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Over the past few years, the revolving door at federal agencies has gotten a fair amount of Congressional and media attention – as noted in this blog – even though the tradition been around as long as there has been a government. It’s only natural since one is quite likely to stay within your own profession when you leave the government. One doesn’t leave the SEC to become a doctor.

As noted in this recent NY Times article, a group of accounting professors has issued a study showing that the revolving door actually toughens enforcement results at the SEC. The study also found no evidence that law firms that hire large numbers of SEC alumni are able to extract more lenient enforcement outcomes from the agency.

My Ten Cents: SEC’s Revolving Door Is Not a Biggie

Personally, I’m not surprised in the least by the study’s findings. Generally speaking, SEC alumni treat the agency with more respect than those that have not graced its hallways – and I imagine that translates into not trying to push the envelope beyond the grey areas of the law. And I can’t imagine that the colleagues that they leave behind would cut corners for them. People that work at the SEC believe in the mission of investor protection. David Smyth agrees with my conclusion, noting that “financial industry defendants would respect (and be inclined to hire) staff who were smart and tough in their work, instead of unethical patsies who were willing to look the other way in exchange for a favor.”

I’ll add two observations. One is I’ve never had a conversation with anyone while working at the SEC or afterwards that somehow indicated that their future career played any kind of role in how they approached a situation while they worked at the SEC. And I’m a social guy and talked with hundreds of Staffers both during my two tours of duty at the SEC and afterwards.

The second is the SEC really benefits when someone that has been there before returns to the Staff. Unless you’ve worked at the SEC, you can’t imagine how different it is than private practice (and vice versa). They truly are two different animals. So someone returning to the Staff will be able to contribute right away – and in a big way because they have the background of the dual experiences. The SEC Commissioner that I worked for – Laura Unger – was unique because she had served in the SEC’s Division of Enforcement before she went to work on Capitol Hill. That gave her a huge leg up when she analyzed cases that came before her when she was in a position of deciding how to proceed on dozens of cases every month.

The bottom line is that it’s all about integrity. Either you have it or you don’t. And the fact that you’re willing to take a huge pay cut and go back into the government more than likely reveals that you have a lot of it. Not the opposite…

Our New “Beneficial Ownership Table Handbook”

Spanking brand new. Posted in our “Beneficial Ownership Table” Practice Area, this comprehensive “Beneficial Ownership Table Handbook” provides a heap of practical guidance about how to navigate under Item 403 of Regulation S-K. This one is a real gem – 35 pages of practical guidance…

– Broc Romanek