The SEC makes mistakes. The Madoff fiasco is one of them; the lease on the building in DC that was never used is another.
But on the whole, the SEC is a highly professional, hard working place that has been a unfairly and relentless attacked for any number of things. And, in the aftermath of Madoff, the Agency has often simply accepted its role as a pin cushion.
So it is nice to see the Commission becoming a bit more assertive and fight back against these sort of challenges. The appeal of Judge Rakoff's decision to reject the Citigroup settlement, and more broadly reject the use of the neither "admit nor deny" approach was a case in point. It is risky appealing bad rulings by the district court. Bad district court cases can become bad appellate court cases. But this time, the SEC decided that it could not let the matter rest. Even judges need to know that the SEC will fight back.
With that in mind, we note a small but important series of examples of the growing verve at the SEC. Top officials have been responding to editorials and stories that contained criticism of the Commission. An editorial on DealBook, Taking On the Little Guy, but Missing the Bigger Ones, criticized the SEC's enforcement record. The editorial conceded that the SEC had done "a much better job of investigating financial crisis wrongdoing than the Justice Department. And it’s true. But it’s like being proud that you’re the 'Dumb' of 'Dumb and Dumber.'” Robert Khuzami, the Director of the Division of Enforcement, wrote a letter taking on the editorial and noting that the "assertion that the S.E.C. somehow 'missed the big guys' misses the mark."
Then there was the response by George Canellos, then the head of the NY regional office, now the deputy director of the Division of Enforcement, to the claim that the SEC exposed a whistleblower. For a short time there was a raft of articles accusing the SEC of mishandling the situation. After the Canellos letter was published, the issue quickly died down.
These are small steps but they are necessary and overdue.