Securities and Exchange Commission

Watch The SEC's Mary Jo White Get Publicly Shamed

Opponents of Mary Jo White's tenure at the SEC have taken to the streets -- in a sense -- to protest the Commission's perceived protection of Wall Street institutions.

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UPDATE: 9/17/15 5:35 p.m.: Looks like the pressure has gotten to Cravath. Check out the update below…

UPDATE: 10/8/15 11:18 a.m.: Now a coalition of good governance organizations have sent the Chairwoman a letter asking her to recuse herself from all PCAOB appointments in light of her husband’s conflict. Read the letter here.

The rising tide of opposition to SEC Chair Mary Jo White has leapt from the pages of dissents and petitions and finally manifested itself in physical form. Behold the “Dump (Mary Jo) Truck,” a mobile billboard set up by CREDO Action that will travel between Union Station, K Street, and the White House from this morning until Thursday.

Ah. A rolling testament to the diminutive litigatrix’s tenure as chief financial watchdog.

Remember those heady days when people hailed President Obama’s decision to install Mary Jo White as SEC Chair? Elie described it as a gauntlet thrown at Wall Street because she scared him while he worked at Debevoise or something. She even talked a big game, citing James Q. Wilson’s famous “Broken Windows” theory of policing, promising to aggressively enforce securities laws against even the most minor infractions to encourage a culture of lawfulness.

So that didn’t work. Like most officials who hail the “Broken Windows” approach, White replaced the idea of enforcing “even” the most minor infractions, with enforcing “only” the most minor infractions — harassing the lowest-level offenders while turning a blind eye toward the big players. SEC enforcement actions are up overall, but when it comes to major financial institutions busted for financial crimes, White’s SEC has bent over backward to cut them slack. Never underestimate the SEC’s cultural commitment to shirking the actual “job” thing.

The protections White and a majority of Commissioners afforded Wall Street over the foreign exchange spot market scandal were so egregious, fellow SEC Commissioner Kara Stein lodged a blistering dissent:

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It is troubling enough to consistently grant waivers for criminal misconduct. It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers. This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them.

In conclusion, I am troubled by repeated instances of noncompliance at these global financial institutions, which may be indicative of a continuing culture that does not adequately support legal and ethical behavior. Further, I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic. Firms and institutions increasingly rely on the Commission’s repeated issuance of waivers to remove the consequences of a criminal conviction, consequences that may actually positively contribute to a firm’s compliance and conduct going forward.

Senator Elizabeth Warren piled on with a scathing letter to White expressing that “to date, your leadership of the Commission has been extremely disappointing” — the classic “I’m not mad, just disappointed” technique at the highest levels of power — and citing the waivers that raised Commissioner Stein’s ire, as well as White’s dragging her feet on Dodd-Frank implementation, her support for enforcement without admission of wrongdoing, and the persistent appearance of a conflict of interest based on her husband John’s continued work at Cravath.

Now the protest has taken to the streets. In a manner of speaking anyway. This isn’t CREDO’s first effort to shine a light on White’s leadership at the SEC. The organization has spearheaded petitions, led a campaign of phone calls to the White House and SEC staffers, and pursued aggressive Twitter engagement with @SEC_news. But the billboard moves CREDO’s efforts into the public eye.

And in a sense, the billboard — touring the city for a mere three days — is the ideal metaphor for White’s SEC leadership: it will make a big public splash for a few days and then, quietly, things will return to business as usual.

UPDATE: 9/17/15 5:35 p.m.: After raising awareness of the possible conflict that arises as Mary Jo White chooses the next PCAOB Chair while Cravath still publicly touts the fact that John White serves on a panel advising the PCAOB, well, seems Cravath got spooked. Cravath has just deleted all reference to John White’s service on that panel. From, say, this:

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Our team includes attorneys with formal accounting backgrounds as well as a current member of FASB’s Financial Standard’s Advisory Counsel and PCAOB’s Standing Advisory Group.

To this:

Our team includes lawyers with formal accounting backgrounds and decades of experience handling a full range of complex accounting and audit-related issues.

That’s… not probably sufficient to heal the conflict, but nice try.

UPDATE: 10/8/15 11:18 a.m.: Check out the letter sent by a coalition of groups requesting the Chairwoman recuse herself from PCAOB appointment decisions on the next page…

Earlier: Obama Throws Down The Gauntlet With New Pick To Head The SEC
Just How Rich Is Mary Jo White, Debevoise Partner and Likely Future SEC Chair?
SEC To Second Circuit: ‘Please Don’t Make Us Do Our Jobs!’

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