A think-tank report says U.S. regulators going off to work for Wall Street firms and corporate lawyers taking their place weakens the legal system.
"Former employees of the Securities and Exchange Commission routinely help corporations try to influence SEC rule-making, counter the agency's investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals and win exemptions from federal law," says a report by the Project on Government Oversight.
Regulatory officials can earn a very presentable living, but corporate lawyers can earn millions of dollars per year. Knowing this is so, it can be expected that an official who expects to work on both sides of the system in the course of a career will temper the work accordingly.
At the Securities and Exchange Commission, top enforcement official Robert Khuzami left his position Friday, presumably to end up in a lucrative Wall Street job, The New York Times reported Monday.
Similarly, President Barack Obama's choice to head the SEC is Mary Jo White, who has worked as a federal prosecutor and as an attorney defending Wall Street executives, the Times said.
SEC spokesman John Nester said the agency follows "government-wide regulations and laws that deter conflicts and ensure impartiality."
"We decide issues on their merits according to the rules and regulations governing the securities industry regardless of whether the requesters have an SEC background or not," he said.
In fact, a previous study came to the opposite conclusion of the study released Monday by the Project on Government Oversight.
A study conducted last year by accounting experts said that prosecutors worked extra hard fighting corporate malfeasance to prove to corporations that when they went to work for them in later years, they were tough adversaries.
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