Prosecutor takes on corporate crooks

WASHINGTON: In the office of Wall Street's top cop hang a courtroom sketch and a framed newspaper article from his biggest case, when he sent the villain away for life.

Now Robert Khuzami, who convicted the "Blind Sheik" and his ring of bomb plotters in that trial, is targeting a different kind of villain, corporate executives, traders and fund managers who dare to break securities laws.

About six months into his job as the US Securities and Exchange Commission's enforcement director, Khuzami, who was handpicked by SEC Chairman Mary Schapiro, has shaken the agency to its core with reforms designed to ensure it does not miss the next Bernard Madoff.

On Oct 16, the SEC brought civil charges against billionaire Raj Rajaratnam and others for what investigators call the largest hedge fund insider-trading scheme ever.

To some, the former federal prosecutor has revolutionized SEC enforcement by scrapping middle managers, giving lawyers more subpoena power, and creating squads to focus on areas such as complex financial products and municipal securities.

"Aggressive is an understatement," said Cam Funkhouser, senior vice president of market regulation at the Financial Industry Regulatory Authority, who has known Khuzami for a decade.

Yet to others, Khuzami's reforms have created uncertainty within a division lashed by Congress and the SEC's own inspector general for missing Madoff's $65 billion fraud.

Also watching closely are the corporate titans and brokers who were more loosely overseen by a more business-friendly SEC during the latter years of the Bush administration.

Khuzami says he is listening to everybody.

"I don't enjoy the criticism, but it is important that we continue to listen and not get closed off," the 53-year-old Khuzami said.

Khuzami's most famous success as a prosecutor was the 1995 conviction of "Blind Sheik" Omar Abdel-Rahman.

Ten were convicted for conspiring to blow up the United Nations building and other New York City landmarks, following the 1993 bombing of the World Trade Center.

Reuters

(China Daily 10/26/2009 page11)