George Canellos, who oversaw some of the Securities and Exchange Commission’s most high-profile cases over the past five years, announced Friday that he would step down at the end the month.
Canellos and Andrew Ceresney jointly run the SEC’s powerful Enforcement Division, an unusual leadership arrangement that many agency observers expected would soon end.
In an interview Friday, Canellos said he had already overshot his expected stay in Washington. He had twice renegotiated the timing with his wife, who lives in New York with their 20-month-old daughter, Clio. Canellos said he works four days at SEC headquarters, then commutes home Thursdays evenings to finish the rest of the workweek.
When SEC Chairman Mary Jo White joined the agency in April, Canellos told her his tenure at agency would soon end, he said.
“Mary Jo knew I was on borrowed time when it came to staying in government longer,” said Canellos, who joined the agency in 2009. “It was always contemplated that the day would come when I would leave and Andrew would continue.”
Canellos said he has not made any career plans, mostly because searching for a job while working for the agency could have created conflicts of interest and forced him to recuse himself from cases. “The best approach from my perspective was just to quit and turn my attention to a job search after I leave,” he said.
On Friday, White praised Canellos. “Every day he brought to work an intense enthusiasm for our mission, extraordinary intellect and experience, and a total commitment to fairness and the public interest,” she said in a statement.
The relationship between the two goes back nearly two decades.
White was the U.S. attorney in Manhattan when Canellos started his nine-year stint there as a federal prosecutor. He then spent six years as a litigation partner at Milbank, Tweed, Hadley & McCloy before joining the SEC to run its large New York regional office.
Canellos came in as the SEC was being pummeled for its failure to detect Bernard Madoff’s Ponzi scheme. Canellos is credited with playing an instrumental role in responding to the crisis. He moved on to become deputy of the Enforcement Division under Robert Khuzami, then took over as acting director when Khuzami left last January.
When White joined the agency three months later, she tapped Canellos and Ceresney as co-directors of enforcement. It was an unusual arrangement: Since the office was created in the 1970s, its hundreds of attorneys had reported to a sole director.
The two men had worked closely together before, first as federal prosecutors under White at the U.S. attorney’s office and later in the private sector. “We’ve been very close friends and professional colleagues ever since,” Canellos said. “Being co-directors has been very easy.”
Experts who follow the agency said Canellos no doubt helped ease Ceresney’s transition. Canellos’s presence also provided a work-around should White and Ceresney need to recuse themselves from cases related to their former private-sector clients.
Both the chairman and Ceresney worked at Debevoise & Plimpton in New York before joining the SEC. As a result, neither of them could take part in cases involving JPMorgan Chase, a Debevoise client. They recused themselves from the settlement negotiations involving JPMorgan’s disastrous “London Whale” trading losses, leaving Canellos as the senior decision maker on the enforcement front.
Canellos played a lead role in the working group that helped craft the Justice Department’s record $13 billion settlement with the bank, which was accused of knowingly selling faulty mortgage securities. He also oversaw some of the agency’s most significant insider trading cases, including ones involving hedge fund billionaire Steven A. Cohen’s SAC Capital and Raj Rajaratnam of Galleon Management.
But Canellos said he’s ready to get back in the trenches.
“Every moment at the SEC has been fascinating,” Canellos said. “But I got a bird’s-eye view of the cases I was supervising. It’s important to go back to arguing cases and litigating in court rather than just supervising others who do it.”