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David Becker couldn’t have picked a better time to look for a job. Thanks to the post-Enron boom in federal investigations of corporate America, the outgoing general counsel of the Securities and Exchange Commission is among the most highly sought-after government officials on the market. At least eight law firms have approached him since he announced over a month ago that he plans to leave the SEC. Becker, who is expected to announce his new position this week, will soon become one of a relatively small number of private lawyers whose specialty is representing businesses, and individuals, who find themselves in the SEC’s cross hairs. Many of them are former SEC officials. Most are based in Washington, D.C. And right now, all of them are awash in work, as the SEC — along with Congress and the Department of Justice — pursues an ever-widening group of alleged corporate crooks. The Enron Corp., Arthur Andersen, Global Crossing, Adelphia Communications, the Xerox Corp., Merrill Lynch — the list of businesses under SEC investigation continues to grow. In recent testimony before Congress, SEC Chairman Harvey Pitt spelled out the unusual volume of enforcement activity under his watch: Over the past six months, he said, the agency “has sought emergency relief, including temporary restraining orders and asset freezes,” in 36 cases — compared with 43 over the entire previous year. Pitt also noted that his enforcement team has suspended trading in seven securities, compared with two the prior year, and brought 14 subpoena enforcement actions, compared with 13 the year before. He promised more. “You will see us moving faster to obtain temporary restraining orders, freezes of assets, and appointment of court monitors to oversee enterprises that commit securities fraud,” Pitt told Congress. That translates into long hours for SEC experts like Debevoise & Plimpton’s Ralph Ferrara; Wilmer, Cutler & Pickering’s William McLucas and Foley & Lardner’s Gregory Bruch. All three lawyers are former officials of the SEC. Ferrara spent several years at the agency during the 1970s and early ’80s, and served as its general counsel. McLucas was the director of enforcement under Pitt’s predecessor, Arthur Levitt. Bruch, who put in 12 years before joining Foley last October, was most recently McLucas’ enforcement assistant. Each is involved in headline-grabbing cases. Ferrara represents Global Crossing in about 50 suits against the bankrupt telecommunications giant, along with investigations by the SEC, Justice, and Congress. McLucas has been overseeing the Wilmer Cutler team handling the internal investigation of Enron’s collapse. Bruch and his colleagues, including another former SEC enforcer, Samuel “Sandy” Winer, are conducting Global Crossing’s internal investigation. Bruch says Foley’s SEC lawyers — including seven partners in D.C. — are “busier than they’ve been, ever.” Since Enron’s spectacular collapse and the ensuing melee of lawsuits and government investigations, “every public corporation in the country is undergoing [a] serious examination of policies and procedures,” Bruch says. That has translated into an increased demand for advice from outside counsel, according to several SEC lawyers. In addition to grappling with formal SEC investigations, says John Sturc of Los Angeles-based Gibson, Dunn & Crutcher, his firm is fielding more calls from clients who want to be sure they’ve got adequate internal oversight of accounting practices and financial reporting. “Nobody wants to be the next guy” on the SEC’s hit list, Sturc says. “There’s more of an inclination to reach for the suspenders in addition to the belt.” Sturc, who spent eight years at the SEC, now works with six partners in Gibson Dunn’s D.C. office who concentrate on cases involving the agency. He estimates that 30 to 50 lawyers firmwide are currently working on SEC enforcement matters. Like many of his counterparts at other firms, Sturc avoids talking about his clients, other than to say he represents investment banks and public companies, and is currently busy with “a lot of investment advisers. “When I do my best work, nobody knows about it,” he says. Dixie Johnson, co-chair of the SEC enforcement team in the D.C. office of New York’s Fried, Frank, Harris, Shriver & Jacobson, says her team, which includes nine partners and about 25 associates, remains busy despite the loss of rainmaker Harvey Pitt. “We’ve had partners cancel vacations recently, and we’ve had to staff enforcement matters with some litigators,” she says. Because Pitt worked at the firm, he is generally required to recuse himself from cases that Fried Frank handles at the SEC. But Johnson says she doesn’t think clients have either shied away from, or been attracted to, the firm because of Pitt’s new role. Johnson points out that the recusal issue will generally evaporate for Fried Frank on Aug. 1, after Pitt has been out of the firm for a year. Fried, Frank represents Adelphia — now the subject of a formal SEC investigation — along with investment advisers Lipper Convertible Funds and Dresdner RCM Global Investors, according to public records. In a coup for Fried Frank, the SEC recently opted to drop its investigation of Dresdner without taking any enforcement action. Bruch, Sturc, and several other SEC lawyers say they’ve seen an increase in the agency’s aggressiveness in handling cases. “There’s a harshness you didn’t see before,” says Bruch. He claims the commission is pushing harder, and faster, for subpoena actions, and is threatening severe sanctions for perceived lack of cooperation from companies under investigation. He points to the SEC’s recent settlement with the Xerox Corp. as one “stunning” example. In that case, the SEC exacted a $10 million penalty — the largest ever in a financial fraud case before the agency. In statements trumpeting the settlement, Charles Neimeier, an enforcement official, noted that the penalty was partly due to “the company’s lack of full cooperation in the investigation.” Xerox was represented in the matter by another well-known SEC expert, Colleen Mahoney of the D.C. office of New York’s Skadden, Arps, Meagher & Flom. Mahoney, a 15-year SEC veteran, served as the deputy director of enforcement from 1994 to 1998. She did not respond to requests for comment. But others, including Arnold & Porter’s Stephen Sacks, say it’s too soon to judge the agency’s enforcement tactics. “They’re tough,” says Sacks, who is well-known for representing major accounting firms before the SEC. “They’ve always been tough.” With the spike in enforcement activity, he says, “the risk is that in a quest for statistics, good judgment gets left behind.” But he says he sees “no sign” that current Enforcement Director Stephen Cutler is “cutting corners or making bad judgments.” Ferrara, whose team at Debevoise historically has tended to represent public companies and the insurers who provide coverage to directors and officers, says he sees the SEC becoming “more programmatic and less opportunistic” in its enforcement activity. Under prior Chairman Arthur Levitt, Ferrara suggests, enforcement was more “eclectic.” “In fact what’s happening is [the SEC] is going back to the old Sporkin model,” he says. Onetime SEC enforcement chief Stanley Sporkin, now a D.C. partner at New York’s Weil, Gotshal & Manges, espoused the theory that the agency should tackle “the access points to fraud,” Ferrara relates. That meant cracking down, in a concerted, strategic way, on ethically challenged lawyers, accountants, brokers, and bankers. “With [Harvey Pitt] back in charge, what you’ve got is someone with a great recollection” of Sporkin’s approach, Ferrara says. Right now, Ferrara suggests, the “access points” the agency is focused on are accountants and crooked chief financial officers. At the SEC, enforcement chief Cutler demurs. The nature of enforcement requires that the agency be reactive much of the time, he notes. But, he says, “there’s more of an effort today to focus our investigations,” in part due to the much-publicized leanness of the agency’s staff. “Where we used to open a company’s financial statements and say, ‘OK, we’re going to recreate everything they’ve done over the last two years,’ now we’re more likely to say, ‘OK, what are the two quarters, or two transactions, we want to focus on?’ ” he says. “ That requires intelligent judgments about what you are going to pursue — where you think you’ll find the wrongdoing. And you have to take some risks. “The question is: Are you doing enough to be able to tell the story of what happened here, and also to address our prophylactic concerns?”

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