WASHINGTON – The Securities and Exchange Commission under chair Jay Clayton will operate with two co-directors of enforcement, Stephanie Avakian and Steven Peikin, and at least one of them has experience with the municipal bond market.
Avakian has been acting director of the enforcement division since December, when Andrew Ceresney stepped down as director, and had served as deputy director of enforcement before that since June 2014. Peikin was most recently a managing partner of Sullivan & Cromwell’s criminal defense and investigations group, the same firm Clayton left to take over as chair. He has represented Barclays and Goldman Sachs.
Avakian’s time with the SEC has overlapped with a number of first-of-their-kind muni cases and other initiatives, including the Municipalities Continuing Disclosure Cooperation initiative, which focused on issuers’ and underwriters’ continuing disclosure failures and led to settlements with roughly 143 dealers and issuers.
She was also at the commission when the SEC broke new ground by pursuing individuals involved in munis under a section of the Securities Exchange Act of 1934 that allows the SEC to hold public officials responsible for violations based on their control of the municipal entity that engaged in the fraud. The enforcement division used the section's control person liability in two 2014 actions, one against the former mayor of Allen Park, Mich. and the other against the former mayor of Harvey, Ill.
Elaine Greenberg, a shareholder with the law firm Greenberg Traurig here, said that Avakian’s position as deputy and then acting director of enforcement during her time with the SEC means she likely oversaw those muni actions or had them brought to her attention and was asked to weigh in on them.
Greenberg, who previously served as chief of what is now the SEC Enforcement Division’s Public Finance Abuse Unit, said that she also worked with Avakian in a muni-related matter before Avakian joined the SEC and was still in private practice with Wilmer Cutler Pickering Hale and Dorr.
“When I was chief of the enforcement division’s muni unit, Stephanie and her firm represented a major financial institution in connection with a very significant and complex enforcement action which had many moving pieces,” Greenberg said. “As a result, it took a good deal of time and effort to resolve the matter and personally as a regulator, I appreciated Stephanie’s cooperative approach and understanding of the process in order to reach a satisfactory resolution for all parties.”
Greenberg would not specify the case with which Avakian was involved.
But publicly available documents show she represented a big investment bank over charges of bid-rigging and price fixing for municipal investment products and derivatives. The probes of bid rigging and price fixing involving guaranteed investment contracts and other investments of muni bond proceeds began in November 2006, involved the U.S. Department of Justice’s antitrust division, the Federal Bureau of Investigation, the Internal Revenue Service’s criminal division, and the SEC and led to charges against and settlements with a number of large investment banks.
Clayton said in the release announcing the new directors that he is “delighted” that Avakian will continue to use her judgment and knowledge to lead the Enforcement Division.
“She has a first-class legal mind, has the respect of her colleagues in Washington and regional offices, and, most importantly, is dedicated to the SEC’s mission,” Clayton said.
He said that Peikin brings “deep market knowledge and extensive prosecutorial experience” to the SEC.
Greenberg said both Avakian and Peikin have “a good mix of public and private sector experience, which should serve them well as leaders of the SEC’s enforcement division.”
Avakian, who will continue to work out of the SEC’s headquarters here, said she is “honored and excited” to continue leading the enforcement division along with Peikin. She has a bachelor’s degree from College of New Jersey and a law degree from Temple University School of Law, both of which were obtained with high honors.
Prior to his joining Sullivan & Cromwell, where he focused on white-collar criminal defense, regulatory enforcement, and internal investigations, Peikin served as an assistant U.S. attorney in the Southern District of New York. He was chief of the U.S. attorney’s office’s securities and commodities fraud task force, where he supervised some of the nation’s highest profile prosecutions of accounting fraud, insider trading, market manipulation, and abuses in the foreign exchange market, according to the SEC release. He also personally investigated and prosecuted a wide variety of securities, commodities, and other investment fraud schemes.
Greenberg said Peikin’s background in criminal prosecution means the financial markets are likely to see continued coordination between the Department of Justice and the SEC, including in the public finance and municipal securities area.
Peikin, who will split his time between the SEC’s headquarters here and the commission’s New York Regional Office, said he is honored to join the division’s ranks of dedicated and talented professionals. He has a bachelor’s degree from Yale University and a law degree from Harvard Law School, both of which he received magna cum laude.