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President Barack Obama nominated Mary Jo White, a former federal prosecutor, to chair the Securities and Exchange Commission (SEC) earlier today.
White first rose to national prominence in 1993, when she became the U.S. attorney for the Southern District of New York, a position she held until 2002. While there, she oversaw the prosecution of high-profile individuals like mafia boss John Gotti, terrorist Sheik Omar Abdel Rahman, and even Osama Bin Laden. But she is best known for being a tough leader with a knack for punishing white collar crime. “You don’t want to mess with Mary Jo,” the president said when announcing his nomination.
“When it comes to prosecuting white collar criminals, she’s got an outstanding track record,” Douglas Ellenoff, of Ellenoff Grossman and Schole LLP, told Crowdsourcing.org. “She’s really an interesting and credible pick for the president, as it relates to the administration’s – and now the SEC’s – commitment to enforcing violations of securities laws.”
The Congress is expected to support the nomination, though some may question her knowledge of complicated financial laws. Her trips back and forth through the public-to-private-sector revolving door may also raise a few eyebrows: before and after her stint overseeing New York’s Southern District, White practiced law at Debevoise & Plimpton, defending some of the biggest names on Wall Street.
What does White’s selection to head the SEC mean for crowdfunding and the JOBS Act? In short, nobody knows for sure. That’s largely because White is considered to be an SEC outsider.
“She doesn’t come from an SEC background,” Ellenoff said. “She needs to have time to appreciate the complexities of the SEC and select her own priorities, which is going to take time.”
“It seems that a nomination like this indicates the interest of the administration in enforcement, more than in philosophical innovation,” said Freeman White, creator of white label crowdfunding platform Launcht who is active in conversations with government officials.
Crowdfund Capital Advisors' Sherwood Neiss, who played a large role in pushing the Congress to draft a crowdfunding bill, believes Mary Jo White's background in enforcing regulation could mean that she warms up to certain aspects of the JOBS Act.
"Title III -- just crowdfunding -- that itself is a series of regulations, so I'm hoping she would look at that as something she would support," Neiss told Crowdsourcing.org. "I could see how she would have some issues with Title II, because it doesn't have the limits and caps that you find in Title III."
Freeman White and Neiss both echoed Ellenoff’s conjecture that the nomination is likely to prolong the lawmaking process, at least in the short term.
“Until she has the opportunity to witness all of [the SEC’s complexities] for herself, I think it’s a temporary setback,” Ellenoff said, referring to the nomination’s impact on the JOBS Act implementation timeline.
"If you're looking at what this means as a whole, I don't think anybody would tell you that when someone new comes in, it doesn't delay things," Neiss said.
If the confirmation process goes smoothly, White will replace interim director Elisse Walter, who took control of the agency after Mary Schapiro stepped down in December.
Schapiro, who opposed the JOBS Act while it was being discussed in Congress, came under fire from lawmakers sympathetic to crowdfunding when it emerged that she elected to slow down the Act's implementation because she was concerned about “being tagged with an Anti-Investor legacy.”
Examined from that perspective, White’s nomination may have a positive long-term effect, eventually leading to warmer relations between the SEC and crowdfunding evangelists.
For the time being, though, all crowdfunding advocates can do is push forward. Whatever White’s stance on crowdfunding may be, Ellenoff said, “as an industry, it’s not going to slow down our efforts or initiatives on building up the system and continuing to work with regulators, every day.”