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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.


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