[ by Melanie Gretchen ]

SEC Enforcement Chief Robert Khuzami was bred, not born, into the industry elite.  The Rochester native was unlike the other members of his family - he possessed little artistic talent, while his parents were ballroom dancers and his sister was a muralist.  Accordingly, the others jokingly referred to Khuzami as "the white sheep" of the family."

Robert was somewhat gruff, but always driven.  He worked his way through school, taking blue collar jobs like dishwashing, bartending and working nights on the dock.  After graduating from Boston University Law, he began his legal career at Cadwalader, Wickersham & Taft in New York.

Success followed him wherever he went.  At the U.S. Attorney's office, he was assigned to terrorism prosecutions and convicted the so-called "Blind Sheik," a Muslim leader tied the 1993 bombing of the World Trade Center.  At Deutsche Bank a decade later, he rose to the position of general counsel of the firm's American arm.

The Beginning of a Beautiful Friendship. Despite showing up in mismatched shoes with different colors following a pre-dawn plane to Washington, Mr. Khuzami was what Mary Schapiro was looking for when she interviewed him in 2009.  "It had to be someone who was a great prosecutor," Ms. Schapiro, in an interview. 

At the SEC, Mr. Khuzami delivered change.  He recruited new blood, including former prosecutors for his staff and other new hires including traders and compliance officers.  In addition, he developed his unit, moving senior lawyers onto the front lines of investigations and creating specialties among his staff.

With regard to those he prosecuted, he lobbied for the SEC to offer leniency for cooperating witnesses and to strike deferred-prosecution agreements to companies that promised to conform.  In the last 4 years, the unit leveled more charges than in any comparable four-year period, including a record number of enforcement actions in 2011.  In addition, they mounted 150 actions against people and firms tied to the crisis.

Leaving the Mark of Success? Not everyone has been enamored by his leadership.  Critics consider it a point of weakness that the SEC opted not to charge Lehman Brothers executives and went soft on firms like Bank of America and Citigroup.  Others wondered why the agency only sued a handful of top executives who managed firms at the center of the credit crisis.  "If you're rich and connected on Wall Street, then don't worry about the S.E.C," said Dennis Kelleher, the head of Better Markets, a nonprofit advocacy group critical of the financial industry.

Nevertheless, even Judge Jed Rakoff, who once called the agency’s $150 million settlement with Bank of America over lax public disclosures "half-baked justice at best," said, "overall I think he has done a terrific job.  Most important, he has restored a sense of pride and purpose to the S.E.C. enforcement division, and we are all the better for it."

Perhaps, then, Mr. Khuzami's time at the SEC comes to end at the right moment for everyone concerned.  For his part, Mr, Khuzami leaves with a sense of satisfaction.  "I don't know what I'm doing next, but I loved the last four years and I'm sad it's ending," he told Dealbook.

For further details, go to [Dealbook, 1/9/13].