Khuzami to Step Down as SEC’s Top Enforcement Cop

Wednesday, 09 Jan 2013 02:27 PM

 

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Robert Khuzami is leaving the Securities and Exchange Commission after leading the agency's efforts to penalize the nation's largest banks for actions that triggered the 2008 financial crisis.

The SEC announced Khuzami's resignation Wednesday. He was named enforcement director in February 2009, just months after the crisis peaked. In his four years at the helm, he spearheaded investigations that accused banks of misleading investors about risky mortgage securities.

His efforts drew historic SEC settlements. Goldman Sachs agreed in July 2010 to pay $550 million to settle civil charges — the largest penalties paid by a bank in a fraud case. Similar deals followed with Citigroup, JPMorgan Chase and others.

The cases related to the financial crisis resulted in charges against about 150 companies and individuals, and $2.68 billion in fines and restitution, according to the SEC.

Still, critics have said the penalties were small compared with the banks' revenues. And they complained that no senior executives were held accountable.

Khuzami is stepping down within a month of former SEC Chairman Mary Schapiro's departure from the agency.

Elisse Walter, one of the SEC commissioners, was appointed by President Barack Obama to replace Schapiro.

Khuzami, a former criminal prosecutor, was a top legal official at Deutsche Bank when Schapiro brought him to restructure the SEC's enforcement division. He streamlined operations and created specialized units to focus on key areas, such as mortgage securities fraud, market manipulation and hedge funds.

At the time, the SEC was smarting from its failure to detect the massive Ponzi scheme run by money manager Bernard Madoff.

During his Justice Department tenure, Khuzami prosecuted the "Blind Sheik" Omar Ahmed Ali Abdel Rahman in what was then the largest terrorism trial in U.S. history following the 1993 bombing of the World Trade Center in New York. Ten defendants were convicted of operating a terrorist organization responsible for the bombing, the assassination of Jewish Defense League founder Meir Kahane, and planning bomb attacks on law enforcement and other high-profile targets.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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