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September 06, 2012 at 10:57 AM
Revelations of the close ties of between a former SEC commissioner and key SEC policymakers are reviving questions about a so-called “revolving door” in which the lure of future high-paying jobs may improperly influence government decisions.
A Bloomberg investigative report published Wednesday documented the e-mail correspondence to the SEC from a former commissioner, Annette Nazareth, a lawyer representing large banks and securities firms for the Washington office of David Polk & Wardwell, an elite law firm.
While those e-mails appear to exhibit a carefully cultivated relationship of influence and at least two revolving door-type anecdotes, the article is all the more interesting because it comes just a week after the SEC’s enforcement chief, Robert Khuzami (left), published an opinion article denying there is any kind of revolving door in Washington.
What’s more, Khuzami cited as supporting evidence a new academic study published last month by four accounting professors who conclude the revolving door does not undermine SEC enforcement.
Bloomberg’s investigation turned up numerous e-mails, obtained in a Freedom of Information request, that Nazareth sent former SEC colleagues.
In one e-mail, Nazareth attached an annotated copy of draft legislation, sent (before the start of the work week on a Sunday) two days after a 20-hour marathon session when legislators concluded negotiations on the rules that would become the Dodd-Frank Act.
In another e-mail, sent to SEC General Counsel and Senior Policy Director David Becker, Nazareth offered a summary of a 1,100-page Senate proposal regarding Dodd-Frank, to which Becker replied “more nap time for me,” implying his dependence on lobbyist Nazareth’s extensive efforts.
In another e-mail, Nazareth obtained an impromptu meeting with Becker, in another she scheduled a friendly lunch, and in still others the two exchanged thoughts on the “inanity” of Dodd-Frank’s proposed SEC investor advocate position and the new consumer protection agency which made Nazareth “feel ill.”
The revolving-door concept was best demonstrated in two e-mails, one in which Becker asked Nazareth to recommend a lawyer for an SEC job, and another in which Nazareth told Becker she recommended him for a legal position for which headhunters had called her. The Bloomberg article noted that SEC pay tops out at $240,000 for staff, but a partner at Nazareth’s firm can make as much as $2.3 million.
“We look at lawyers who leave the SEC to join law firms,” deHaan (left) says. “On average these lawyers are more aggressive in their enforcement efforts while at the SEC. So on average the revolving door does not seem to be causing a problem for these particular lawyers. But within that set (under study), there could be cases where there was this sort of unethical behavior.”