By Sarah N. Lynch
WASHINGTON, July 23 (Reuters) - Robert Khuzami, the U.S. Securities and Exchange Commission’s former head of enforcement, has been hired as a partner in Kirkland & Ellis, the law firm said on Tuesday.
The announcement ended months of speculation in the legal community over where Khuzami would land. He had been in talks with law firms since leaving the SEC in January.
Jeffrey C. Hammes, the chairman of Kirkland’s Global Management Executive Committee, described Khuzami as “one of the most respected and experienced attorneys within global enforcement,” adding that he “brings invaluable public- and private-sector experience to our growing government, regulatory and investigations practice.”
Khuzami will be based in the law firm’s Washington and New York offices.
Kirkland & Ellis also said it has hired Kenneth Lench, a high-ranking SEC enforcement lawyer who helped oversee many of the cases stemming from the financial crisis. Lench will leave the SEC at the end of this week.
Khuzami joined the SEC in February 2009, when the regulatory agency was at one of the lowest points in its history.
The SEC was still reeling from failing to detect Bernard Madoff’s $65 billion Ponzi scheme and catching heat for its lax oversight leading up to the financial crisis.
On Khuzami’s watch, the enforcement division was restructured.
With an eye toward improving efficiency, Khuzami eliminated mid-level managers. He formed five specialized units to sniff out wrongdoing in areas such as market abuses and insider trading, municipal securities, bribery, structured products and asset management.
With the SEC under fire for failing to detect the red flags of Madoff’s fraud, Khuzami created an Office of Market Intelligence that uses a more sophisticated system of tips and complaints to vet early leads on investigations. That office also teamed up with the Federal Bureau of Investigation by embedding FBI agents at the SEC to improve information sharing and cooperation.
Under Khuzami’s leadership, the SEC brought a record 735 enforcement actions in fiscal 2011 and 734 actions in fiscal 2012.
At the same time, Khuzami faced criticism for not bringing enough actions against high-level Wall Street executives.
Some skeptics questioned whether his previous ties to Deutsche Bank, where he worked as a top lawyer in its U.S. unit when it was heavily involved in packaging subprime loans, were why the SEC never filed charges against the bank.
The fact that Khuzami and Lench are joining the same law firm will probably come as no surprise to SEC insiders.
For months, there have been rumors that Khuzami hoped to find other SEC staffers to accompany him to a law firm, and Lench’s name was among them.
Lench will leave the SEC after a 23-year career. He oversaw the structured products unit, one of the five specialized enforcement units that Khuzami created.
Among the landmark achievements of Lench’s team was the $550 million settlement with Goldman Sachs over allegations that the bank misled investors about a collateralized debt obligation known as ABACUS.
Although the bank settled with the SEC, the agency’s case against Goldman Sachs trader Fabrice Tourre continues. The trial started last week.