Stephen M. Cutler, the Securities and Exchange Commission's top cop who has overseen some of the commission's biggest enforcement cases, plans to leave the SEC in a month to return to private practice, the SEC announced yesterday.
Known for his rigorous work ethic and long hours, Cutler, 43, has been director of the SEC's enforcement division since October 2001 and was deputy director of the division for two and a half years before that. He joined the SEC in January 1999.
He has told colleagues at the commission that he does not plan to begin job-hunting until after he leaves.
Linda C. Thomsen, Cutler's deputy, is a top candidate to replace him and, if chosen for the position, she would be the first woman to serve as SEC enforcement director on a non-temporary basis, several sources said.
During Cutler's tenure, the SEC filed enforcement cases against market participants seeking a total of $6 billion in penalties and disgorgement, more than $4.5 billion of which is being returned to investors that were victimized by the illegal behavior.
The cases included one against WorldCom, Inc., which settled SEC charges by agreeing to a $750 million penalty, the largest penalty against a public company in the SEC's history. Of the 12 largest penalties in the commission's history, 10 were obtained in cases presided over by Cutler.
He led the SEC's efforts to crack down on abuses in the mutual fund industry, some of which involved market timing of municipal bond funds, and spearheaded the agency's crackdown against illegal initial public offering allocation practices on Wall Street.
He also spearheaded the SEC's ground breaking efforts against banks, insurance companies and other financial intermediaries for their roles in several public company financial reporting failures, including a case against American International Group, Inc. for its transactions with two different public companies and cases against Merrill Lynch & Co., Citigroup Global Markets Group Inc, J.P. Morgan Securities Inc., and Canadian Imperial Bank of Commerce in connection with the collapse of the Enron Corp.
Cutler stepped up the SEC's efforts to hold audit firms and their personnel accountable for misconduct, played a key role in the commission's historic "global settlement" with Wall Street firms over research analysts' conflicts of interest, helped bring some of the agency's most significant financial reporting cases involving foreign companies, and led dealers and other financial services firms to conduct a comprehensive review and self assessment of potential conflicts of interest.
"Steve Cutler has been an outstanding leader of the commission's enforcement program," SEC chairman William H. Donaldson said yesterday. "America's investors have been enormously well-served by Steve's keen intellect, superb judgment and abiding sense of justice. He is what every prosecutor should be: tough but fair. We will miss Steve's dedication, leadership and integrity as we continue our critical efforts to pursue and root out wrongdoing in our marketplace."
Cutler said, "I have had the very good fortune to work with an extraordinary group of colleagues during an historic period for the commission and our capital markets. I am proud to have been a part of the agency's efforts and considerable accomplishments in the enforcement arena."
Before joining the SEC, Cutler was a partner in the law firm of Wilmer, Cutler & Pickering here, where he represented clients in SEC yield-burning and pay-to-play investigations in the municipal market. The firm is now called Wilmer, Cutler, Pickering, Hale and Dorr, LLP. Cutler also previously served as a Visiting Fellow at the Center for Law in the Public Interest in Los Angeles and as a law clerk to Judge Dorothy W. Nelson of the U.S. Court of Appeals for the Ninth Circuit. He received his bachelor's degree summa cum laude from Yale University and his law degree from Yale Law School, where he was Editor of the Yale Law Journal.
