From Capitol Hill to academia and the SEC inspector general’s office, observers of the agency have voiced concern that the revolving door can make the SEC a more docile protector of the public interest.
A study to be released Friday by the Project on Government Oversight (POGO), based on hundreds of SEC documents obtained through the Freedom of Information Act, sheds new light on the relationship between the regulators and the regulated.
Over the past five years, 219 former SEC employees filed disclosures with the SEC saying that they planned to represent clients or employers in dealings with the agency, POGO found.
Many of those former SEC employees were appearing before the agency on multiple matters; altogether, they filed almost 800 disclosure statements, the private watchdog group reported.
One former SEC employee, Walter G. Ricciardi, filed 20 disclosures within a two-year period, POGO said. Formerly deputy director of enforcement, Ricciardi is now at the law firm Paul, Weiss, Rifkind, Wharton & Garrison. Neither he nor a spokesman for the firm responded to requests for comment.
The documents obtained by POGO reflect just a portion of the interplay between the agency and its alumni in the private sector. Former employees are required to file such disclosure statements only during the first two years after they leave the SEC.
The matters the former employees were addressing at the agency ranged from SEC enforcement actions to proposed rules for industry and so-called “no action letters,” in which companies seek the SEC’s assurance that something they plan to do will not get them in trouble with the agency.
For example, in March 2006, former SEC official Margaret E. “Mitzi” Moore notified the agency that she had joined the Financial Services Roundtable, which represents big financial companies. Moore wrote that she was scheduled to meet with the SEC’s chairman to discuss, among other things, concerns about a proposal to require disclosures about the salaries of highly paid employees. More than half of the disclosure statements — 403 of 789 — were by people who worked in the SEC’s enforcement division.
The revolving door includes so-called professional accounting fellows, who often come to the agency from big accounting firms and then return to those firms.
“Has the revolving door infected the SEC’s capacity to do its job?” asked Nick Schwellenbach, POGO’s director of investigations. “At a minimum, the revolving door has undermined the integrity of the SEC’s oversight on numerous occasions, and the SEC isn’t policing it as aggressively as it should,” he said.
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