A report published by the Project on Government Oversight (POGO) just a few weeks after Mary Jo White was nominated to head the SEC shows that there was a revolving door between Wall Street executives and SEC staff.
A case study on money market fund lobbying shows how SEC staff that are now working in the private sector could have influenced the SEC’s ability to push through reforms in policy and enforcement over the past ten years.
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The report calls for reforms to help prevent such influence from continuing, saying the close relationship between regulators and those they regulate can impact the culture, the mindset, and the values of the agency.
Suggested reforms include requiring agencies to post disclosure statements online, the time frame for filing post-employment statements, and extending the cooling off periods for employees who enter and leave the government.
The report cites a long list of commissioners who questioned then SEC chair Mary Schapiro’s proposed reforms to money market funds.
Three commissioners refused to support putting the reforms out for comment.
The report also cites White’s appointment as another revolving door example, citing her hiring by Morgan Stanley’s board to determine whether John Mack, its prospective chief executive at that time, had any exposure to the SEC’s insider trading investigation into Pequot Capital Management.
Providing selective access to senior SEC officials during such an investigation caused the SEC to reveal small bits of information about a private investigation
to a potential defendant’s prospective employer.