David Peavler has been the director of the U.S. Securities and Exchange Commission’s Fort Worth Regional Office for three months and one day.
“No surprises so far,” Peavler said in an exclusive interview with The Texas Lawbook. “Not much has changed since I left two years ago. But there will be some differences, some changes in focus.”
As the top federal cop overseeing corporations, financial institutions and investment firms and dealers, Peavler is making his first public appearance next Tuesday, Oct. 15, in an exclusive Texas Lawbook CLE event in downtown Dallas. (More details on the CLE program below.)
“David and the SEC office in Fort Worth have some very real challenges ahead,” said former SEC regional director David Woodcock, a partner at Jones Day in Dallas. “This SEC (office) covers a very large region that includes Texas, which is growing rapidly, especially in the business world. The problem is that the SEC’s resources here have not grown to meet the demand. In fact, resources here have shrunk.”
Woodcock and two other SEC experts – Vinson & Elkins securities litigation partner John Wander and Ankura senior managing director Jason Flemmons – will share the stage Tuesday night, questioning Peavler about trends, developments and challenges facing the federal agency.
“Though the budget purse-strings have loosened a bit lately and the office is starting to hire enforcement staff again, they’ve been hit hard by unreplaced attrition the last three or four years,” said Wander, who represents corporations and business leaders in cases involving the SEC. “So, I think resource constraints continue to be the biggest challenge in FWRO, which forces the staff to pick and choose their priorities.”
Peavler, who served as associate director of enforcement of the SEC’s Fort Worth Regional Office prior to becoming the general counsel of HD Vest Financial two years ago, said he’s hired two lawyers for the enforcement division during the past three months and he plans to add a third soon.
The Fort Worth Regional Office has about 100 lawyers, accountants and other professionals charged with policing hundreds of publicly-traded companies –including three of the 10 largest corporations in the U.S. – and more than 1,000 financial brokers, dealers, investors and advisors in Texas, Oklahoma, Arkansas and Kansas with more than $2 trillion in assets under management.
But the office is down about a dozen lawyers in its enforcement division, which investigates and prosecutes securities violations, oil and gas fraud schemes and other illegal financial activity.
“I want to re-emphasize the corporate accounting and disclosure aspects of our docket,” Peavler said. “Just the sheer number of public companies we have in our region is astounding. Some of what we will be able to do is certainly resource driven, but I want to refocus toward surveillance of publicly traded companies.
“We need to take advantage of the tremendous amount of data we have to look for things that raise questions and serve follow up,” he said.
Wander and Woodcock agree that Peavler is the right person for the position at this time.
“David is the first real insider to be hired into that position in a long time,” Wander said. “He brings a long enforcement resume and both the Fort Worth staff and outside lawyers have a sense of his style and priorities.
“Given the resource-constrained environment in which the office is operating, David brings a necessary sense of stability to the position, with no real learning curve for anyone involved,” Wander said. “He has the necessary patience and demeanor to fight through the resource issues and pursue his and the Commission’s agenda.”
Woodcock agrees.
“David knows the inner-workings of the commission as well as anyone,” he said. “And his outside experience at a financial services firm gives him tremendous credibility among those in the investment community, including broker/dealers.”
Woodcock also believes that SEC enforcement lawyers in Fort Worth are operating differently since the U.S. Supreme Court issued its opinion last year in Kokesh v. SEC, which put time limits on the federal agency’s ability to recover disgorgement from ill-gotten gains.
“As a result, I think the SEC staff is much more aggressive early on in investigations,” he said. They are pushing cases faster. They are seeking documents sooner. They want to interview witnesses faster.”
Wander predicts other changes, too.
“I do think we are going to see an increasingly active enforcement agenda, as the office staffs-up,” Wander said. “The people they have been interviewing and hiring are experienced securities fraud lawyers. My sense in the last year or so suggests we are heading to a period with more attention on financial statement and accounting fraud than we have seen in the last several years, which have leaned more to direct fraud on investors.”
Details of the SEC CLE
Lawyers and business leaders can learn more about Peavler and trends at the SEC at an exclusive CLE event this coming Tuesday, Oct. 15, hosted by The Texas Lawbook. Here are the details:
This exclusive event starts Tuesday at 5 p.m. and will be followed by a one-hour reception. The CLE has been approved for one-hour of ethics credit.
The CLE will be held at the offices of Vinson & Elkins in downtown Dallas (2001 Trammel Crow Building).
Association of Corporate Counsel DFW Chapter members and other corporate in-house counsel may attend for free. It is $60 for general admission and $30 for Texas Lawbook premium subscribers.
To RSVP, please email sally.selio@texaslawbook.net.