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January 10, 2013

Khuzami, S.E.C. Enforcement Chief Who Reinvigorated Unit, to Step Down

After becoming the public face of Wall Street oversight and reining in firms like Goldman Sachs, Robert S. Khuzami is walking away from the spotlight.

Mr. Khuzami, 56, a former terrorism prosecutor who revamped the Securities and Exchange Commission’s enforcement unit in the wake of the financial crisis, said Wednesday that he was stepping down from the agency after a four-year tenure.

His departure signals the end of an important chapter in the history of the agency, which has been praised for taking action against some of Wall Street’s largest banks after the 2008 financial crisis, but has also drawn criticism for not doing enough to punish top executives at those same firms.”

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“Some consumer advocates say the enforcement unit remains too timid. They complain that it opted not to charge Lehman Brothers executives and was soft on firms like Bank of America and Citigroup. In 2011, Judge Rakoff refused to bless a $285 million deal with Citigroup in a case involving a collateralized debt obligation, calling it “pocket change.”

Critics also question why the agency sued only a handful of top executives who ran companies at the center of the credit crisis.

“If you’re rich and connected on Wall Street, then don’t worry about the S.E.C.,” said Dennis M. Kelleher, chief executive of Better Markets, a nonprofit advocacy group critical of the financial industry.

Mr. Khuzami dismissed the grumbling, noting that his unit sued 65 senior executives involved in the crisis, including the leaders of Fannie Mae, Freddie Mac and most of the major mortgage companies that caused the housing bubble. In the cases involving big banks, he said, there was not enough evidence to implicate chief executives.

Despite their differences, Judge Rakoff credited Mr. Khuzami with a rapid turnaround of the enforcement division.

“Although, from our different perspectives, Rob Khuzami and I sharply disagree about some matters, over all I think he has done a terrific job,” he said.”

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Read full New York Times article here

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