Linda Chatman Thomsen will step down from her position as head of the Securities and Exchange Commission's enforcement division to return to the private sector, the SEC announced yesterday.
The SEC did not say precisely when she would leave, but her departure had been expected after widespread complaints that the agency had failed to uncover money manager Bernie Madoff's $50 billion Ponzi scheme in spite of concerns raised by a whistleblower. Thomsen will remain on staff "for a period of time to ensue a smooth transition," said SEC spokesman John Nester.
Nester would not comment on a report that commission chairman Mary Schapiro will name Robert Khuzami, currently general counsel for the Americas division of Deutsche Bank AG in New York, to replace Thomsen. A Republican, Khuzami previously served as the chief of the securities fraud unit at the U.S. attorney's office in Manhattan. The Wall Street Journal reported yesterday that Khuzami had been offered the position and accepted it.
When reached, Deutsche Bank spokesman declined to comment.
Thomson was tapped to head the enforcement division in May 2005. Since then, she has overseen more than 2,000 enforcement actions conducted by the SEC, including last year's auction-rate securities settlements with Wall Street and other firms, which commission staff say are the largest settlements in the agency's 75-year history and will lead to more than $50 billion in liquidity to tens of thousands of investors.
Among other things, she was involved in the Enron investigation earlier in the decade and the resulting actions against a number of large financial institutions, including Citigroup, JPMorgan, and Merrill Lynch & Co., the SEC said.
"Linda's achievements have been nothing short of extraordinary, even heroic, in an era of unprecedented challenges in our securities markets," Schapiro said in a release.
Despite her accomplishments, Thomsen and other SEC officials have been grilled for failing to uncover the Madoff ponzi scheme. Following a House Financial Services Committee hearing last week, in which commission officials were repeatedly assailed and refused to answer certain questions because of ongoing investigations, Schapiro took the unusual step of apologizing to the committee.
Thomsen joined the SEC staff as an assistant chief litigation counsel in 1995. She served as an assistant director, an associate director, and deputy director of the division of enforcement before former chairman William Donaldson appointed her director in 2005.
Before joining the commission, she was in private practice at Davis Polk & Wardwell and served as an assistant U. S. attorney for the District of Maryland.
Thomsen earned her bachelor's degree in government from Smith College and her law degree from Harvard University.
