Wednesday, April 9, 2014

Thank You for Your Service: Retirement Message from an SEC Attorney

Thank You for Your Service: Retirement Message from an SEC Attorney

This morning I’m handing over my blog to James Kidney, a recently retired attorney from the Enforcement Division of the SEC.  At his retirement party, Mr. Kidney delivered some remarks about his career at the SEC as well as some observations about the timidity of his former employer.  You can find the entire speech at

Snowed In (2000)

Mr. Kidney’s critique isn’t new.   However, there’s a certain power to the charges when they come from a career civil servant.  Moreover, the speech isn’t the rant of a disgruntled employee.  At times, Mr. Kidney is humorous about and appreciative of his service at the SEC.  The core of Mr. Kidney’s message is as follows:

The revolving door is a very serious problem. I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket. They mouthed serious regard for the mission of the Commission, but their actions were tentative and fearful in many instances. You can get back to Wall Street by acting tough, by using the SEC publicity apparatus to promote yourself as tough, and maybe even on a few occasions being tough, if you pick your targets carefully. But don’t appear to fail. Don’t take risks where risk would count. That is not the intended message from the ticket punchers, of course, but it is the one I got on the occasions when I was involved in a high profile case or two. The revolving door doesn’t push the agency’s enforcement envelope very often or very far.

 The attitude trickles down the ranks. Combined with the negative views of the civil service promoted by politicians and the beatings we take from the public, it is no surprise that we lose our best and brightest as they see no place to go in the agency and eventually decide they are just going to get their own ticket to a law firm or corporate job punched. They see an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when Enforcement does go to the penthouse, good manners are paramount. Tough enforcement – risky enforcement – is subject to extensive negotiation and weakening.

Unfortunately, this story is repeated over and over again in government whether it’s bank regulators, prosecutors, or safety inspectors.  The problem of weak enforcement isn’t just caused by the revolving door.  We’re part of the problem.  We allow the revolving door to spin, and more importantly, we show little respect for career civil servants whether they work for the SEC in Washington or the Department of the Environment and Natural Resources in North Carolina.

How often have you heard someone, particularly a politician, thank someone in the military for their service?  The phrase has been repeated so often that it has become meaningless.  Clearly, we owe our soldiers a lot more than this phrase.

How often have you heard someone thank a scientist at the Federal Drug Administration, an inspector at the Department of Agriculture, or an investigator at the National Transportation Safety Board for their service?  If we lauded their public service, it would actually be meaningful because we’ve shown so little respect for their work.

So I want to thank Mr. Kidney for his service.  It’s not easy battling a phalanx of investment bankers, their lawyers, and their lobbyists, while politicians and much of the public belittled his work.   If you think enforcement has been meek, imagine if Mr. Kidney and his colleagues had given up.  Instead of owning the senior ranks of the SEC, Wall Street would own all of it. 

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