When the absolutely useless reign of the "captured" SEC head Mary Schapiro came to an end, only to be replaced with former Wall Street darling, former Debevoise lawyer Mary Jo White whose prior Wall Street clients were virtually all financial firms, many said her appointment was an epic blunder, since she would have no choice but to recuse herself out of the majority of SEC enforcement actions. And if not many, then certainly Zero Hedge. Recall from April: "Think the revolving door for Morgan Stanley's diaspora of clutch interests goes only from the private sector outward, with the recent appointment of MS' darling Mary Jo White (who will promptly recuse herself in virtually all major cases involved her former clients at Debevoise for years to come) to head the SEC? Think again. Sure enough moments ago, as part of the SEC's perhaps most important action in history, in which the agency managed to get a confirmation of securities law violation from none other than the largest US bank, JP Morgan, where was Mary Jo White? Why quietly drinking her coffee in some quiet corner of course, for one simple reason: she had to recuse herself as JPM was, you guessed it, a former client.
Only three of the five commissioners who run the Securities and Exchange Commission were able to take part in the agency’s vote on its landmark enforcement action against J.P. Morgan Chase & Co over the firm’s ‘London Whale” trading blunders, according to a person close to the agency.
SEC Republican commissioner Daniel Gallagher and Chairman Mary Jo White both recused themselves from the vote because of potential conflicts of interest arising from their previous employment, the person said.
Before joining the SEC, Mr. Gallagher was a partner at Wilmer Cutler Pickering Hale and Dorr LLP, a law firm representing J.P.Morgan in this case.
Ms. White – and the SEC co-chief of enforcement Andrew Ceresney – both recused themselves from the Whale case because J.P.Morgan is a client of their previous law-firm employer, Debevoise & Plimpton LLP, according to people familiar with the agency.
So how long until it will be not three, but two commissioners that have not recused themselves? Or one? Or zero? In other words, when in need of capturing a Federal Regulator, what better way than to put in charge the very person who represented all of Wall Street previously.
Case closed.