last fiscal year at the agency, the CFTC obtained $1.7 billion in financial sanctions. In addition, over the past few years the CFTC promulgated more than 70 rules to implement Dodd-Frank. I expect we will see an uptick in the number of actions brought under the new Dodd-Frank authority as the new rules take hold.
Q: Why did you join the CFTC? Did you always expect to return to Skadden?
A: While I have always found private practice and defense work rewarding, I had been interested in returning to public service in a law enforcement capacity. When I was asked whether I would be interested in taking the enforcement director position, the opportunity sounded exciting. I saw the CFTC as a place where I thought I could make an impact; where I could bring to bear my experience in white-collar criminal and enforcement matters with respect to the financial markets and public companies. I was honored that then Chairman Gary Gensler offered me the opportunity to lead the division at such an important turning point for what has become a pivotal agency.
While working at the CFTC, I wasn’t thinking about my next position and had no expectations about where I might work when my appointment had ended. I didn’t undertake a job search until after I stepped down.
Q: What did you accomplish during your tenure at the CFTC? What are some of the big cases that the enforcement division initiated?
A: I really enjoyed my time as the director. I was proud of my relationship with the staff, and I was very grateful that they accepted me as their leader, even though I was a relative outsider. There are a number of people in the division who have spent the better part of their careers there — these people gave me their full support literally from the moment I stepped into my role.
While I was there, we streamlined various internal processes in an effort to bring cases more quickly and efficiently. I established a senior-level committee — the Case and Policy Committee — which is now known as CAP, to ensure consistency in charging and policy decisions. I also created two squads — the Manipulation & Disruptive Trading Squad and the Swaps Squad — to focus resources on certain core areas of enforcement.
The Enforcement Division’s goal is to bring cases that have the most significant impact, whether by influencing market behavior broadly or bringing relief to the most people. We made a number of good cases and all of them were important. I am proud of the work we did to bring a wide variety of charges, such as those involving customer fund protection, Ponzi-type frauds, abusive trading practices, manipulation, supervision failures, making false statements to the Division, and many others.
The Libor and other interest rate benchmark charges were a highlight of my time at the agency and were very important to the market and industry. We charged five financial institutions over benchmark manipulation, with significant sanctions, and in each case we required the institution to take steps to improve its processes and ensure the integrity of its submissions going forward.
I think we were also successful in strengthening relationships with the SEC and other U.S. regulators, the Department and Justice, various U.S. attorneys, and with our law enforcement partners around the world such as Financial Conduct Authority in the United Kingdom.
Q: What impact did the CFTC job have on your family?
A: Working mostly in the Washington, D.C. offices of the commission while my family lived in New York was challenging at times. I traveled each week back and forth between New York and Washington, and also regularly visited the other regional offices. During all of this, my wife and teenage kids were great, and I could not have done the job without their support.
Q: Why did you leave the agency when you did?
A: I decided to leave the agency as my and the chairman’s terms were drawing to a close. I think it’s important for a new chairman to select his enforcement chief from a clean slate and rotation of the enforcement director position is important. In addition, my youngest child was starting his last year of high school, so I wanted to be home full time.
Q: What is your practice at Skadden? What are Skadden’s plans for the Government Enforcement and White-Collar Group you now head?
A: I am the head of Skadden’s Government Enforcement and White-Collar Crime group in New York, which is part of a global network of attorneys who represent institutions and individuals in a wide variety of matters in the civil and criminal enforcement space, as well as internal investigations. Firm-wide, this network includes three former U.S. attorneys (one of whom is also a former federal judge), numerous other former federal prosecutors, former SEC and CFTC officials, a former Treasury/OFAC official, a former DOJ/Antitrust chief, a former state securities commissioner and others with similar backgrounds, not to mention several former Supreme Court clerks. I personally would like to get back into court trying cases—one of my favorite things about being a lawyer.
Going forward, we expect to see government regulation continue to pick up, especially in regards to enforcement that is cross-border and multi-jurisdictional in nature.
Q: Are there cases you cannot work on due to your activities at the CFTC?
A: Yes, I am forever barred from working on cases that I worked on while at the CFTC.
Q: Is there an increasing demand for lawyers, like yourself, with government experience? Has your government service made you a more effective private attorney?
A: For many years there has been a demand for lawyers with government experience, however I can’t speak to whether or not that demand is increasing. In my experience, clients rely on attorneys who have a broad base of knowledge to counsel them on what to expect from the government. Quite often, lawyers who have worked for the government are in the best position to provide that advice. However, some of the best attorneys I know never worked in law enforcement, so it’s not a prerequisite by any means. I hope that my service as an assistant U.S. attorney and then as the director, on top of my experience in the private bar as an enforcement and criminal defense lawyer, makes me a well-rounded attorney and in a good position to help our clients.
Q: Is there a “revolving door” between government and the private sector? Is that a bad thing?
A: Many accomplished practitioners join and then leave the government. Not surprisingly given my career, I believe in that path. I think government attorneys who have had the defense perspective provide great value to law enforcement, not only because they can anticipate and best evaluate defense positions, but because they can bring a certain well-rounded perspective to the exercise of prosecutorial discretion. To me, public service is very important, but there is no good reason to reserve it solely for those who have chosen to stay in the government for their entire career. The fundamental point here, which is sometimes lost, is that those of us who have worn both hats have the same duties of loyalty and confidentiality to our clients as all other attorneys who have never been in public service. The fact that an attorney represents the government, or previously has represented the government at some point in his or her career, does not change that fundamental point in the slightest.