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January 9, 2013

SEC NEWS AND SPEECHES-SEC Announces Departure of Enforcement Director Robert Khuzami

By Matthew Garza, J.D.

The SEC has issued a press release announcing that Robert Khuzami will leave his post as Director of the Division of Enforcement after nearly four years in the role. The Enforcement Division under Mr. Khuzami filed more cases than ever before in fiscal years 2011 and 2012, underwent the most significant reorganization since it was established in 1972, and also streamlined the way the Division handles tips and complaints. The agency filed a record 735 enforcement actions in fiscal year 2011 and 734 in the 2012 fiscal year. Mr. Khuzami was tapped by former Chairman Mary Shapiro in February 2009 to replace Linda Chatman Thomsen, who had served as Director of the Division since 2005.

The Division of Enforcement under Mr. Khuzami brought 293 actions involving investment advisers in 2011 and 2012 and increased by 60 percent the number of cases filed against broker-dealers in 2011 and another 19 percent in 2012. The 17 actions related to municipal securities that were filed in 2012 were the most since 2004. The Division prioritized misconduct related to the financial crisis and charged more than 150 individuals and entities with wrongdoing since 2009, according to the release, including 65 corporate officers. It obtained 36 officer and director bars and $2.68 billion in financial relief. The release pointed to high-profile defendants subject to enforcement stemming from financial crisis misconduct, including Goldman Sachs, J.P. Morgan, Credit Suisse, Citigroup, State Street, Wachovia, Charles Schwab, and executives at Fannie Mae, Freddie Mac, and Countrywide. The Division also continued to prioritize insider trading under Mr. Khuzami, bringing 58 insider trading actions in 2012 against 131 individuals and entities, including the Galleon Management case involving Raj Rajaratnam and former McKinsey & Co. head Rajat Gupta.

The reorganization of the Enforcement Division created five National Specialized Units to focus on areas the SEC believed needed enhanced enforcement scrutiny-Asset Management, Market Abuse, Structured and New Products, Foreign Corrupt Practices, and Municipal Securities and Public Pensions.

"Rob's leadership and bold ideas transformed and reinvigorated the enforcement program. Under his direction, the Division not only produced record results, but embraced changes that in the years to come will enable the talented staff to better protect investors through increased efficiency, expertise, and strategic focus," said SEC Chair Elisse Walter.

Prior to joining the SEC, Mr. Khuzami was General Counsel for the Americas at Deutsche Bank AG from 2004 to 2009 and, prior to that, spent 11 years as a federal prosecutor for the U.S. Attorney's Office in the Southern District of New York. In his role as federal prosecutor, Mr. Khuzami prosecuted the terrorist group responsible for the 1993 bombing of the World Trade Center, the planned simultaneous bombing attacks on the FBI's New York Headquarters, the Lincoln and Holland Tunnels and the United Nations Headquarters, and the assassination Jewish Defense League founder Meir Kahane. He also served for three years as head of that office's Securities and Commodities Fraud Task Force.

"I have spent half my career in public service, and nowhere is there the level of professionalism, skill, and talent on such a large and coordinated scale as there is in the SEC's Division of Enforcement," said Mr. Khuzami. "They have inspired me, educated me, and motivated me to do my very best, and for that I am eternally grateful."

TopStory: Enforcement SECNewsSpeeches

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