The potential for a high-paying job after an SEC stint helps the agency recruit people with expertise in arcane areas. SEC pay scales generally can’t compete with industry; they top out at about $240,000 for staff and $156,000 for commissioners. At Davis Polk, profits per partner reached $2.3 million in 2011, American Lawyer magazine reported.
The SEC gets “top-notch, high-quality people because it’s fun, because it’s challenging, because it’s exciting and because of the economic opportunities after they leave,” said David Gourevitch, a former agency enforcement lawyer who is now in private practice in New York.
Gourevitch, in comments echoed by other SEC alumni, said the back-and-forth between the industry and the commission doesn’t help ex-officials tip the scale toward their clients.
“There clearly is a revolving door,” he said. “I don’t see it influencing the results.”
Others aren’t so sure. Markets are so complex that regulators operate under an “informational disadvantage” with those they police, and it’s natural for SEC officials to listen more closely to lawyers and lobbyists who once worked at the agency, said Pritchard, the law professor.
Nazareth is recognized as an expert since she ran the SEC’s markets division before she served as a commissioner. “She knows how to pitch the arguments to the SEC in a way that they’re likely to respond to,” Pritchard said.
The e-mails reviewed by Bloomberg News begin in February 2009, just as Dodd-Frank was being crafted by the Obama administration and half-dozen agencies, and end in May 2011, when the public records request was first made.
The time period coincided with an effort by Davis Polk, a New York-based firm that has long represented prominent Wall Street clients, to market its financial regulatory work. It sought to outdistance rival Sullivan & Cromwell, people in the legal and banking industries say. Besides JPMorgan, Goldman Sachs and Bank of America, Davis Polk has done work for Citigroup and Morgan Stanley on Dodd-Frank matters.
The correspondence illustrates how Nazareth tended her relationships and pushed for access. She was able to arrange an unscheduled meeting with Becker on June 24, 2009, when she e-mailed him from the SEC’s lobby: “My meeting has just ended with Trading and Markets. Do you have time to meet?”
Five minutes later, Becker said, “I do.”
On July 11, Nazareth e-mailed Becker to offer “just some Saturday morning thoughts” about the Treasury Department’s draft of the regulatory bill, noting that she found it “very peculiar in places, causing me to believe that it was not written by the SEC or fully vetted.”