The SEC will see departures for its division of trading and markets, the chief accountant’s office, and the enforcement division’s litigation program.
In the wake of the news that SEC Chair Mary Jo White will be stepping down, other key officials of the regulator have announced their exits as the Obama administration draws to a close and President-Elect Donald J. Trump comes to power.
Departures have been announced for the SEC’s division of trading and markets, the chief accountant’s office, and the enforcement division’s litigation program
Among the high-level departures, Stephen Luparello, director of the division of trading and markets, will be leaving the agency by the first of the year, according to the SEC. Luparello has been serving as director of the office since February 2014.
SEC officials have credited Luparello as playing “a key role in enhancing the transparency and strengthening the integrity of our nation’s markets, including the operation of trading platforms, clearing agencies, and broker-dealers that investors rely on every day.”
Luparello and the SEC “set an ambitious agenda to enhance our market structure,” White says in a statement. “Steve was at the forefront of that effort, and his leadership and expertise have helped produce both important new protections for investors today and a strong foundation from which the commission can continue to further strengthen our markets for years to come.”
Reg SCI and Other Changes
Stephen Luparello, director, division of trading and markets, SEC
During Luparello’s term, the SEC adopted Regulation Systems Compliance and Integrity (Reg SCI) that set new controls “to strengthen crucial technological systems, providing greater transparency, accountability and resilience,” according to the SEC.
Luparello and the SEC also pushed for efforts to “enhance operational transparency and regulatory oversight of alternate trading systems (ATSs) that trade stocks listed on a national securities exchange, including dark pools,” according to the SEC. He also led the effort to propose rules that would require broker-dealers “to disclose the handling of institutional orders to customers.”
Under Luparello, the SEC greenlighted a plan to “create a comprehensive database that allows regulators to track trading activity in the U.S. equity and options markets,” according to the SEC. “The database, known as the consolidated audit trail (CAT), will greatly enhance regulators’ ability to monitor market behavior and reconstruct market events.”
Luparello also had a role in the creation of the SEC’s Equity Market Structure Advisory Committee (EMSAC), which has just been renewed until August 2017 with the current membership. The committee was slated to expire in February 2017.
As a liaison between the SEC and the Treasury Department, Luparello facilitated discussions about the U.S. Treasury market in the wake of treasury instrument flash crash of Oct. 15, 2014.
“Under his direction, the commission approved a Financial Industry Regulatory Authority (FINRA) rule proposal that would require its members to report U.S. Treasury securities transactions, that for the first time gives regulators enhanced oversight in the U.S. Treasury market,” SEC officials say.
Luparello was involved in creating “a new regulatory regime for security-based swaps, involving cross-border rules for security-based swap (SBS) entities, rules for SBS data repositories, new business conduct standards, and enhanced SBS transactions reporting and recordkeeping,” according to the SEC. “In addition, the commission approved division recommendations to approve heightened standards for critical central counterparties, and to propose a rule to shorten the clearance and settlement cycle.”
Before his time at the SEC, Luparello spent 16 years at FINRA and its predecessor, the National Association of Securities Dealers (NASD), officials say. At FINRA, he served as vice chairman, responsible for FINRA enforcement, exam, market regulation, international and disclosure programs.
Luparello’s Replacement
In Luparello’s place, Heather Seidel, chief counsel for the Division of Trading and Markets, will become the acting director, according to the SEC.
Seidel joined the SEC in 1996 “in what was then the Division of Market Regulation and later moved to the Division of Investment Management,” according to the SEC.
In 1999, she then left the SEC for the private sector, returning to the SEC in 2003 to the Division of Trading and Markets, serving as an attorney fellow, senior special counsel and assistant director in the Office of Market Supervision. By 2010, Seidel became an associate director in the Office of Market Supervision, and in 2015 she was named as chief counsel for the division, officials say.
Chief Accountant Retires
In another branch of the SEC, James Schnurr intends to retire from his position as chief account for the SEC, officials say. Schnurr has been serving in the post since October 2014.
“During his tenure, Mr. Schnurr was committed to establishing and enforcing accounting and auditing policy as well as to improving the professional performance of public company auditors,” according to a statement from the SEC. “Under his leadership, the Office of the Chief Accountant has worked to enhance the transparency and relevancy of financial reporting and has worked to ensure that financial statements are credible and presented fairly.”
In April 2016, Schnurr was in “a serious bicycle accident and is continuing his rehabilitation from his injuries,” according to the SEC. Before joining the SEC staff, Schnurr retired from Deloitte, where he was vice chairman and senior professional practice director and specialized in financial and SEC reporting for public companies.
This past August, the SEC reported that Wesley R. Bricker has been named the interim chief accountant, heading the commission’s office of the chief accountant, while Schnurr “recovers from a serious bicycle accident.”
Schnurr began his career at Deloitte in 1975 “and became a partner in 1985,” according to the SEC. “He was a senior partner for mergers and acquisition services from 1994 to 2002 and a deputy managing partner of the firm’s professional practice from 2002 to 2009 where he was responsible for quality control and risk management of the firm’s audit and advisory services.”
The SEC notes that Schnurr’s accomplishments were:
- The development of the concept release on audit committee disclosures to help evaluate whether investors have the information they need to make informed decisions;
- The oversight of Financial Accounting Standards Board (FASB) and his involvement in the “timely identification and monitoring of implementation issues related to the new revenue recognition standard developed jointly by FASB and the International Accounting Standards Board (IASB);”
- And worked with the Public Company Accounting Board (PCAOB), and “representatives of the preparer and audit profession in addressing concerns on the interpretation and application of the requirements related to the guide to internal control over financial reporting (ICFR).”
Schnurr led an effort to find alternatives for the use of International Financial Reporting Standards (IFRS) “by domestic issuers and a path forward for continued collaboration on convergence,” SEC officials say. He also helped the Division of Enforcement on financial reporting cases, including against BDO LLP and Grant Thornton LLP.
Chief Litigation Counsel to Leave
Matthew C. Solomon, the chief litigation counsel for the SEC’s Enforcement Division, will leave the agency in early December, SEC officials say.
Solomon has been leading the Enforcement Division’s litigation program since September 2013, overseeing cases pending both in federal courts and administrative proceedings at the SEC, officials say. The trial unit has 48 attorneys at the SEC’s Washington headquarters as well as more than 100 additional litigators throughout the agency’s 11 regional offices.
The SEC reports that during Solomon’s tenure the regulator:
- “Received favorable verdicts in 22 federal jury trials, including the SEC’s cases against two brothers accused of violating the laws governing ownership and trading of securities by corporate insiders, its insider trading cases against two brokerage employees and a pharmaceutical executive and a U.K. resident, and a first-ever case against a recidivist municipality and one of its city officials;”
- And the regulator had “strong successes in administrative proceedings before the SEC’s administrative law judges.”
Solomon joined the SEC in June 2012 as the Enforcement Division’s Deputy Chief Litigation Counsel, officials say. Prior to the SEC, Solomon served as an assistant U.S. Attorney in the U.S. Attorney’s Office for the District of Columbia and was later promoted to chief of that office’s fraud unit, “where he supervised 25 prosecutors handling hundreds of white-collar criminal matters, including securities fraud offenses,” officials say.
Solomon has also worked as a trial attorney in the public integrity section of the criminal division of the U.S. Department of Justice and he has served as a counsel to the U.S. Senate Judiciary Committee.
With Solomon’s departure, David Gottesman, the Enforcement Division’s Deputy Chief Litigation Counsel, and Bridget Fitzpatrick, a supervisory trial counsel in the Enforcement Division, will serve as acting co-chief litigation counsels, according to the SEC.
All the SEC vacancies created by the departures will be advertised via the USAJobs.gov website.
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