New Securities And Exchange Commissions Miami Office Head May Boost Efforts To Stifle White Collar Crime

By Zachary S. Fagenson
Whoever US Securities and Exchange Commission Chairman Mary Schapiro names to head the commission’s Miami office may bolster the staff to follow up on the high number of complex leads the office receives.

Longtime Director David Nelson left the commission in early May to join law firm Boies, Flexner & Schiller in Fort Lauderdale.

And according to Ken Thomas, a Miami-based banking consultant and economist, the Miami office, located in what he called the "white-collar crime capital of the country," needs more staff for enforcement and to check tips from whistleblowers.

"Look at all the bank regulators," he said. "They’re all in Atlanta.

"The Securities and Exchange Commission is the only exception with its offices in Miami," Mr. Thomas added.

He claimed that while just investigating possible fraud can seem an insurmountable task, the commission’s office here didn’t even follow up on tips from whistleblowers.

"I have personal knowledge of a case where a whistleblower personally delivered information on a case to Nelson’s office and no one responded," Mr. Thomas said.

While he declined to cite the whistleblower or which company may have been called into question, Mr. Thomas said it’s an example of the commission’s shortcomings.

"What good is having the SEC if there’s no enforcement?" he asked.

Bowman Brown, head of law firm Shutts & Bowen’s financial services practice, said he’s hoping to see a new director more aggressively pursue those leads.

The office "hopefully will be able to build its staff significantly to enable it to deal with the landscape in South Florida," he said, "which includes a very significant amount of white-collar fraud and SEC law violations."

And while Mr. Thomas acknowledged that it’s unlikely any regulatory agency could catch every crook, he said he expected the commission’s local office to ramp up its enforcement and make examples of some lawbreaking financiers.

"You’re only going to [catch] maybe one out of 10, only a portion of the scandals," he said. "What you hope to do is get the top person, enforce [the laws] well, make an example [of the case] and deter" the behavior in the future.

According to an e-mail from commission spokesperson Kevin Callahan, the Miami office is responsible for securities enforcement in Florida, Mississippi, Louisiana, the US Virgin Islands and Puerto Rico, as well as compliance and examination of companies and individuals who buy and sell securities.

But the key to accomplishing its tasks and preventing schemes like those of Bernard Madoff and R. Allen Stanford from recurring is human capital.

"I think that there is so much activity in the South Florida market in the white collar crime area that it’s a very daunting task to follow up on leads effectively and to make cases and prosecute cases," said Mr. Brown of Shutts & Bowen. "Certainly if the SEC is going to take a more effective enforcement stance, they’re going to need significantly more staff.

"These schemes are tangled, the evidence isn’t clear and it takes a great deal of digging to figure out where bodies are buried," he added.

And while Ms. Schapiro of the commission has yet to name Mr. Nelson’s successor, Mr. Brown predicted the office, in the interim, will continue with business as usual.

"I don’t see any backsliding as a result of the change of director," he said. "The local offices are directed from Washington to a large extent and they’ll take their marching orders from Washington." Advertisement