SEC Lawman Khuzami Officially Resigns
Traders Magazine Online News, January 9, 2013
It's official now. There's going to be a new sheriff in the trading industry.
Khuzami has led the Division's most productive period of insider trading enforcement as investigators cracked large-scale coordinated schemes involving Wall Street professionals. The Galleon Management/Raj Rajaratnam investigation has resulted in charges against 29 defendants including former McKinsey & Co. global head Rajat Gupta.
The SEC also has pursued insider trading cases related to expert networks, charging hedge funds, portfolio managers, and analysts for illegally trading on confidential information obtained from technology company employees moonlighting as expert network consultants.
The SEC also charged hedge fund advisory firm CR Intrinsic Investors LLC and its former portfolio manager Matthew Martoma in a $276 million insider trading scheme that is the largest ever charged by the SEC. Since the beginning of fiscal year 2010, the SEC has filed 180 enforcement actions alleging insider trading by approximately 430 individuals and entities for illicit profits totaling $900 million.
Khuzami was named director of the enforcement division in February of 2009 by Chairman Schapiro. He succeeded Linda Chatman Thomsen after the SEC had come under public criticism for failing to detect Bernard Madoff's Ponzi scheme.
Upon arriving at the SEC, he established himself as the agency's crime fighter and led the charge to prosecute wrongdoing on Wall Street. And he succeeded.
According to the SEC's annual report for fiscal 2012, Khuzami division filed 734 enforcement actions, one shy of the all-time record of 735 filed in 2011. Under his direction, the agency obtained orders requiring the payment of more than $3.0 billion in penalties in 2012, an 11 percent increase over the amount ordered in 2011.
Khuzami joins the growing list of high-level departures at the agency that began last-November when Chairman Mary Schapiro announced she was leaving the Commission.
After Schapiro announced her departure in November, others left the agency soon after. General counsel Mark Cahn, finance director Meredith Cross and the director of the Division of Trading and Markets, Robert Cook, announced their respective resignations in next three weeks.
Before joining the Commission, the Brooklyn-born Khuzami was a prosecutor in the U.S. Attorney's Office in Manhattan's Southern District of New York from 1991 to 2002. During his tenure, he rose to become chief of that office's Securities and Commodities Fraud Task Force.
In 2002, Khuzami was hired by Richard Walker to work at Deutsche Bank in New York as global head of litigation and regulatory investigations, where he oversaw litigation and regulatory investigations. In 2004, he was promoted to serve as general counsel for the Americas, where he supervised more than 100 lawyers.
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