Like predecessors, White not perfect

In choosing Mary Jo White as his nominee to head the Securities and Exchange Commission, President Barack Obama has picked someone with a rare background for the position. There is no perfect career path for the role of chairman of the SEC. The chairmen appointed by the four most recent presidents had varied backgrounds, and all could be criticized for lacking one element or another that you'd like to see on a top regulator's résumé. Richard C. Breeden, appointed in 1989 by President George H.W. Bush, was a corporate lawyer. Arthur Levitt, appointed by President Bill Clinton in 1993, began his career selling tax shelters, was a partner in a brokerage firm and later became chairman of the American Stock Exchange. Harvey L. Pitt, appointed in 2001 by President George W. Bush, was a lawyer by training and worked his way up through the ranks of the Securities and Exchange Commission, eventually becoming general counsel. William H. Donaldson, ap-pointed by Mr. Bush in 2003, was a chartered financial analyst and a founder of the investment management firm Donaldson Lufkin and Jenrette. (On Mr. Donaldson's appointment, some critics thought he was too close to Wall Street, while others thought he would be alert to any Wall Street practices likely to harm investors.) He was replaced as chairman by Christopher Cox, who possibly had the broadest background of the group. Mr. Cox, a lawyer by training, was a partner in a law firm, a member of the White House staff in the Reagan administration, taught at Harvard Law School, started a publishing company and served 17 years in Congress. Ms. White's immediate predecessor, Mary Schapiro, a lawyer by training, had stints as a member of the SEC, chairman of the Commodity Futures Trading Commission, and chairman and chief executive of NASD and later the Financial Industry Regulatory Authority Inc. While Ms. Schapiro's experience leaned heavily in the direction of regulation, Ms. White's experience leans heavily toward enforcement. Her work as a prosecutor and later as a defense lawyer no doubt has given her insights into the strengths and weaknesses of the securities law and regulations that will inform her decisions going forward. It also brought her into contact with able lawyers on both sides with whom to fill vacancies at the SEC — both in enforcement and in drafting regulations.

IS HER RÉSUMÉ LACKING?

Some have argued that the SEC is primarily a regulatory agency and that Ms. White's prosecutorial background leaves her short on regulatory experience. But the SEC has equal responsibility for enforcing federal securities laws as for regulating the securities industry. In fact, the SEC has been criticized as having been slow to prosecute top Wall Street executives in the wake of the fiscal crisis of 2008, though it brought a near-record number of enforcement actions in fiscal 2012. Perhaps Ms. White's background will lead to more emphasis on enforcement without shortchanging regulation. As the Financial Planning Coalition commented after the nomination, Ms. White's experience in prosecuting white-collar criminals augurs well for investor protection from Wall Street fraud. It's likely she learned as much about white-collar crime from her defense work in the past decade as she did during the time she was a prosecutor — knowledge that will help in her new responsibilities. Further, Ms. White clearly is not beholden to any lobbying group, meaning she will bring fresh insight to issues such as the fiduciary responsibility of the broker-dealer adviser. If there is one skill set lacking in Ms. White's résumé, it is in dealing with Washington's politicians, Congress and the SEC's budget. She will have to develop the needed political skills quickly. Ms. White prosecuted criminals with great energy. She defended accused wrongdoers with equal energy. No doubt she will invest the same energy and determination in her new role as chairman of the SEC for the benefit of investors and the securities industry.