Clarification: This story is updated to clarify that the statements related to the Securities and Exchange Commission in the last paragraph reflect the opinions of the agency’s critics.
For the first time, the Securities and Exchange Commission will to have two chiefs running its high-profile enforcement division, with Andrew Ceresney joining the agency from the private sector to jointly head the office.
Ceresney will team with George Canellos, who held high-level positions at the SEC before taking over as the enforcement unit’s acting director in January.
The unusual arrangement, announced Monday, should help address the private-sector baggage that Ceresney — and new SEC Chairman Mary Jo White — bring to their public-sector jobs. Both came from the law firm of Debevoise & Plimpton in New York, where they have defended big names on Wall Street for the past decade, including JPMorgan Chase.
Having Ceresney and Canellos jointly lead the 1,200-employee division could help alleviate conflicts of interest that may arise if matters come before the agency involving one of Ceresney’s former Debevoise clients.
The conflicts issue came up often after President Obama nominated White, and she has pledged to recuse herself for one year from cases involving her past clients. Hiring an enforcement director with the same set of conflicts as the chairman could have been problematic, securities experts said. The two-director approach provides a work-around.
“With this set-up, if Ceresney needs to recuse himself, the agency won’t be left without a senior decision maker on any important cases,” said William R. McLucas, a former head of the SEC’s enforcement division who is now a lawyer at Wilmer Hale.
The arrangement also eases the transition for Ceresney, who has never worked at the SEC and has yet to announce when he will start. He can lean on Canellos, who joined the agency in 2009. Canellos, 48, has run the SEC’s large New York regional office and served as the enforcement division’s deputy director before becoming its acting director when Robert Khuzami left the post.
“George and Andrew are a formidable team and I am grateful to both of them for taking on this extremely important responsibility,” White said in a statement.
The deal sounds cumbersome, said Thomas Gorman, a lawyer at Dorsey & Whitney who has worked for the SEC’s enforcement division and the general counsel’s office.
“The buck stops at the director’s desk, and it’s always been one desk, not two,” Gorman said. “But [Ceresney] is her trusted lieutenant, and you’d expect that she’d want her own person in there.”
Ceresney, 41, has built a reputation as a smart attorney and a White protege.
When she was the U.S. attorney for the Southern District of New York, he was a deputy chief appellate attorney in her office and played a major role on big cases. When White left to join Debevoise in 2003, he followed her there and became her right-hand man.
At Debevoise, he defended JPMorgan Chase as it battled federal and state investigations into its handling of its mortgage servicing business and former Bank of America chief executive Kenneth D. Lewis.
Many observers who track the agency expect that Canellos will eventually either leave the agency or move to a different post. But there was no mention of that Monday.
Ceresney and Canellos said they were looking forward to working together again. Canellos also was a prosecutor for nine years at the U.S. Attorney’s Office in Manhattan.
“I am delighted and honored to have this opportunity to serve again under Mary Jo White in partnership with my longtime friend and gifted former colleague,” Canellos said in a statement.
The path Ceresney and Canellos forge will help define White’s tenure and determine whether she will fulfill her pledge to launch a “bold and unrelenting” enforcement program. White’s supporters, including Obama, have heavily touted her credentials as the federal prosecutor who went after terrorists and organized crime boss John Gotti.
The challenge for the enforcement division will be pushing the unit out of its comfort zone, some of the agency’s supporters and critics said. They say the agency is gripped by fear of failure, and for that reason does not take on Wall Street titans as aggressively as it should.