New SEC Chief Mary Jo White Thinks the Government Should Bring Cases

More data appear on White's adverse record By Matt Taibbi | January 30, 2013

A few added things about Mary Jo White, the above prosecutor and accumulated advocate afresh alleged by Barack Obama to arch the SEC. Last week, I wrote about White's involvement in the belled Gary Aguirre episode, wherein the above U.S. Attorney and then-partner at the accomplished white-shoe aegis close Debevoise and Plimpton helped squelch then-SEC investigator Aguirre's cabal trading case adjoin approaching Morgan Stanley CEO John Mack.

White, who was apery Morgan Stanley in this affair, went over Aguirre's arch to allocution anon to then-SEC administration arch Linda Thomsen about "reviewing" the case. Afterwards Aguirre was accursed and the case adjoin Mack went away, the official amenable for absolute the case, Aguirre's bang-up Paul Berger, was accustomed a lucrative, multimillion-dollar job with Debevoise and Plimpton, closing the amphitheater in what looks like a archetypal case of revolving-door corruption.

There are a few added adverse data about this adventure that haven't been appear about yet. The aboriginal absorb White's degradation about this case, which she gave in February 2007, as allotment of the SEC Inspector General's investigation. In this deposition, White is asked to blab the action by which Berger came to plan at D&P. There are several arresting exchanges, in which she gives awful absolute answers.

First, White describes the after-effects of her breezy queries about Berger as a appoint candidate. "I got some feedback," she says, "that Paul Berger was advised actual advancing by the aegis bar, the aegis administration bar." White is adage that attorneys who represent Wall Street banks anticipate of Berger as getting affectionate of a hard-ass. She is anon asked if it is advised a acceptable activity for an SEC official to be "aggressive":

Q: If you say that Berger was advised to be actual aggressive, was that a absolute activity for you?

A: It was an activity to explore.

Later, she is afresh asked about this "aggressiveness" question, and her answers accommodate outstanding acumen into the cerebration of Wall Street's assassin acknowledged accoutrements – what White describes as "the aegis administration bar." In this exchange, White is about adage that she had to counterbalance how abundant Berger's abrogating acceptability for "aggressiveness" a part of her little association of bought-off broker attorneys adeptness aching her firm.

Q: During your action of assuming due activity on Paul Berger, did you analyze what you had heard beforehand about him getting actual aggressive?

A: Yes.

Q: What did you apprentice about that?

A: That some humans anticipation he was actual aggressive. That was an issue, we absolutely did allocution to a amount of humans about.

Q: Did they aggrandize on that as to why or how they anticipation he was aggressive?

A: I anticipate and as a above prosecutor, sometimes humans accredit to me as Attila the Hun. I accept how humans can get a acceptability sometimes. We were aggravating to acutely amount out whether this was something beyond, you consistently accept a spectrum on the aggressiveness calibration for government types and was this an activity that was above absolute charge to the job and the mission and bringing cases, which is a absolute activity in the government, to a point. Or was it a broader activity that could leave acerbity in the business association or in the acknowledged association that would bassinet his adeptness to action able-bodied in the clandestine sector?

It's absolutely aberrant that White has to authorize the abstraction that bringing cases is a absolute activity in a government official – that bringing cases is a "positive activity . . . to a point." Can anyone brainstorm the approaching arch of the DEA adage something like, "For a prosecutor, bringing biologic cases is a positive, to a point?"

One would anticipate that even a aegis close would amount a regulator with an advancing rep -- afterwards all, a boxy advocate is a boxy lawyer. What this affidavit shows is that what is admired instead in this dainty association of millionaire attorneys (where one can calmly "get a reputation") is a aptitude for political calculation, and a acuteness to what may or may not bassinet one's adeptness to "function in the clandestine sector." What they're searching for is anyone who, if sitting in the regulator's seat, does the job, but doesn't reside the job, if you bolt the distinction.

Given that White has already fabricated this move from administration to aegis once, and accustomed that we now apperceive that she knows that firms like chastening amount regulators who can abstain creating "resentment in the business community" and absorb their adeptness to "function in the clandestine sector," I anticipate it's safe to apprehend that White's SEC will yield actual acceptable affliction to accompany cases, but alone "to a point."

A few added things about White and the Aguirre case. There's one acutely absorbing area of the SEC Inspector General's address on the accomplished affair, and sheds some ablaze on how these Wall Street attorneys work.

To bound epitomize the case: Mack, the above admiral of Morgan Stanley, was amid jobs in the aboriginal 2000s. He went to Switzerland to account with Credit Suisse Aboriginal Boston for a top column there. CSFB at the time was the investment broker for a aggregation alleged Heller Financial, which was in the action of getting acquired by GE. Right afterwards Mack came aback from Switzerland, he alleged an old friend, a barrier armamentarium banker alleged Art Samberg from a aggregation alleged Pequot Capital. Almost anon afterward, Samberg, who had never captivated a affair about Heller Financial or done any analysis in the firm, began affairs up Heller stock. Weeks later, the accretion took abode and Samberg fabricated $18 million. Mack, meanwhile, was cut into a Pequot accord that netted him $10 million.

In investigating this case, Aguirre beatific a amendment to Morgan Stanley for annal of emails amid Mack and Samberg. Now, remember, Mack by the time of the apprehensive trades was no best alive for Morgan Stanley (he would acknowledgment to be its CEO years later, but at the time, he had just stepped down from the presidency). Nonetheless, Aguirre capital all the emails Mack had beatific to Samberg and carnality versa during Mack's aboriginal assignment at Morgan Stanley. All he was searching for was affidavit that the two knew anniversary added – and for some about amplified affirmation about their akin of chumminess.

Aguirre's approach had consistently been that the antecedent of the Heller tip had been the Credit Suisse interview. He never believed that Mack somehow anesthetized the tip to Samberg while he was still at Morgan Stanley.

Nonetheless, White alleged then-SEC Administration Director Linda Thomsen if Morgan Stanley accustomed the subpoena, and approved to run a little bold on the SEC. The SEC Inspector General afterwards abbreviated White's affidavit about that call:

White said she asked Thomsen "if we could advance the assembly of those emails [which were acknowledging to an SEC amendment issued in the Pequot case] did she anticipate the SEC adeptness be in a position to say something added about Mr. Mack's acknowledgment or not."

In added words, White proposed to Thomsen that she could acceleration up the acknowledgment to the subpoena, if Thomsen in about-face could analysis the emails and accomplish a abrupt acumen about Mack's acknowledgment based on that affirmation – affirmation that not even Aguirre anticipation would accommodate annihilation absolutely absolute about the cabal trade.

Aguirre anticipation Mack got the tip in Switzerland. White had to apperceive the tip could not accept appear from Morgan Stanley. She knew these accurate emails would not appearance the antecedent of the trade. Yet she capital Thomsen to accomplish a acumen about Mack's acknowledgment based on this evidence. This is the array of acknowledged brownie ambush that above regulators like White get paid by the banks millions of dollars a year for.

Two canicule afterwards White's alarm to Thomsen, Morgan Stanley beatific a CD abounding of abstracts over to the SEC – not to Aguirre, but apparently to anyone college up, possibly Thomsen. Again, the Mack case after went away, and Aguirre was after accounted a affliction in the ass for accusatory about this and fired. The SEC after paid Aguirre a almanac $755,000 blameworthy abortion settlement.

More fun data about your new arch of the SEC. Do you feel safer? I apperceive I do.