The Securities and Exchange Commission on Thursday named a former federal prosecutor as its new enforcement chief to lead the embattled agency's drive to strengthen its pursuit of financial fraud.
Robert Khuzami has been a top legal official on Wall Street at investment firm Deutsche Bank since 2004. Before that he worked for 11 years in the U.S. attorney's office in Manhattan and prosecuted insider trading cases, Ponzi schemes and other financial crimes.
Khuzami, 52, replaces Linda Thomsen, the SEC enforcement director since May 2005. Her departure was announced last week.
Thomsen became a lightning rod for criticism over the SEC's failure to detect the $50 billion Ponzi scheme allegedly run by money manager Bernard Madoff, despite red flags raised to the agency staff by outsiders over the course of a decade.
The naming of Khuzami by new SEC Chairman Mary Schapiro came two days after the agency accused Texas billionaire R. Allen Stanford in a civil lawsuit of a "massive" $8 billion fraud that lured investors with sham promises of double-digit returns on certificates of deposit.
The action against the jet-setting Stanford, who donated liberally to campaigns of U.S. lawmakers and was knighted in the island nation of Antigua, followed by about two months the SEC's civil fraud charge against Madoff, a prominent Wall Street figure accused of running the biggest investment scam in history.
Schapiro, in a statement, said she was pleased to have Khuzami join the SEC "in such an important role at this crucial time."
"As we work to improve investor confidence in the markets, our enforcement efforts are vital," Schapiro said. "As a former federal prosecutor, Rob is well suited to lead the SEC's division of enforcement as we continue to crack down on those who would betray the trust of investors."
Besides leading several major financial fraud cases, Khuzami also prosecuted the "Blind Sheik" Omar Ahmed Ali Abdel Rahman in what was then the largest terrorism trial in U.S. history following the 1993 bombing of the World Trade Center in New York. Ten defendants were convicted of operating a terrorist organization responsible for the bombing, the assassination of Jewish Defense League founder Meir Kahane, and planning bomb attacks on law enforcement and other high-profile targets.
In a speech at the 2004 Republican National Convention, Khuzami praised then-President George W. Bush for his handling of the war on terror.
"We will have the leadership that will continue to protect both our lives and our liberties" by re-electing him, said Khuzami, who also made campaign donations to Republican Sen. John McCain.
Democratic lawmakers, however, have not publicly criticized the choice of Khuzami as SEC enforcement chief since his name was floated early last week.