Now that President Obama has officially nominated Mary Jo White to head the SEC, it's time to find out what kind of Chairwoman she'll be.
Wall Street, take note.
To get the inside scoop on White's style, Business Insider contacted Patrick Cotter, an ex-colleague of the former U.S. Attorney.
Cotter said White has “a natural inclination to aggressively pursue the law,” and took the time to address Ms. White’s critics with his own experience working by her side.
Cotter is currently a partner at Barnes & Thornburg LLP, and was an assistant U.S. attorney under Ms. White while she was U.S. attorney for the Eastern District of New York, which encompasses Brooklyn, Queens, and Long Island.
In his experience, White’s combination of hands-on leadership and managerial prowess makes her the perfect choice to lead the SEC.
“She’s not a bureaucrat with a law degree – she’s walked the walk,” Cotter says, “She’s someone who gets personally involved in the direction of the office she’s running.”
He expressed zero doubts about Mr. White’s ability to manage such a massive agency. As a U.S. attorney, she oversaw hundreds of lawyers and was in contact with the leadership of the FBI, ATF, DEA, and IRS on a daily basis.
After serving on the prosecution side, White changed it up and defended former Bank of America CEO Kenneth Lewis against securities fraud, and helped Morgan Stanley vet former CEO John Mack in 2005.
But Cotter doesn't see this as an example of “the infamous revolving door between federal service and major law firms,” as Bill Singer of Forbes reported.
“To suggest that somehow that if you’ve been on one side you can never be on the other without somehow having tainted your integrity is, as I say, painfully ignorant,” Cotter declared, “If that’s meant to be a criticism…I think it’s perfectly baseless.”
White’s experience on both sides of the aisle is actually an advantage. It means she has a broader perspective from which to analyze the impact of regulations or the enforcement of laws, Cotter added.
“I mean, it would be her natural inclination to aggressively pursue the law,” he explained, “If that means revisiting cases from the financial crisis, I’m sure that’s something that she would consider.”
That could make a few people on The Street nervous.
Many thanks to Patrick Cotter for the interview. Read the full transcript below:
BI: Can you describe your working relationship with Mary Jo White?
PC: Mary Jo, at one point in her career, was the – first she was the chief assistant, then subsequently the U.S. Attorney for the Eastern District of New York, which is Brooklyn, Queens, and Long Island. And during part of her tenure, I was with the Strike Force on Organized Crime for the Eastern District, and was eventually an assistant U.S. Attorney under her. So, for a period of time, she was my boss and that’s how I came to know her. Subsequently, I left that office to do other things; she stayed to become the U.S. Attorney and then eventually transferred across the river to the Southern District. Our paths have crossed a number of times in the years since. So, we got to know each other when I worked for her and we have crossed paths a few times. I am not a close friend of Mary Jo’s; I never have been, in any sense.
BI: Good to know.
PC: But I did have the opportunity to work for her, and we have a lot of mutual friends – alumni, if you will – from the Eastern District. So I know I always hear about what she’s up to, and talk to people that work for her and with her. So that’s kind of the extent of our knowledge of each other.
BI: A lot of people – and consumer protection agencies – are mentioning that very little is known about how Mary Jo White feels about new regulations like Dodd-Frank and the regulatory climate in general. Can you offer any insight to what we might expect from her on that front?
PC: I’m afraid I cannot. I have not had occasion to discuss her views of Dodd-Frank or any of the new regulations or even the overall shifts in regulatory and prosecutorial views towards Wall Street since the economic collapse. I can only do this – and it’s not any insight – it’s just that she, for the last decade, has acted as a defense attorney, a white collar practitioner, consulting with and advising and representing individuals and corporations dealing with those regulations – that’s what I do – that’s what I’ve been doing for the past decade. So the only way I have any way of having an educated guess as to what her views are the views of myself and other white-collar practitioners from around the country and what our general view of those things are. I can’t say that I can definitely attribute them to her, but I can say that many of us who have been in the same situation as her, we tend to have similar experiences, and those shape our views.
BI: Could you comment on her litigation style, if you’ve ever seen her in court?
PC: By the time I met her, she was the first assistant, and then she was the U.S. attorney itself. First Assistants and U.S. Attorneys are the Generals of the army; they’re not the combat soldiers. Now she has an excellent reputation as a litigator, but when I was working with her she wasn’t in court litigating cases on any regular basis – she was the General on top. She would meet with people – including myself – and discuss a trial, or case strategy, or tactics, so I have knowledge of that, but I can’t honestly say I ever sat and watched her in a courtroom. Not a lot of U.S. attorneys do that a lot.
BI: That’s understandable. How about her involvement in cases she oversaw? Was she a very hands-on manager, or did she prefer to delegate?
PC: My perception is she was very personally involved, and had a very keen strategic mind, and tactical mind, in advising the assistants that worked for her. I think she’s very personally involved. If you run a large office like the Eastern or Southern District of New York, by necessity you have to delegate some things. You can’t possibly oversee each case – it’s just not humanly possible. But having said that, I think she certainly was someone who was more than willing to get personally involved when dealing with strategic and tactical questions about individual cases. I mean, she’s a real lawyer. She’s not a bureaucrat with a law degree – she’s walked the walk. And that was always very clear from the meetings I was in with her and other things I saw her do with other people. She is a real litigator, and I would think that she would not be somebody – she certainly doesn’t have that reputation in private practice and certainly didn’t when she was running the prosecutorial offices I was in – she’s not up in her ivory tower. She’s a real manager, as it were. So I would definitely say that she’s someone who gets personally involved in the direction of the office she’s running, and I would expect that would be true if she were appointed to the SEC.
BI: So the flip side of that – if she were to be appointed, she’d be in a similar situation before, having overseen 200 attorneys, but she’d still be the head of a federal agency and from an administrative standpoint, how do you see her dealing with the bureaucracy?
PC: I will say this – the SEC is obviously a very large organization, with offices all over the country. And even within the SEC, there are different divisions and branches and each of them have managers and people that have their particular assignments and responsibilities, so it’s a much bigger animal, of course. But I would just point out that if you’re running the Southern or Eastern District of New York, you’re overseeing an office that oversees all federal law enforcement for millions and millions of people. So you’re dealing with very large organizations. When you’re the U.S. attorney, you’re not just overseeing your attorneys. You’re also very intimately involved with all the investigative agencies – the FBI, ATF, DEA, IRS – I mean, you are interacting with their leadership on a daily basis. Plus, you’ve got to answer to Main Justice, and that huge apparatus, all the different divisions, etc. So you are constantly, as a U.S attorney – particularly in a big, big district like the two she’s run – you are constantly interacting with enormous federal bureaucracies, and you are part of a huge federal bureaucracy, the Department of Justice. So she did that for two different districts over many years, and she did that successfully. Everybody, I think, will tell you that she was a very successful U.S. attorney. So there’s no question she knows how to maneuver and handle large federal bureaucratic issues. She’s done it. I don’t think anyone needs a crystal ball to figure that out. But the SEC is a different kind of animal in some ways. I mean there is a very prosecutorial aspect of it, also very regulatory. It is there to crack down on people who break the rules but it’s also there to help people who want to and are trying to play by the rules. The securities laws in this country – everyone would agree – are very complex. And it’s not always cut and dry. The SEC spends a lot of time – as someone who’s practiced with them – a lot of it is sort of saying “Jeez, we know your client is doing this, what’s that about?” It’s not that they necessarily think your guy is a bad guy, but they think that something they’re doing may be dangerous or maybe they’re not fulfilling all their obligations on reporting. Everybody today tends to look at the SEC and think, ‘Oh, why aren’t you putting guys in jail?” There’s a prosecutorial aspect of it, but a lot of it is trying to help people who are trying to make a living in the markets, and run their businesses, trying to help them do it the right way. So that’s a whole different kind of animal than a U.S. attorney’s office. So there would be some new challenges there for her, I think, in dealing with that kind of an organization.
BI: One of the biggest criticisms or skeptical comments that people have made is that she has connections defending Kenneth Lewis, and she helped vet Mack for Morgan Stanley before he came in. It’s almost has the appearance of a lobbyist situation, where she worked in public service and then cashed in when she crossed over to the private sector. Do you feel she’s in any way ‘compromised’ or has any deep conflicts of interest that would prevent her from serving in the necessary capacities?
PC: Well, I frankly think people making those comments are either insincere in the comments or painfully uniformed about how the practice of law works, and should educate themselves. The reality is, our legal system requires people to be both working for the government to enforce laws and regulations, either criminally or civilly, and it’s required that we have people on the other side who represent individuals and companies who are dealing with those rules and laws. To suggest that somehow that if you’ve been on one side you can never be on the other without somehow having tainted your integrity is, as I say, painfully ignorant. I mean, it’s just painfully ignorant. The system requires it; it has always been thus since the founding of the Republic. People work for the government, then they go into private practice, then they go back to working for the government, that is a constant. Mary Jo was in private practice before she was the U.S. Attorney, then she was the U.S. Attorney, then she went back to private practice. And now, if it turns out that she’s offered the job and if she chooses to take it, she will be going back into public service at what is no doubt a significant sacrifice for her own personal financial well-being. So, the suggestion that somehow because you were once a federal prosecutor and then you went into private practice that you’ve somehow tainted yourself just betrays someone who either doesn’t believe in the legal system of this country and the way it’s set up, or doesn’t understand it. All the best prosecutors – many of the best prosecutors – were defense attorneys at one point in their lives, as Mary Jo was. Many of the best defense attorneys were, in fact, prosecutors. I’ve been both. I was a defense attorney, then I became a prosecutor for the Department of Justice and U.S. Attorney, then I went back into private practice. I didn’t change my morals at any point, and neither does anyone else. So I think if that’s meant to be a criticism, it’s based on either someone who’s not being honest, or about what their real motives are, or it’s someone who doesn’t understand how the legal system works. I think it’s perfectly baseless. What I would also say, and more importantly, is that if you want somebody who understands and is well equipped to deal with whatever legal situations come up in the securities industry, I think you’d be well served to choose somebody who’s been on both sides. In other words, they’ve been a law enforcement person, they’ve dealt with the federal bureaucracy and enforcing the law, and at the same time, they’ve also been in the private sector. They’ve represented individuals and companies who have had to deal with it. That, frankly, is the definition of well-rounded, well-informed, well-trained, and well-qualified. It’s not the description of someone who is somehow corrupted. Frankly, the alternative is to ask people in their 20s to pick a side, which of course is a betrayal of our whole legal system, but you would ask them to pick a side and then the only people that would rise up would be lifetime government employees. Which is a prescription for having people who aren’t as well-qualified as they should be.
BI: That definitely wouldn’t be Pollyanna, by any stretch.
PC: Yeah! It’s a silly kind of view of the world. And it’s not smart. I represent people before the SEC. I would much rather, in some senses, be up against some SEC attorney who had never been a defense attorney. They don’t know all the stratagems and tactics I might employ, and therefore it’s possible that I’ll have an advantage over them because they just don’t have the experience. They haven’t looked at it the way I have. And that could be an advantage to me, because I have been on their side. Not as an SEC attorney, but as a federal prosecutor, so I’ve looked at it the way they’ve looked at it. And that’s an advantage to me. That makes me better. That gives me an advantage in our negotiations, our litigation, in everything we do. So I think any clear-eyed thinking person would agree with that – you’re much better off if you’ve looked at it from both sides and have experience on both sides. You’re going to do a better job. You’re not going to be fooled, you’re not going to miss a trick, you’re not going to forget about an aspect because you’ve looked at it from both sides. And you have experience looking at it from both sides. I think, what’s a wonder to me, is so many people who reach high office have only been on one side. I think it’s a deep disadvantage. So I think, actually, the fact that she’s been in private practice is a great qualification. It makes her more qualified than somebody who hasn’t.
BI: That’s a very good point. I think the criticism mainly stems from the notion that injustices done during the financial crisis have not been resolved or addressed. While we’re on the subject, the statute of limitations on mortgage fraud, for example, would allow Mary Jo White to pursue or revisit cases from the financial crisis. Is that something that you could expect from her, if she were given the position and accepted it?
PC: Well, I don’t know if I could put it in those terms, that’s a little overly specific with all due respect, but here’s what I would say. I think that the selection of someone like Mary Jo would have to be perceived by the public and the Street, if you will, the market, as a message. A message that the SEC is going to perhaps, more aggressively than in the past – and that’s not to suggest they haven’t been aggressive, because I disagree with some of the ‘popular wisdom’ that they haven’t been aggressive. I think they have; people don’t want to admit it. But in any event, I think Mary Jo – the appointment of somebody who has such a strong record and experience as a prosecutor, would certainly send a message to the market that the SEC is now being led by someone who has absolutely proven themselves capable of being very aggressive in enforcing the law, either criminally or civilly. And I think that’s meaningful. I don’t think that’s an accident. So I think that one would have to draw from that, that if the administration were to appoint her, that’s the message they’d be sending and I think that would be the mandate she would probably have going forward. I mean, it would be her natural inclination to aggressively pursue the law. If that means revisiting cases from the financial crisis, I’m sure that’s something that she would consider. You’re right, it’s a 10 year statute of limitations for crimes involving any kind of bank fraud. Obviously all the mortgage cases or derivative-based cases, almost all of them could be put into that basket if one tried. You’d have to look at the facts, but I’m sure many, many, many cases would still be alive, in that sense. Now, would she do that or not? I haven’t the faintest idea. She hasn’t called me up and told me. I think that, you know, if you appoint someone who has the kind of prosecutorial experience Mary Jo has, I think you’re telling the world, “You know what, I could’ve appointed some bureaucrat, someone very, very good at dealing with large agencies, and personnel, and budgets, and all that sort of thing.” They could’ve done that, and there wouldn’t have been anything wrong with it, but it sends a different message. And I think you appoint someone like Mary Jo because you want people to understand that this is going to be an aggressive agency, and Mary Jo enjoys a wonderful reputation amongst the bar and the judiciary. And she’s a very nice person, but it’s not because she’s a very nice person. It’s because she’s really good at what she does, and she’s really smart. And I think that’s what the message would be if she were appointed, that they would be aggressive. I think reasonable people would understand that.
BI: I agree. Thanks for your time and insights – this has been illuminating.
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