SEC Chair's Conflict of Interest Waiver Draws Scrutiny

A newly disclosed conflict-of-interest waiver the Office of Government Ethics gave the head of the Securities and Exchange Commission has prompted criticism from a transparency watchdog concerned about the “revolving door” between Wall Street and regulatory agencies.

SEC Chair Mary Jo White last February received two waivers allowing her to end her recusal and vote on regulatory matters affecting two of her former private legal services clients: Credit Suisse and the international corporate law firm of Simpson Thacher & Bartlett LLP. Both have regular issues before the commission.

Only the Credit Suisse waiver, however, was made public at the time, Project on Government Oversight investigator Michael Smallberg noted Wednesday. He argued this was a disservice given fears of coziness between Wall Street firms and federal overseers assigned to probe insider trading and other irregularities.

 “SEC officials’ ties to former clients on Wall Street have at times been so tangled and extensive that they threatened to hamstring the agency on important matters,” he wrote.

The ethics office last week posted the missing second waiver and acknowledged the omission to POGO.

White, who was sworn in to head the SEC in April 2013, had to comply with the president’s January 2009 executive order on “Ethics Commitments by Executive Branch Personnel” and recuse herself from decisions affecting prior clients, as do all Obama administration appointees.

But because White’s work for Simpson Thacher & Bartlett was “minute”—less than an hour over two years–the ethics office judged that it is “in the public interest for this waiver to be granted,” citing in a letter to White a situation in which “your leadership, experience and expertise have not been brought to bear on significant matters before the commission.”

POGO argues that transparency requires "timely online posting of waivers, recusals, and other ethics records for officials who go through the revolving door. There is also a need for more detailed disclosures so that the public can evaluate, for instance, whether it was appropriate for White to receive a blanket waiver for all matters involving Simpson Thacher.”