Will Robert Khuzami revive investors’ trust to the SEC?

As the reputation of the Securities and Exchange Commission was undermined in light of its latest failure to disclose the investment scam run by Bernard Madoff in spite of numerous warning signs and complaints the regulator is now making efforts to regain its name. Thus its recent appointment of a new head for the enforcement division is considered as the best hope to root out financial fraud and convince fuming investors that the commission is still capable to do its work.

The SEC’s enforcement division will be led by a former federal prosecutor Robert Khuzami who worked for 11 years with the U.S. Attorney's office for the Southern District of New York. At that time he prosecuted complex securities cases and dealt with everything from insider trading, Ponzi schemes and accounting fraud, to organized crime infiltrating securities markets.

Additionally Khuzami also prosecuted the "Blind Sheik" Omar Abdel-Rahman in the case that was viewed as the largest terrorism trial in the U.S. history. Besides, he served as the head of he securities and commodities fraud task force at the attorney's office for three years.

"Bringing him on board is a good sign that the SEC is returning to its role as a strong cop on the beat and an aggressive regulator of our capital and financial markets," said Senator Jack Reed, the Rhode Island Democrat who chairs the banking subcommittee on securities which oversees the SEC.

It is not yet known how the SEC’s enforcement unit will be reformed under Khuzami, but as he himself said he laid out some broad general themes to staff, and will be studying specific proposals in the coming days and weeks as to how best to achieve them. He noted that his latest position as a general counsel for the Americas at Deutsche Bank will help him in his current role as enforcement chief.

Meantime a number of former and current law enforcers, as well as former SEC Chairman Harvey Pitt, underline that Khuzami is the right person to revitalize the enforcement division.

"Khuzami has a reputation for being a tough securities fraud prosecutor, which is what the public, (Congress) and the commission now want," said Russell Ryan, a former assistant director of enforcement at the SEC who is now in private practice at law firm King & Spalding.