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SEC\'s Top Enforcer to Leave Agency

Date: Tuesday, February 10, 2009
Author: Thomson Reuters.com

The U.S. Securities and Exchange Commission's top enforcement official, Linda Thomsen, will resign, the agency said on Monday [Feb. 9], less than a week after a congressional panel chastised her for failing to follow up tips that might have uncovered Bernard Madoff's alleged $50 billion fraud.

Thomsen's departure date was not given. She will stay at the agency for a period of time to ensure a smooth transition, an SEC spokesman said.

The agency declined comment on who would take over the top enforcement job. A source familiar with the matter told Reuters over the weekend that former assistant federal prosecutor Robert Khuzami was expected succeed Thomsen.

Thomsen's enforcement division has been heavily criticized for rebuffing a Wall Street tipster, Harry Markopolos, who urged agency officials for nine years to thoroughly investigate Mr. Madoff's investment business. Mr. Madoff was arrested in December Previous Reuters Story.

At a U.S. House of Representatives Financial Services subcommittee hearing last week, several members expressed irritation and frustration when Ms. Thomsen and four other SEC officials declined to answer specific questions about Markopolos' tips, citing continuing investigations Previous Reuters Story. The SEC's new chairman, Mary Schapiro, sent a letter to the subcommittee leaders after the hearing ended, offering to find a way to give information to lawmakers without hurting the civil and criminal investigations of Mr. Madoff.

Ms. Thomsen was appointed SEC enforcement chief in 2005 under then SEC Chairman William Donaldson Previous HedgeWorld Story. She remained in the post when Christopher Cox became chairman. Mr. Cox left the agency last month Previous Reuters Story.

During Ms. Thomsen's tenure, the SEC negotiated settlements with some of the country's largest banks over whether investors were misled about the safety of auction-rate securities. It also took enforcement actions against former Bear Stearns employees for fraud linked to collapsed hedge funds.

Ms. Schapiro is under pressure to restore the agency's reputation as a tough policeman on Wall Street.

By Rachelle Younglai and John Poirier, with additional reporting by Karey Wutkowski