Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

Who Is Adam Storch and Is Mary Schapiro Really the Right Person to Head the SEC?

Posted by Larry Doyle on October 16, 2009 11:22 AM |

You must be kidding me.

Our financial regulators, both the SEC and FINRA, certainly failed American investors. The structural failures of these regulators have been highlighted by their own internal reviews authored by David Kotz for the SEC and Charles Bowsher for FINRA.

Over and above the structural failures of these regulators, both the SEC and FINRA have major image problems. What is at the core of those image problems? The following:

> A strong perception that their relationships with Wall Street are far too cozy. Additionally, Uncle Sam has gotten slammed for the depth of relationships and number of hires specifically from Goldman Sachs.

> A strong perception of a general lack of experience throughout these organizations.

Against these widely held perceptions, I am left dumbstruck by news of a very senior hire by the SEC. The SEC announced this morning the hiring of Adam Storch as Chief Operating Officer for its Enforcement Division. I do not know Adam Storch nor would I besmirch his capabilities. That said, for SEC Head Mary Schapiro and SEC Director of Enforcement Robert Khuzami to hire Mr. Storch as COO within this division raises serious questions that deserve to be addressed. What are those questions?

1. If the SEC is in need of experienced people, how does a 29 year old fit that bill?

2. If Uncle Sam in general has been tainted by a perceived cozy relationship with Goldman Sachs, how is it that one of the first key senior hires at the SEC comes from Goldman Sachs?

Bloomberg sheds light on Mr. Storch’s hiring in writing, SEC Said to Hire Goldman’s Storch for Enforcement Job:

The U.S. Securities and Exchange Commission hired Adam Storch, a 29-year-old former employee in Goldman Sachs Group Inc.’s business intelligence unit, as the enforcement division’s first chief operating officer, according to people familiar with the decision.

The COO, who started Oct. 13, has “a great deal of background” in technology and managing processes and the pace of work, Robert Khuzami, head of enforcement, said yesterday in Washington. Storch, who worked since 2004 in a unit at Goldman Sachs that reviewed contracts and transactions for signs of fraud, will be charged with making the unit more efficient. Storch, reached by telephone at the SEC, declined to comment.

I would ask Mr. Khuzami when five years became generally accepted as ‘a great deal’ of experience. What has Mr. Storch done to distinguish himself? His experience includes:

Storch holds degrees in accounting and finance from the State University of New York at Buffalo and studied at New York University’s Leonard N. Stern School of Business. He has certifications in accounting, fraud examination and auditing.

Prior to joining Goldman Sachs, Storch was a senior analyst at accounting firm Deloitte & Touche and an intern at Neuberger Berman LLC, a New York-based asset management firm.

I could understand if Mr. Storch were hired as an examiner or perhaps even a senior examiner if he is particularly strong. But COO? Are you kidding?

A COO is not a rank and file examiner. A COO is one of the senior most individuals in any organization. I have a very hard time believing that Mr. Storch is the ABSOLUTE best candidate for this role. What does his hiring indicate about Mary Schapiro’s and Robert Khuzami’s understanding and appreciation of the SEC’s problems?

The question has been asked previously whether Mary Schapiro is the right person to run the SEC. With all due respect to Mr. Storch, his hiring should increase the intensity of those questioning Ms. Schapiro’s capabilities.

LD

  • ed

    Incompetence hires inexperience and the beat goes on…

  • No kidding Larry. This is UNBELIEVABLE after the Bernard Madoff case, the Allen Stanford case, the Bank of America/Merrill case, the Auction Rate Securities case, and all of the recent negative PR surrounding Goldman Sachs. Is this a practical joke? It’s almost as if the SEC is telling America “What are you going to do about it?”. They hire a 29-year-old kid from Goldman Sachs as the COO of Enforcement? This is the absolute WORST possible hire they could make right now given their recent incompetence and PR/image problems. Is Ken Lewis going to be the next Chairman of the Federal Reserve? This is truly stranger than fiction.

    • Larry Doyle

      They don’t “get it”!! Or perhaps they do, and this is nothing more than what is regarded on the street as one large
      “#%&! you”

      • Unfortunately it feels to me like more of the latter. They do get it and this is just giving the middle finger to Americans and investors.

        • zeke

          I agree with you Matt. I think they “got it” years ago.

  • B

    Age is nothing but a number. How old were those at the SEC who were in charge before?! Obviously their experience did no help. Financial statements have grown increasing complex and the use of derivatives, etc. is stuff even the most veteran of analysts don’t understand. I think Adam is a great choice. He is young, dedicated, and one of the most intelligent people I know. I know plenty of 40-50 year olds who do not have these same traits. People are looking at his post-graduate work though I know Adam was doing much more at 15-16 years old than most people do as adults. I understand it is your to write web news and sell advertising, but you have to give him an opportunity before issuing negative comments.

    Further, being 29, many of those “cosy relationships’ you refer to are less likely to exist.

    • fiscalliberal

      So – what has he accomplishted to date regarding the job he is to do. Your description is generic platitudes versus discrete accomplishments.

      Normally for a senior position, you want some one with the platitudes you list and a list of accomplishments.

      Regarding the past, Chris Cox financially starved the SEC and eliminated/reassigned people who asked questions.

    • Larry Doyle

      B . . . My critique is directed at Ms. Schapiro and Mr. Khuzami, not Mr. Storch. He may be a world beater, but to place him immediately in the position of COO is a tremendous leap of faith. How about if he comes in as a senior examiner and shows his capabilities and then elevate him? I mean, was he the COO of a similar sized division at GS? Has he shown the wide array of managerial skills necessary for this role? If he did, I would think Khuzami may have wanted to highlight those facts in his release.

      I find it interesting that Bloomberg initially reported this story, but that there was no press release from the SEC itself. That press release just came out on the SEC website. From that we learn that:

      Mr. Storch will be responsible for project management and workflow for various infrastructure and operational aspects of the Division, including budget, information technology, and administrative services. In addition, he will oversee the workflow and process associated with the collection and distribution of Fair Funds to harmed investors. Along with Lorin Reisner, the Deputy Director of the Division of Enforcement, Mr. Storch will supervise the Office of Market Intelligence, improving the collection, analysis, risk-weighing, triage, referral, and monitoring of the hundreds of thousands of tips, complaints and referrals that the agency receives each year.

      This is a BIG job. Congrats to Mr. Storch. That said, his lack of experience presents a greater risk. It is self evident.

  • divvytrader

    wow ….. this guy will strike fear in the hearts of Stevie Cohen , George Soros and Icahn fer sure ! ( http://www.businessinsider.com/found-photo-of-adam-storch-29-year-old-goldman-guy-who-is-now-coo-of-the-sec-2009-10 )

  • fiscalliberal

    Below is from the Financial Times article on the SEC hiring Storch – SEC Inspector General cited inexperience as a problem – looks like nothing is changing

    ————–From the Financial Times ———————

    The whole agency was strongly criticised in a report last month from David Kotz, the SEC inspector-general, who said it suffered ”systematic breakdowns” during its investigations into the 17-year long Madoff Ponzi scheme in spite of eight credible complaints brought to the agency during that period

    He said he did not find the failure of the SEC to be the result of ”the misconduct of a particular individual or individuals, and found no inappropriate influence from senior-level officials”.

    The report found the agency missed multiple opportunities to uncover the fraud, largely because the investigators were too inexperienced, were too narrowly focused, or did not take the extra, necessary steps to verify basic facts.

    Before joining Goldman, Mr Storch worked at Deloitte & Touche; he has an MBA from New York University.

    • Larry Doyle

      The FT’s comments speak volumes…with all due respect to Mr. Storch, for Ms. Schapiro and Mr. Khuzami, this critical hire sends an enormous statement as to the fact that they truly do not get it on many fronts.

      Swing and a miss….!!

      Thanks for sharing the FT post.

  • Johnathan

    Interesting to see that the SEC has not learned. They are still going with incompetence and inexperience.

  • Pingback: The Firm of Goldman, Sachs, and, SEC()

  • ToNYC

    Oh, they “got it!” for sure. Our elected representatives and their appointees are making sure that we the people are still “getting it!” The good news is his buds at GS will give him the book on “where the bones are buried”, so he can clear the field for the likes of the our former Treasury Secretary, Henry Paulson, who proved beyond a shadow of a doubt that he knows how to play the game and bring home the bacon in the greatest public to private transfer of wealth in the history of the U.S. The Federales always get their man, but always those little guys without the “stinkin’ badges”. The only question is, “Who’s representing the People?”. Efficiency without Insight for the final phase of Corporate Statism (F******). Look out up ahead for the General Strikes. G.S.M.F.T. Goldman Sachs Means Fine Theft. The Congress let them do it.

  • kiers

    damn! that NEel Kashkari (cash n carry?) must be disappointed right now for all those late night a** kissing he did to Paulson 🙂






Recent Posts


ECONOMIC ALL-STARS


Archives