washington<u+2014>when president barack obama announced in 2013 his decision to tap mary jo white to run the securities and exchange commission, he set high expectations that the former high-profile prosecutor could repair the image of an agency tarnished by the financial crisis and a series of shocking investment scandals. <u+201c>you don<u+2019>t want to mess with mary jo,<u+201d> mr. obama said at the time. but during her tenure, ms. white<u+2014>who announced monday that she would step down jan. 20<u+2014>has struggled with political conflict from both democrats and republicans that slowed her agenda, and she ended up the latest target for critics who argue that wall street still gets off too easily when it violates the law. the sec under ms. white pursued record numbers of enforcement cases, including dozens of insider-trading claims, yet had no marquee case that made critics forget its failure to root out fraud before the crisis. it wrote more than 40 regulations but didn<u+2019>t complete all of the rules assigned it by the 2010 dodd-frank financial overhaul. and it feuded with other regulators who saw gaping holes in its supervision of the $15.7 trillion mutual-fund industry. the fight over fund rules highlighted the sec<u+2019>s struggle to adapt to an era when regulation is expected to provide a bulwark against systemic risk, or the threat of shocks caused by a big firm<u+2019>s failure. <u+201c>she had political fights to engage in that obviously impacted her initiatives and her success in office,<u+201d> said former sec chairman arthur levitt. in an interview nov. 7 in anticipation of her resignation<u+2014>embargoed until monday<u+2019>s formal announcement<u+2014>ms. white said she was proud of her record, particularly on enforcement, saying she would be leaving the agency<u+2019>s enforcement <u+201c>off the charts in terms of its strength.<u+201d> for all the democratic complaints that ms. white didn<u+2019>t do enough on regulation and enforcement, her tenure is likely to be a high-water mark for both, at least for the foreseeable future. donald trump <u+2019>s victory opens the door to a republican successor who could veer toward a deregulatory approach after six years of passing stricter rules required by dodd-frank. ms. white<u+2019>s successor also could pull back on the scrutiny that the agency has applied to mutual funds, hedge funds and private-equity firms in recent years. unlike some of her predecessors, ms. white leaves the agency without a major scandal or controversy dogging her tenure. her predecessor, mary schapiro, left in 2013 after the commission rejected her plan to restructure how the riskiest money-market mutual funds work. former chairman christopher cox left in 2009 as the sec was taking blame for failing to foresee the credit crisis. <u+201c>she was in command of her agenda in a way that her predecessors were not, in particular the initiatives that were not mandated by congress,<u+201d> said daniel gallagher, a former republican commissioner who worked with ms. white and now is president of patomak global partners, a regulatory consulting firm. <u+201c>she had the good fortune of not experiencing any market dislocations or other bombshell events during her tenure.<u+201d> ms. white<u+2019>s move to head the sec in 2013 was the capstone of a prestigious legal career that included nine years as u.s. attorney in manhattan during the 1990s, a period when her office prosecuted mobsters and terrorists who attacked the world trade center. she later did a spin through the revolving door, defending clients on wall street and corporate america. reflecting that background, she has been most outspoken at the sec about enforcement, which she vowed when she took office would <u+201c>have a presence everywhere,<u+201d> including going after smaller infractions as a means of discouraging bigger frauds. a career litigator, ms. white had no shortage of ideas for flexing the sec<u+2019>s enforcement muscle. in march 2014, she and her enforcement director, andrew ceresney, read <u+201c>flash boys,<u+201d> a book that alleged the stock market was rigged in favor of high-frequency traders, during the weekend that it was published. the pair fired off emails chapter by chapter as they spotted potential problems to tackle, said daniel hawke, who ran the sec<u+2019>s market-abuse unit until last year and now is in private practice. when enforcement lawyers told her that they had several investigations in progress that would address issues raised by the book, ms. white backed their approach, mr. hawke said. credit suisse group ag and barclays plc later agreed to pay a total of $150 million to resolve claims that they didn<u+2019>t fully inform investors how private trading venues, known as dark pools, worked. <u+201c>they<u+2019>ve tried to keep a footprint in basically every area of the market that they can,<u+201d> said william mclucas, a former sec enforcement director who now is a defense lawyer. <u+201c>it is hard to imagine how they would be much tougher.<u+201d> even so, liberals often asked ms. white for more. sec commissioner kara stein, a democrat, pushed ms. white to impose more pain by withholding waivers that shield companies from automatic penalties that kick in when firms settle enforcement cases. the extra sanctions are blunt tools that can expel firms from lucrative businesses, such as raising money for hedge funds. ms. white disagreed with ms. stein, saying the waivers shouldn<u+2019>t be used as an enforcement club<u+2014>but the agency began to withhold them with more frequency after ms. stein went public with her opposition to the relief. ms. white<u+2019>s critics say the agency<u+2019>s progress on dodd-frank rules was slower than it could have been because she didn<u+2019>t actively recruit commissioners as allies. ms. stein, in particular, has an icy relationship with ms. white. for instance, the agency still hasn<u+2019>t completed rules that standardize how derivatives are traded and guaranteed on exchanges and clearinghouses, or limits on executive compensation required by the 2010 law. ms. white said she ramped up communication with commissioners after taking office and attributes divisions to views on the law itself. <u+201c>that controversy tends to come back into rule making,<u+201d> she said. sen. elizabeth warren (d., mass.) labeled ms. white a disappointment in june 2015, largely because the sec stopped work on a potential rule making that would require public companies to report their political spending. ms. warren also complained the sec didn<u+2019>t often require companies to admit fault as a condition of settling enforcement cases. warren has continued to take shots at ms. white, on oct. 14 calling for mr. obama to dismiss ms. white as sec chairman. the white house rebuffed the call . ms. warren<u+2019>s 2015 letter stung ms. white, who said the senator had mischaracterized one of their conversations. <u+201c>remember what we learned in school,<u+201d> sec commissioner michael piwowar wrote in an email to ms. white the morning that ms. warren<u+2019>s letter became public. <u+201c>the quickest and best way to end bullying is to stand up for yourself and tell the bully firmly to stop.<u+201d> ms. white replied: <u+201c>always good advice.<u+201d> in the interview, ms. white said she didn<u+2019>t move forward on a political-spending rule because sec staff informed her soon after she took over that they didn<u+2019>t believe it was <u+201c>material,<u+201d> or needed for shareholders to make investment decisions. <u+201c>there were concerns this is really an issue for congress or the federal election commission,<u+201d> she said. the proposal almost certainly will get no traction under republican leadership. ms. white<u+2019>s tenure included a move to pass new restraints on mutual funds, effectively siding with other regulators who worried that the industry could be a source of systemic risk. she announced the overhaul after an umbrella group of financial regulators, led by the treasury department, considered subjecting blackrock inc. and fidelity investments to stricter rules typically reserved for the largest global banks. blackrock<u+2019>s size and complex activities worried banking regulators who surmised that its failure could destabilize markets. when ms. white arrived in march 2013, for instance, the sec couldn<u+2019>t say how much money firms, such as blackrock, oversaw for sophisticated clients, such as pension funds, a fact that bewildered officials at the treasury department, according to people familiar with the matter. sec officials thought that the focus on separate accounts was misguided because money managers don<u+2019>t control the assets<u+2014>clients invest or withdraw funds at their discretion. even so, ms. white directed the sec staff to cooperate on efforts to study the industry, the people said. the umbrella group, the financial stability oversight council, later signaled that blackrock or fidelity wouldn<u+2019>t be treated like banks. <u+201c>she was instrumental in reasserting and strengthening the role of the sec as the primary regulator of the asset management industry,<u+201d> said norm champ, who served as the top regulator of mutual funds under ms. white. <u+201c>they can never take away from her.<u+201d> write to dave michaels at dave.michaels@wsj.com and aruna viswanatha at aruna.viswanatha@wsj.com
white<u+2019>s sec tenure hamstrung by political divisions - wsj
dave michaels aruna viswanatha