“It is a testament to your commitment and professionalism that you never permitted those distractions to become obstacles to excellence,” he said.
Under Khuzami, the SEC filed more than 130 cases related to the financial meltdown, including 57 actions against senior corporate officers. His investigators have taken aim at lenders who generated subprime mortgages as well as Wall Street traders and investment banks that bundled the home loans for investors.
He oversaw some of the biggest settlements in SEC history. Goldman Sachs Group Inc. agreed in July 2010 to pay $550 million over claims it misled investors about a mortgage-linked investment; Citigroup reached a $285 million settlement and JPMorgan Chase & Co. forfeited $154 million for their roles in similar deals.
A former federal prosecutor in New York who went on to work as a top lawyer at Deutsche Bank AG, Khuzami was a strong defender of the SEC’s enforcement record and argued it brought as many cases as the law allowed.
He said that many of the ill-fated investment decisions made before and during the financial crisis didn’t amount to securities fraud. He also defended the agency’s policy of not requiring firms to admit wrongdoing when settling allegations, saying such a stance would lead to protracted litigation and drain the enforcement program of resources.
After arriving at the SEC in March 2009, Khuzami spent the first several months of his tenure reorganizing the division. The process started with “a top-to-bottom scrub” of its operations, he said in an August 2009 speech marking his first 100 days on the job. He likened the overhaul to changing tires on a moving car.
Aside from financial crisis investigations, Khuzami reoriented the enforcement division to take a more aggressive approach to identifying misconduct in new areas. The specialized units he formed are taking a deeper look at asset managers and using data-intensive analysis to root out market manipulation and insider trading.