Richard Bowen, a former Citigroup Inc. underwriter, had the ear of special investigators on April 7. Testifying before the Financial Crisis Inquiry Commission, Bowen said he had waited years to blow the whistle on Citigroup’s risky dabbling in mortgage markets.

Plaintiffs’ lawyers were listening, too. Two weeks later, Bowen’s testimony became the basis for a fresh filing in a securities lawsuit against Citigroup.

The episode is one example of how the congressionally chartered commission, tasked in May 2009 with digging into the recent financial havoc, has the ability to fuel litigation against Wall Street.The commission’s early findings are spilling over into courtrooms, and it’s happening as the commission has become a political target — with critics speculating that the presence of plaintiffs’ lawyers on the commission’s staff could keep it from conducting an even-handed investigation.

Last month, as the commission was set to receive an increase in funding, U.S. Rep. Darrell Issa (R-Calif.) fired off a letter critical of how the commission operates. Issa questioned whether a commissioner, Byron Georgiou, and a staff member, Christopher Seefer, have conflicting interests because they are on leave from plaintiffs’ firm Robbins Geller Rudman & Dowd, which handles some securities litigation. Georgiou is of counsel there, while Seefer is a partner.

The commission’s chairman, former California state treasurer Phil Angelides (D), brushed off the criticism in an Aug. 9 reply. He pointed to the commission’s ethics and confidentiality policies, which prohibit staff members from disclosing any information that the commission hasn’t itself released.

“Our confidentiality and ethics policies are very strong and very robust,” said Tucker Warren, a commission spokesman, in an interview. He added that the commission “has been very judicious in releasing documents,” doing so only at hearings and only when the documents were relevant to the topic at hand.


The commission has about 50 staff members, including about eight lawyers, and they come from an array of backgrounds, including federal agencies, financial companies and law firms. At least three of the lawyers hail from firms that handle the plaintiffs’ side of securities litigation: Seefer of San Diego-based Robbins Geller; Jobe Danganan, previously an associate at Grais & Ellsworth in New York; and Thomas Krebs, a partner at Haskell Slaughter Young & Rediker in Birmingham, Ala. Others come from firms that typically handle defense work, including Gary Cohen, a Los Angeles partner at Sidley Austin, who is the commission’s general counsel, and Mina Simhai, previously an associate at what was Hogan & Hartson.

Almost since it hired its first key staff members in November 2009, the commission has faced criticism that it was too closely aligned with plaintiffs’ lawyers. Feeding that criticism, some of the staff lawyers did not make clean breaks with their old law firms — instead taking a leave of absence with plans to return after Dec. 15. Georgiou, Krebs and Seefer all maintained profiles on their firms’ Web sites, with notes that they are on leave for the commission. None are receiving compensation from their firms while working for the commission, said Warren, the commission spokesman.

By contrast, lawyers who head from private practice into jobs in the executive branch must cut ties completely with their old firms. The financial commission is officially part of the legislative branch, where the rules are not as strict.

Warren said the on-leave arrangement was a necessity given the circumstances the commission is in. “This is for many people no more than a one-year job, and it would be very difficult to attract top talent if they had to leave a secure position for a year or less,” he said.

Issa, in his letter to Angelides, said he’s concerned the commission is not striking the right balance. “While I recognize that the need to assemble a staff with expertise in financial markets will naturally lead to hiring individuals with a wide range of experiences, it is also critical to prevent conflicts of interest which inappropriately influence the [commission's] investigation,” he wrote.


Plaintiffs’ lawyers frequently piggyback on other investigations, including those by the U.S. Securities and Exchange Commission. But the potential to acquire information is especially high here because the financial commission can access and then release information that otherwise might not be easily available — or available at all — during civil discovery. For example, at a June 2 hearing, the commission released an internal SEC report from 2007. The report was critical of the process at Moody’s Investor Services Inc. for rating mortgage-backed securities.

Since January, the commission has held 12 days of public hearings featuring a parade of current and former Wall Street executives and government regulators. Companies and public agencies have turned over hundreds of thousands of pages of records, some of which, like the SEC report on Moody’s, the commission has already made public. A final report from the commission — along the lines of the 9/11 Commission’s report — is due on Dec. 15.

Not all investors plan to wait that long. Testimony from a commission hearing has also shown up in a lawsuit against Goldman Sachs Group Inc. On June 3, public pensioners in Detroit who sued the company included in their complaint testimony in which Lloyd Blankfein, Goldman’s chairman and chief executive officer, described some practices as “improper.” The pensioners allege the company misled them over mortgage-backed securities. They’re represented by Lawrence Kolker, a partner at Wolf Haldenstein Adler Freeman & Herz in New York.

Both the Citigroup and Goldman Sachs lawsuits have been filed in the U.S. District Court for the Southern District of New York. Citigroup, represented by Paul, Weiss, Rifkind, Wharton & Garrison, has moved to dismiss its lawsuit, while Goldman, represented by Sullivan & Cromwell, has not yet responded. The two companies are also using those law firms to respond to requests from the financial commission.

As the commission heads into its final months of work, its members will have to decide how much of their work papers to make public. Like a congressional committee, it faces few restrictions on releasing information, even though much of it would be considered confidential by companies or by government agencies.

Warren said no final decisions have been made and that the commission’s general counsel will be in discussions with the National Archives. “The commission would like for as much information as possible and as reasonable to be made public,” he said, adding that exceptions might be made for trade secrets, for example.

The result could be a wealth of information about the internal operations of some of Wall Street’s biggest players. “They will be able to make hay out of that in future litigation,” said Matt Webb, senior vice president for legal reform policy at the U.S. Chamber of Commerce, who is following the commission’s work. The commission, he added, is “a way for the trial bar to have elements of the government do their work for them.”

David Ingram can be reached at