Watchdog: Former SEC employees helping shield corporations from regulations

Between 2001 and 2010, some 419 former SEC employees filed almost 2,000 disclosure statements indicating their intent to contact the commission on behalf of a new employer or client, the group found.

“The revolving door between the SEC and the firms it oversees is so pervasive that it threatens the integrity of our regulatory system,” said Michael Smallberg, the report’s author. “The relentless flow of SEC officials to and from industry can enable powerhouse firms to shape the SEC’s culture and sway policies.”

SEC spokesman John Nester countered that the commission follows federal laws and regulations that deter conflicts of interest and ensure impartiality on policy and enforcement decisions.

“We decide issues on their merits according to the rules and regulations governing the securities industry regardless of whether the requestors have an SEC background or not, and I’m not aware of any factual information to the contrary," Nester said.

He added that the Government Accountability Office recently studied the issue and concluded that the SECs controls were consistent with those of other agencies.

The 89-page POGO report is available here.

In it, the nonprofit watchdog chronicles a case last year in which several former SEC staffers were part of a lobbying effort that blocked the tightening of regulations on money market funds.

The group also documents an instance in which the deputy director of an SEC branch that reviewed shareholder proposals later helped JPMorgan, Alaska Air UnitedHealth Group and Yahoo! block such proposals.

In another case, the enforcement branch chief at the SEC’s San Francisco office left for a position as in-house counsel for Wells Fargo & Company. Less than two weeks later, she filed disclosures signaling that she would represent the company in connection with pending enforcement matters conducted by her former office.

The report sparked concern from Sen. Chuck GrassleyCharles (Chuck) Ernest GrassleyOn The Money: Inside the Mueller report | Cain undeterred in push for Fed seat | Analysis finds modest boost to economy from new NAFTA | White House says deal will give auto sector B boost The 7 most interesting nuggets from the Mueller report Government report says new NAFTA would have minimal impact on economy MORE (R-Iowa), who said the revelations serve as evidence that more SEC oversight is necessary.

“The SEC has to fix this problem once and for all,” Grassley said in a written statement. “That involves more disclosure, more meaningful restrictions, and top-to-bottom application of the rules without waivers that make any restrictions meaningless."

The report comes with the SEC between chiefs. Former chairwoman Mary Schapiro departed the commission in December. President Obama has nominated Mary Jo White to replace her.

As the study notes, White served as a partner at the law firm of Debevoise & Plimpton, where she has represented Wall Street firms before the SEC.