My Own Spin Through the Revolving Door
Mary Jo White has been nominated to head the Securities and Exchange Commission. Ms. White, a former prosecutor, is a partner at Debevoise & Plimpton. In her private practice she represented many of the institutions that she will now regulate. Understandably, the press has raised lots of questions about her ability to switch sides. They’ve also examined the impact of her appointment on the SEC because she will have to recuse herself from a variety of matters that come before the agency. These are legitimate issues and are ably explored by Andrew Ross Sorkin in the New York Times (“Nominee for ‘Sheriff’ Has Worn Banks’ Hat”). However, I have some sympathy for Ms. White, recognizing completely that she will be navigating a series of real and apparent conflicts of interest. I have some experience with this issue on the much smaller stage that is North Carolina.
As I’ve repeatedly noted in my posts, I was Chief Investment Officer for the State of North Carolina from 2001 to 2004. However, I had a second stint in 2005 advising the State Treasurer that garnered attention from the press and editorialists. The coverage wasn’t flattering. The facts looked bad, and the press jumped on them.
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After I left my state post in 2004, I started a consulting practice advising money managers on organizational and investment issues. I set two limitations on the business: first, I would not market or solicit business for any client; and, second, I would disclose to the State Treasurer any prospective client that also worked for the State, and he could veto the prospective relationship. Among my small group of clients, two turned out to be managers for the pension plan. As a result, I quickly went through the revolving door. I sat on investment committees, advised on succession plans, and had nothing to do with the manager’s relationship with North Carolina
None of this would have mattered, but in early 2005 the Treasurer asked me to temporarily come back to help oversee the pension plan. I terminated all my consulting relationships and went back through the revolving door. Somewhere along the way, the local newspaper got wind of this story, and by the summer I was reading a critical portrayal of my behavior. I tried to explain to reporters that my brief sojourn into consulting had no impact on my ability to advise the State Treasurer. However, I can’t blame the press or the public for their reaction.
However, there was one fact missing from this story, and that was the reason for my return to the pension plan. My successor had fallen seriously ill immediately after taking the job in late 2004. The State Treasurer needed someone to help oversee the plan, and work with the new CIO as she received medical treatment. As a new employee, she didn’t have much sick leave or vacation, so we needed to make sure she could remain involved and work as much as possible over the many months that she received treatment.
I don’t have any doubt about my conduct over the course of my temporary assignment. I was a zealous advocate for the pension plan and its beneficiaries, notwithstanding the appearances, which brings me back to Ms. White. Almost anyone who dedicates a part of their career to public service is going to accumulate a series of real and potential conflicts. In Ms. White’s case, the list is pretty long. However, Ms. White’s public and private sector experiences are unusually valuable to us if she applies them to the public good. We have to hope her heart is in the right place.