SEC Nominee's Disclosure Report Shows Possible Conflicts
February 12, 2013 by Dave Michaels
Bloomberg) –Mary Jo White, PresidentBarack Obama’s nominee to lead theU.S. Securities and Exchange Commission, said she will avoid some matters involving firms includingJPMorgan Chase & Co.,General Electric Co. andDeloitte & Touche LLP if confirmed by theSenate.
White, a former U.S. prosecutor who is retiring as a partner in the law firmDebevoise & Plimpton LLP, outlined her recusal plans in cases involving former clients in a letter accompanying her financial disclosure report. She reported earning more than$2.4 million from her partnership stake last year.
The report, which also lists former Bank ofAmerica Corp. Chief Executive OfficerKenneth D. Lewis, former Goldman Sachs Group Inc. directorRajat Gupta andUBS AG as clients, underscores White’s longstanding ties toWall Street as a top defense lawyer. She may face questions over potential conflicts of interest at herSenate confirmation hearing, which hasn’t been scheduled.
Obama nominated White forSEC chairman onJan. 24, praising her tenure as U.S. attorney for the southern district ofNew York from 1993 to 2002. She will be a “cop on the beat” of the financial system and help “complete the task of reformingWall Street,” the president said.
In her letter, White wrote that “for a period of one year after my retirement” from the law firm, she would “not participate personally and substantially in any particular matter involving specific parties in whichDebevoise & Plimpton LLP is a party or represents a party.”
Executive Order
Under an executive order signed by Obama in 2009, White must sign an ethics pledge that forbids her from participating in particular matters involving former clients or Debevoise for two years.
The two-year pledge is written in a way that could allow White to work on some issues that have ties to Debevoise or her former clients, saidKenneth A. Gross, a partner atSkadden, Arps, Slate, Meagher & Flom LLP.
“This would give her a good bit of latitude to regulate a former client because this restriction is narrow,” said Gross, who advises political appointees on government ethics laws.
Scott H. Kimpel, a former counsel to SEC commissioner Troy A. Paredes, said White’s participation in SEC business related to Debevoise or former clients would have to be reviewed by the SEC’s office of ethics counsel.
Enforcement cases, rather than regulatory votes, would be most likely to raise potential conflicts of interest for White, Kimpel said in a phone interview. Some commissioners recuse themselves from any issues involving former clients or law firms during their entire term at theSEC, Kimpel said.
Client List
“Anytime Debevoise is a defense counsel in the enforcement space, she is going to have to recuse,” said Kimpel, now a partner atHunton & Williams inWashington.
White’s other clients at Debevoise have included News Corp.’s independent directors,Microsoft Corp. and officers ofMoneyGram International Inc. She also has representedHoward Udell, aPurdue Pharma LP general counsel who pleaded guilty to criminal charges of misrepresenting the prescription painkiller OxyContin as less likely to be abused than other narcotics.
She and her husband,John W. White, have grown wealthy during more than three decades as eliteNew York lawyers. The couple reported assets valued between$9.9 million and $41 million, largely in index and exchange-traded funds, according to her financial disclosure report. The form requires administration nominees and officials to disclose the value of assets as a range, not a specific figure.
Couple’s Income
The couple reported income of between$3 million and $8.7 million during 2012, including her salary at Debevoise.John White, who was the director of the SEC’s corporation finance unit from 2006 to 2008, is a partner atCravath, Swaine & Moore LLP.
In her ethics letter,Mary Jo White wrote that she would receive a lump-sum retirement payment from Debevoise upon confirmation asSEC chairman. The letter doesn’t indicate how much she would receive, though the disclosure form indicates she is eligible to receive$42,500 a month at retirement.
She wrote in the letter that she will forgo a retiree benefit that entitles her to use of “secretarial services, office space and a BlackBerry at the firm’s expense.”
White will also get a payout of money she contributed to Debevoise as an equity partner. Her disclosure form values her interest in the firm at between$500,001 and $1 million.
She also said in the letter that she will avoid participating in matters involving three private investment funds in which her husband is an investor. He plans to divest his interest in the funds if she is confirmed, according to the letter.
John White has agreed to not communicate with the SEC “on behalf of the firm or any client” while his wife is chairman, she wrote in the letter. His practice involves advising firms on public reporting requirements and corporate governance matters, according to Cravath’s website.
