Shamoil Shipchandler, the director of the U.S. Securities and Exchange Commission’s Fort Worth regional office, has resigned his position as the federal government’s top corporate cop effective today.
In an email he sent to friends and colleagues Friday afternoon, Shipchandler said “it has been an incredible honor to serve” as head of the SEC’s office that regulates thousands of publicly traded businesses and dealers and brokers.
“While I will miss my colleagues, public service and the agency’s mission dearly, I am looking forward to taking some time off before returning to private practice,” he stated.
The Texas Lawbook reported early Friday that Shipchandler, who became SEC regional director in August 2015, informed senior officials and staff of his decision to leave the federal agency over the past several weeks.
Shipchandler has been a national leader in efforts to regulate cybersecurity and cryptocurrency and he brought dozens of charges against oil and gas executives for illegally using investor money supposedly raised for exploration and production purchases for other reasons, such as booze, blow, strippers and luxury items.
In 2016, Shipchandler and his deputies aggressively pursued federal securities fraud charges in 2016 against Texas Attorney General Ken Paxton – charges that were later dismissed by a federal district judge.
“Shamoil was an energetic leader who wasn’t afraid to try the unconventional, and he made the enforcement program more efficient during his tenure,” says David Woodcock, a partner at Jones Day in Dallas and Shipchandler’s predecessor in the SEC’s Fort Worth office. “His curiosity and intelligence allowed him to leave his mark in the areas that are hot for the SEC right now: blockchain, cybersecurity, and cryptocurrency.
“He was well-liked in the office, and they will no doubt miss him,” Woodcock says.
Shipchandler also made national headlines when he used the SEC’s Twitter feed to raise awareness of several important issues through humor – sometimes truly goofy humor. He once wrote that the SEC’s Fort Worth office planned to add the words “block chain” to its title in order to add value.
“Shamoil did an amazing job of raising the public profile of the SEC regional office and its priorities,” says Haynes and Boone partner Kit Addleman, a former SEC director.
The Texas Lawbook, which covers the SEC and the cases it brings against businesses and business executives, published nearly 40 articles quoting Shipchandler or citing complaints he had filed in federal court. His photo has been published more on the cover of The Lawbook than any other person in the seven-year history of the online newspaper.
Lawyers close to Shipchandler say he has not accepted a new position and that the SEC leadership in Washington, D.C. has not started looking for a replacement.
A former federal prosecutor in East Texas who focused on white-collar criminal cases, Shipchandler took the top SEC post three-and-a-half years ago amid expectation that he would implement a more aggressive approach in cracking down on fraudulent business leaders.
Legal experts say Shipchandler unquestionably scored some major successes. For example:
• He successfully charged self-proclaimed “frack master” Christopher Faulkner with several counts of offering fraud for diverting $23 million in investment funds in Breitling Energy Corp. for his personal vanity purchases.
• He charged United Development Funding (UDF) and five of its senior executives with making misleading comments to investors and they paid $8.2 million in penalties as a result.
• He brought fraud charges against Paul Gilman, who was known in musical circles as “The Whale Whisperer,” for misleading investors and misusing their funds.
Shipchandler also brought fraud charges against AriseBank’s top executives. AriseBank CEO Jared Rice Sr. and COO Stanley Ford paid $2.7 million in penalties for operating a cryptocurrency scheme that used former heavyweight boxing champion Evander Holyfield as a spokesperson.
Former SEC enforcement lawyers say Shipchandler entered the position as regional director in 2015 with hopes of cracking down on fraud among hedge funds and the financial industry, which is large in North Texas especially. But they say that federal authorities in Washington, D.C. kept cutting his resources and reducing his staff throughout his three-and-a-half years on the job.
During the past two years, the SEC’s Fort Worth office, which handles federal securities enforcement for Texas, Arkansas, Oklahoma and Kansas, lost more than a dozen of its best enforcement attorneys to the private business sector and that Shipchandler was never given the authority or funding to replace those individuals.
“Shamoil lost a ton of good people, which was not his fault at all, but he wasn’t allowed to fill those slots and I think that impacted how aggressive he could be and what he could do,” says Winstead shareholder Toby Galloway, who previously served as lead trial lawyer for the SEC’s Fort Worth Office. “As a defense attorney, I can say that Shamoil was very fair to my clients. I never felt my clients got a short shrift with him.”
One of the key lawyers Shipchandler lost to the private sector was Jessica Magee, an eight-year veteran of the SEC who departed last year to be the general counsel at The Beneficient Group in Dallas.
“The FWRO benefitted greatly from Shamoil’s transparent and inclusive leadership style, his creative approach to the important work the SEC does and his commitment to collaboration across the SEC and with other agencies,” says Magee, who served as Shipchandler’s chief deputy. “As he led the office through turbulent times, Shamoil was a champion of the FWRO who always ensured the staff knew he had their backs and that they are the best at what they do.”
SEC Associate Regional Director Marshall Gandy and Associate Regional Director Eric Warner will lead the Fort Worth Regional Office until SEC officials in Washington select Shipchandler’s replacement.
Shipchandler joined the SEC after being a partner in the Dallas office of Bracewell. He spent a decade as an assistant U.S. Attorney in the Eastern District of Texas prosecuting individuals and companies on charges of bank and securities fraud. He joined Bracewell in April 2014.