Exclusive: SEC officials’ holdings, legal work, pose potential conflicts


“Their careers have been representing the industry that they are now supposed to govern and they are going to bring to the job the mindset of the controlled parties,” Robert Weissman, president of the liberal watchdog group Public Citizen. “Their orientation is serving Wall Street, not the people.”

Should those businesses come before the SEC, potential conflicts of interest could arise.

In another filing, William Hinman, the SEC’s director of corporate finance, said his former law firm, Simpson Thacher & Bartlett, represented big banks in addition to technology companies.
He did not indicate plans to offload holdings in non-financial companies such as Apple Inc (AAPL.O) and General Electric Co (GE.N).
“Steve and Bill are subject to and complies with all applicable ethics laws, rules, and regulations, and both are working together with the agency’s ethics counsel as required,” SEC spokeswoman Judith Burns said in a statement.

Peikin and Hinman had no further comment beyond the SEC’s

Released at Thu, 17 Aug 2017 18:38:59 +0000
Steven Peikin, the new co-head of enforcement at the SEC, held as much as $9 million worth of stock in dozens of blue-chip businesses as of Aug. 8, according to a disclosure filing obtained via a public records request.

Peikin said in his disclosure form confidentiality obligations prevented him from disclosing the identity of 18 other former customers, five of whom would be the topic of “pending windmill authorities investigations.”
Conflicts of interest have long been a point of contention between those who assert the SEC benefits from hiring people with real-world expertise, and critics that say the revolving door makes it impossible to regulate effectively.

Among them are several large financial firms whose shares Peikin intends to divest, including Goldman, JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Intercontinental Exchange Group Inc (ICE.N), according to the filing.

Thomas Sporkin, a partner at Buckley Sandler LLP, who formerly led the SEC’s Office of Market Intelligence, said that having two enforcement chiefs is “incredibly valuable” to avoid conflicts while ensuring a senior officer is involved with significant cases.
This debate has heightened under U.S. President Donald Trump, who has stocked his government with former company executives, and pledged to slash regulations. In July, SEC Chairman Jay Clayton, who is also a former corporate attorney, outlined ways he intends to do that in the SEC.

WASHINGTON (Reuters) – Two lawyers appointed to senior jobs in the U.S. Securities and Exchange Commission have ties to key companies including financial firms Goldman Sachs Group Inc (GS.N) and Wells Fargo & Co (WFC.N) that may complicate efforts to regulate them, according to government records viewed by Reuters.
Having such conflicts is not unusual for senior SEC officials, whose stints in the bureau are often bookended by private sector roles. The SEC has stricter rules than other government institutions about conflicts, and a detailed guide on how best to handle them during and after roles at the bureau.
While he was there, Simpson Thacher & Bartlett also represented Chinese e-commerce firm Alibaba Group Holding Ltd (BABA.N) as well as its affiliate ANT Financial Services Group, which is seeking regulatory approval for a planned purchase of U.S. money transfer firm Moneygram International Inc (MGI.O).

Peikin also said in paperwork filed with the Office of Government Ethics that he or his former employer, law firm Sullivan & Cromwell, represented several big banks during his time there.

While at Sullivan & Cromwell, Peikin represented Goldman and Barclays PLC (BARC.L) in investigations involving sanctions violations, rate manipulation and insider trading.
The company also provided services to JPMorgan, U.S. Bancorp (USB.N) and Wells Fargo & Co (WFC.N) while he was there. The SEC is one of several authorities probing Wells Fargo over sales practices that harmed consumers.
Peikin, 51, and Hinman, 62, are two of the most prominent appointments by Clayton, who faced questions from lawmakers about his own conflicts of interest during a confirmation hearing in March.
Peikin is co-head of enforcement alongside Stephanie Avakian, allowing him to recuse himself from things that pose conflicts.

Stephen Cohen, the director of Palantir Technologies, which signed a contract worth more than $43 million with the SEC in 2015, was another company client during Hinman’s employment. The contract was for five years, with two years through five being discretionary, an SEC spokeswoman told Reuters at the moment.

A Wells Fargo bank sign is envisioned in downtown Los Angeles, California, U.S. August 10, 2017. Mike Blake