There may be a change in leadership coming to the state Department of Financial Services at the beginning of Gov. Andrew Cuomo’s third term, according to a report from the Wall Street Journal.
It was reported Thursday afternoon that Cuomo is considering replacing Maria Vullo as head of the financial regulator with Linda Lacewell, who currently serves as his chief of staff.
Plans for the reshuffle are unconfirmed. A spokesman for Vullo did not respond to an inquiry for comment on the report and Cuomo’s office declined to confirm the move in a statement on Thursday.
“We do not comment on appointments until they are made,” said Dani Lever, a spokeswoman for Cuomo.
The switch would give DFS its third permanent superintendent in as many terms for Cuomo. The agency was created in 2011 and led by former Superintendent Benjamin Lawsky, who left in 2016 to start his own legal and consulting firm.
Vullo was brought on shortly after Lawsky’s departure and a few bumpy, interim agency heads. She was previously of counsel at Paul, Weiss, Rifkind, Wharton & Garrison in Manhattan, where she was a partner for two decades. Before her time in private practice, Vullo oversaw the Economic Justice Division in the New York Attorney General’s Office, where she supervised a staff of approximately 200 individuals.
She’s had a long career in the legal industry, where she’s litigated matters involving securities, real estate, insurance, consumer protection, and other areas of law. She’s argued before the U.S. Supreme Court, and the U.S. Court of Appeals for the Second, Ninth, and Tenth circuits. She’s also argued in state courts, including the Appellate Division.
Her career almost took a different direction at one point. Vullo was twice selected by the New York State Commission on Judicial Nomination to be a candidate for associate judge on the New York Court of Appeals. She clerked for U.S. District Judge John Mackenzie of the Eastern District of Virginia. She is a graduate of New York University Law School.
Vullo’s tenure as head of the state’s banking and insurance regulatory agency was not her first stint in state government. She was previously a top aide to Cuomo when he was the state’s attorney general from 2007 until the end of 2010. That’s when she served as executive deputy attorney general for economic justice. The job oversees the investor protection, antitrust, real estate finance, consumer frauds and internet bureaus in the office.
She led several high-profile cases leading that division. Among them were actions which resulted in settlements with former hedge fund manager Ezra Merkin and Ivy Asset Management for alleged fraud relating to Bernie Madoff’s Ponzi scheme. Vullo also investigated and brought an action against Ernst & Young for losses to investors resulting from the bankruptcy of Lehman Brothers.
Before her work in the attorney general’s office, she litigated a few significant cases involving some pro bono work. She represented women raped by soldiers during the Bosnian War from 1992 to 1995, which resulted in a $745 million jury verdict for the plaintiffs. She also represented abortion providers in a case where they were threatened in an online “hit list.” The case ended with a $100 million jury verdict for those providers.
Vullo’s tenure at the DFS has been turbulent at times, mostly when it comes to litigation involving the agency.
After DFS promulgated regulations intended to curb the practice of title insurance companies passing along marketing and entertainment costs to consumers, a Manhattan Supreme Court justice struck down the rule in a decision earlier this year.
The state has appealed that decision, which is currently under review by the Appellate Division, First Department. A ruling is expected soon on the appeal, which was argued before the panel in October.
The agency has been more successful in other litigation in recent months. A federal judge dismissed a lawsuit in August from UnitedHealthCare against DFS over its decision to establish its own risk adjust program for health insurance companies.
The regulation was promulgated to allow the agency to collect funds from certain health insurers who received funding from the federal risk adjustment program established under the Affordable Care Act and redistribute that money to other insurers who may have been negatively impacted by the program. The rule has been paused while the district court’s decision is appealed.
Vullo has also been at the center of a lawsuit against the state from the National Rifle Association, which alleged her official actions as superintendent may in the future cause financial hardship for the advocacy group. The state recently lost a motion to dismiss the case, which is scheduled for a status conference in Albany this month.
Lacewell, Vullo’s reported replacement, has also been active in the legal industry during her career. Before her appointment as Cuomo’s chief of staff, Lacewell held positions in the U.S. Attorney’s Office for the Eastern District of New York and as special counsel to Cuomo during his time as governor and state attorney general.