‘Chasing Minnows’
“While this individual may be liable, may have broken the law and may have gotten what he deserved, this one case should fool no one: the SEC has an embarrassing record of non- enforcement on Wall Street,” Kelleher said in a statement following the verdict. “No one should be allowed to break the law, but the SEC must stop chasing minnows while letting the whales of Wall Street go free.”
Tourre claimed that ACA Management LLC, which was selecting the Abacus securities, knew about the role of Paulson’s fund in the transaction. Tourre faces penalties that will be determined later, including fines and a possible bar from the securities industry.
In recent years, the SEC has sought to bolster its courtroom gravitas through recruitment. Robert Khuzami, a former prosecutor of terrorists and white-collar criminals, was appointed the agency’s enforcement chief a month after President Barack Obama took office in 2009. White, the former U.S. attorney for the Southern District of New York from 1993 to 2002, won the convictions of four followers of Osama bin Laden for the bombings of two U.S. embassies in Africa.
“You don’t want to mess with Mary Jo,” Obama said in January as he introduced her at the White House.
Canellos, Ceresney
Keeping a full staff may be a challenge. Matthew Martens, the SEC’s lead lawyer in the Tourre trial, is planning to leave the agency, according to a person with direct knowledge of the matter, requesting anonymity because the information isn’t public. Khuzami, 57, departed earlier this year and was replaced by Ceresney and George Canellos, 48, who both had worked for White as federal prosecutors in Manhattan.
White, 65, still has work to do to convince defense attorneys that they will face a formidable opponent if they go to trial, according to Frenkel.
“There’s nothing about this verdict that would cause me as a trial lawyer to be any less willing or desirous of trying a case against the SEC,” Frenkel said.
The case is SEC v. Tourre, 10-cv-03229, U.S. District Court, Southern District of New York (Manhattan).