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Stephen Cutler to Leave SEC

A possible successor is his deputy, Linda Thomsen, who has overseen the Enron investigation and who would be the first woman to serve as enforcemen...
Stephen TaubApril 14, 2005

It’s the end of an era for the Securities and Exchange Commission.

Stephen Cutler, director of the Division of Enforcement, announced Thursday that he intends to leave the commission next month to return to the private sector. Before joining the SEC as deputy director in January
1999, he was a partner at the Washington, D.C., law firm Wilmer, Cutler & Pickering. (See the CFO Blog for senior writer Tim Reason’s thoughts on the timing of Cutler’s announcement.)

Cutler is credited with leading the agency’s investigations of some of the largest financial scandals in history, including those at Enron,
WorldCom, Adelphia, Qwest, Tyco, and HealthSouth. During his tenure, the commission obtained judgments in enforcement actions totaling more than $6 billion in penalties and disgorgement, more than $4.5 billion of which is being returned to harmed investors, according to the SEC.

Among them were WorldCom’s $750 million penalty — the largest against a public company in commission history. In fact, of the 12 largest penalties ever obtained by the SEC, 10 were from cases brought
under Cutler’s leadership.

In a statement, the SEC also credited Cutler for groundbreaking efforts against banks, insurance companies, and other financial intermediaries for their roles in a number of public-company financial-reporting failures. Those included the commission’s cases against Merrill Lynch, Citigroup,
J.P. Morgan, and CIBC in connection with Enron’s collapse, and the cases against American International Group for its transactions with two public companies.

“Steve presided over the agency’s enforcement efforts during a period of the greatest upheaval and challenge since the creation of the SEC,” William McLucas, a former enforcement chief himself, told Bloomberg. “His legacy will be in the same category as that of Stanley Sporkin, as one of the greatest leaders and public servants the SEC has ever seen.”

That is quite a complement, noted the wire service, given the respect
reserved for Sporkin’s reign as enforcement chief from 1974 to 1980. He later joined the Central Intelligence Agency as general counsel and then become a federal judge.

Bloomberg speculated that Cutler could be succeeded by his deputy, Linda Thomsen, who has overseen the Enron investigation. If Thomsen gets the job, she would be the first woman to serve as enforcement director, according to Bloomberg.

“There’s a strong culture within the enforcement division to promote talent from within,” Stephen Crimmins, a former SEC trial attorney, told the wire service. “We’ve seen Steve Cutler give Linda a prominent role, and she’s proved herself a very capable leader.”