The U.S. Securities and Exchange Commission is looking for a new sheriff to aggressively police corporations, cryptocurrency operations, hedge funds and thousands of investment brokers and dealers in Texas, Arkansas, Oklahoma and Kansas.
Only a handful of people even qualify for the position, legal experts say.
Law degree required. Experience prosecuting securities and accounting fraud is a must, preferably with the SEC or U.S. attorney’s office. Preference for those with a history of significant public service. Must manage a staff of 112 professionals, including more than 40 securities lawyers, and be willing to go to battle against some of the largest and most powerful corporate executives in the world. Annual pay: $280,000 a year.
Last week, SEC Regional Director David Peavler resigned his position as head of the Fort Worth office, which oversees securities enforcement of scores of huge publicly traded companies including Exxon Mobil, Chevron, Haliburton, AT&T, Dell, Toyota North American, Southwest Airlines and Walmart.
A 19-year veteran of the SEC, Peavler is joining the global law firm Jones Day, which has large offices in Dallas and Houston.
“This region, especially Texas, has grown dramatically over the last five years in terms of population, large public companies and regulated entities, but Fort Worth regional office’s headcount is smaller than it was in 2016,” Peavler said. “And with the SEC impending rulemaking and the growth of new and complicated types of investments, especially digital asset investments, the office will have to make harder and harder decisions about how to use its limited resources most effectively.”
Peavler and others say the SEC and white-collar prosecutors with the U.S. Department of Justice are focused on fraud related to corporate accounting and disclosures, conflicts of interest involving investment professionals, inept gatekeepers, fraudulent digital asset investments and market integrity issues like insider and manipulative trading.
“The challenge, though, will be to look around the corner for risks that are coming, which may depend on a number of unpredictable variables such as the economy, the markets and financial innovation,” he said.
The SEC is expected to post the job opening this week and start accepting applications for the regional director’s position over the next two months.
“This is one of the most important jobs that most people don’t even know exists,” said Winstead law partner Toby Galloway, a former SEC senior trial lawyer. “The SEC should look for someone with deep experience within the agency, considerable expertise with the federal securities laws and the demeanor to lead a diverse and talented workforce.”
Former SEC lawyers practicing in Texas say the next regional director faces some monumental challenges, as the SEC commissioners in Washington, D.C., push new regulations involving cryptocurrency, cybersecurity and climate change.
Scott Mascianica, a former SEC assistant director of enforcement and now a partner at Holland & Knight, said the next regional director has “significant shoes to fill” following Peavler.
“The Fort Worth regional office will benefit from someone who can bring a combination of strong leadership skills and high technical acumen to lead both enforcement and exam [divisions] through a period following a steady stream of proposed rules and significant legal challenges that could have significant impacts on the agency,” Mascianica said.
No lawyer has officially raised her or his hand as being interested in the position, but legal experts agree that there are a few frontrunners for the position if they choose to apply. Current SEC Associate Regional Director Eric Werner and former associate director Jessica Magee are viewed by insiders as most qualified. Magee is now a partner at Holland & Knight.
Vinson & Elkins partner Rebecca Fike, a former senior SEC enforcement lawyer, said the next regional director needs to be someone who is “enthusiastic” and “ready to hit the ground running.”
“The next director needs to be someone who will continue to raise the FWRO’s status within the commission and the legal and business community in Texas and beyond,” she said.
Peavler and his two predecessors have lobbied their bosses in Washington to open an SEC branch office in Houston, which is the largest city in the U.S. without an SEC presence.
“Clearly, the fourth largest city in the U.S. – a city that is home to many of the largest corporations in the world – should not be without any SEC coverage,” Peavler said. “The SEC should have a presence in Houston, but with the budgetary concerns, I think it would take a literal act of Congress for it to happen.”
Shamoil Shipchandler, the SEC regional director who preceded Peavler, said the argument for the SEC to open a Houston office is strong.
“SEC enforcement and exam folks should learn the industries within their jurisdiction and have a collaborative relationship with the leaders to be effective regulators, and when you have a physical presence in a place like Houston, you have those things,” said Shipchandler, who is now chief counsel at financial services giant Charles Schwab.
“When you are jetting in and out of Houston for meetings, you don’t have those things,” he said.