The incident also underscores the increasingly strong approach that progressives are taking to influence hiring in the Biden administration, even if it means challenging their friends. Setting the direction of the SEC is a big deal for progressive lawmakers and activists, as the independent agency has broad powers to regulate corporate America and limit the influence of big business.
“The SEC’s enforcement department has been failing to aggressively enforce our securities law for a generation,” Warren, a Massachusetts Democrat, said in a statement. “Gary Gensler now has a chance to re-execute and make it clear with his choice that he intends to break away from the troubled history of the division and I very much hope he will take it. “
With strained confidence, Gensler will face fierce scrutiny and more likely criticism from the left as he tries to implement what would already be a highly controversial agenda, including forcing companies to expose the risks that are face climate change and write rules for cryptocurrency.
“Gary Gensler has been perceived by many as the best place to work on Wall Street, but he also has proven experience in bringing big corporations to justice,”
Progressives are eager to see the SEC step up to challenge business because they aren’t sure Democrats in Congress will be able to do so.
“There is a common belief that the SEC is a way for the executive – without the approval of Joe Manchin – to make progress in curbing corporate behavior,” said Revolving Door Project CEO Jeff Hauser, who is leading the effort to pressure Gensler. to replace Oh. “One tone on the progressive agenda can be summarized to make corporate America follow the rules.”
During the Obama years, Warren prosecuted then-SEC President Mary Joe White, another veteran defense attorney and also the former O chief of her time as prosecutor, for failing to protect investors to the point that called for whites to be fired.
“The public relies on the SEC to act as a cop in the rhythm of a fair market – issuing rules that ensure that investors can make informed decisions and hold rule-breakers accountable for their actions,” Warren wrote to White in 2015. “When The SEC is down to work, the impact is being felt throughout the economy as it affects every American family. “
For now, Democrats in Congress are holding fire, at least in public, even as the decision to hire Gensler has shaken progressives on Capitol Hill. Instead, external groups attached to Warren are taking an aggressive approach to put pressure on the new SEC chief, whom they have previously praised.
On Tuesday, the day before O’s unexpected resignation, the Demand Progress Advocacy Groups, the Progressive Change Committee and the Revolving Door Project wrote to Gensler that they were “surprised and disappointed” by his decision to recruit her and that she should be withdrawn. from the message.
The groups focused on her two decades at law firm Paul, Weiss, Rifkind, Wharton & Garrison, where she represented Fortune 100 companies facing government investigations. Her tenure at the firm followed for three and a half years as a federal prosecutor in New York, where she worked under White, then an American lawyer.
The following afternoon, the SEC announced its resignation, citing “development” in one of its cases. The case turned out to be a class action lawsuit filed by Indonesian villagers against ExxonMobil, an O client, in order to hold the oil giant responsible for killings and torture by the Indonesian military during civil unrest between 1999 and 2001. The company hired security guards to natural gas.
The apparent “development” was a move by U.S. District Judge Royce Lambert on Monday to urge Oh and others defending ExxonMobil after complaining about their behavior.
The judge acted after the villagers’ lawyers told the court that ExxonMobil’s security team had described them as “excited, disrespectful and meaningless”.
In February, lawyers prosecuting ExxonMobil also accused a company witness of “simply parroting unresponsive defense scripts” during filing and of being “a lawyer’s mouth.”
“Obviously, this was a calculated strategy prepared before the deposit and then aggressively implemented,” said lawyers who tried ExxonMobil in their lawsuit, adding that the defense responded to the repulsion with repeated threats to seek sanctions and fees against the plaintiffs. .
The defense team countered that the witness of ExxonMobil answered “over 300 essential questions, but used the prepared notes to answer only forty-five questions”, the court records show.
Paul, chairman of Weiss, Brad Karp defended Oh in a statement: “Alex is a man of exceptional integrity and a consistent professional, with a strong code of ethics.” Karp said that otherwise the company “can not comment on this issue because it includes a decision in ongoing litigation “.
The revelation raised concerns among Gensler’s allies about how O was screened and when the SEC learned of any complaints about her behavior. A Gensler spokesman declined to comment on the story, including about Oh’s verification process.
Better Markets President and CEO Dennis Keleher, who serves with Gensler on Biden’s transition review team, said the alleged behavior “looks particularly outrageous” but is difficult to know for sure, as certain information about the case not available to the public.
It is unclear whether O would have resigned if he were no longer the target of advocacy groups calling for Gensler directly. In recent years, groups have become more vocal when Warren chanted the mantra that “staff is politics,” a campaign that often requires engaging fellow Democrats.
“Progressive advocacy is fast, strong, and now successful,” said Isaac Boltanski, director of policy research at Compass Point Research & Trading, who was a member of the banking rescue supervisory board that Warren chaired after the 2008 financial crisis.
Hauser, who is leading efforts to combat O’s appointment, believes he has had an impact. He founded the Revolving Doors project in 2015 and recently emerged as one of the most prominent public voices on the left, trying to influence Biden’s election as politically appointed.
Hauser told O: “I don’t think she’s the first lawyer to overdo it on behalf of a corporate client and then get a big government job. I think the Revolving Doors project and our allies are what is different now than in the past when it would be just a nuisance to deal with. “
Not all of Gensler’s allies are quick to criticize him.
Barbara Roper, director of the American Consumer Protection Federation, said she plans to sue him based on his full team.
Roper praised Gensler’s decision to hire former AFL-CIO employee Heather Slavkin Korzo as its political director, setting an unprecedented number of advocates for such a high-profile role. Roper said Gensler was also under “enormous pressure” to appoint a diverse senior team, a goal she said was worth pursuing. Oh was the first colored woman to serve as the agency’s executive director.
“I’ve known Gary for 20 years,” Roper said. “I know he is doing a serious job as chairman of the SEC. He will get through this. I am sure he will learn from these events and move on.”