Securities and Exchange Commission Historical Society

The Enforcement Division: A History

2008 – 2016

Crisis – The Crucible for Change

Bernard Madoff - Ponzi
Bernard Madoff - Charles Ponzi

In the summer of 2008, the United States entered the worst financial crisis since the Great Depression, marked by the collapse of Bear Stearns in the Spring and bankruptcy of Lehman Brothers in the fall. The crushing blow for the Enforcement Division, however, came in December, when it was discovered that a major New York firm, Bernard Madoff Investment Securities, was a Ponzi scheme, in which investors wound up losing billions of dollars. In soon turned out that whistle-blowers had approached the SEC to warn of Madoff’s activities, only to have investigations closed inconclusively.(1) Two months later came news of a second multi-billion-dollar Ponzi scheme, this one run by Texan Alan Stanford.(2)

Change was unavoidable. With a new election came a new Chair, Mary Shapiro, who in March 2009 named Robert Khuzami, a former Assistant U.S. Attorney and General Counsel of Americas at Deutsche Bank, Director of Enforcement. Khuzami moved rapidly to shake up the Division, which with over 1000 employees was no longer the small operation it had been in the 1970s. Drawing on his managerial experience, he eliminated a layer of supervisors in order to return lawyers to investigations, and hired the first Chief Operating Officer for the Division.(3) He also moved the Division toward specialization. While in the past enforcement attorneys had occasionally been tasked to programs temporarily targeting specific areas, Khuzami created within the division a series of permanent specialized units (Asset Management, Market Abuse, Structured and New Products, FCPA, and Municipal Securities and Public Pensions) and brought in non-lawyer experts to help staff them. An Office of Market Intelligence was also formed to sort through the “hundreds of thousands of tips, complaints, and referrals” received by the Agency each year, in the hopes of catching a future Madoff.(4)

Robert Khuzami
Robert Khuzami, 2011

In response to the financial crisis, the Division brought a series of cases intended to spotlight practices that led to the collapse, identifying “one bad deal at each major firm.”(5) From 2009 to 2011 it reached settlements relating to sale of collateralized debt instruments with firms including Goldman Sachs, which paid $550 million, Citigroup, which paid $285 million, and JPMorgan, which paid $155 million. (Financial institutions would eventually pay billions more to settle class action suits with the Department of Justice.)(6) Yet it faced ongoing criticism for declining to charge senior employees of settling firms, for the size of the settlements, and especially for its longstanding policy of allowing settling defendants to “neither admit nor deny” the SEC’s charges. The most effective critic was Judge Jed Rakoff of the Southern District of New York, who refused to approve an SEC settlement with Bank of America until it was increased from $33 million to $150 million, and refused to approve the Citigroup settlement because it did not require admission of liability, although in this case he was overruled by the Court of Appeals.

Khuzami persevered through the criticism and implemented further reforms during his tenure. Some originated in his experience as a Federal prosecutor which, together with the appointment of other former Assistant U.S. Attorneys to senior positions in the Division, led to criticism that the Division was adopting “aggressive prosecutorial tactics” and becoming more prosecutor than regulator.(7) Among new approaches borrowed from Federal prosecutors were deferred prosecution agreements and policies giving individual defendants the same kind of credit for cooperation that corporations had long received.(8) After the passage of the Dodd-Frank Act in 2010 the SEC formed an Office of the Whistleblower to gather tips and avoid future Madoff scandals; it was soon receiving a flood of tips and, in some cases, paying multi-million dollar bounties to whistleblowers whose tips produced successful matters.(9)

The reforms continued under Khuzami’s successor Andrew Ceresney, who served from 2013-2017 (in his first year co-directing the Division with George Canellos). Starting in 2013, the SEC would change policy and require a few defendants to admit responsibility when settling charges, a departure from “neither admit nor deny.”

Previous Next


(1) Diana Henriques, The Wizard of Lies: Bernie Madoff and the Death of Trust: 152 (2011).

(2) Stephen Labaton and Charlie Savage, String of Problems and S.E.C. Fines did not head off Huge Fraud Case, N.Y. Times Feb. 19, 2009: B1.

(3) Robert Khuzami oral history.

(4) SEC Names New Specialized Unit Chiefs and Head of New Office of Market Intelligence, SEC News Release 2010-5 (Jan. 13, 2010).

(5) Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives: 294-95 (2017).

(6) Id. 294-99.

(7) Ben Protess, Khuzami, SEC Enforcement Chief who reinvigorated unit, to step down, NY Times January 9, 2013: B5.

(8) Id.; Robert Khuzami oral history.

(9) Mary Jo White, The SEC as the Whistleblower’s Advocate, Speech to the Corporate and Securities Law Institute, Northwestern University, April 30, 2015, SEC website.

Related Museum Resources


June 2008
transcript pdf (Courtesy of Paul Atkins and Bradley Bondi; with permission of the Fordham Journal of Corporate and Financial Law)
June 19, 2009
image pdf (Government Records)
August 31, 2009
image pdf (Government Records)
February 26, 2010
image pdf (Government Records)
March 31, 2010
Report of Investigation, SEC Office of Inspector General: Investigation of the SEC's Response to Concerns Regarding Robert Allen Stanford's Alleged Ponzi Scheme (redacted)

(Government Records)


September 15, 2014
Bingham Presents 2014: Current Issues in Broker-Dealer Enforcement
April 3, 2018
Roundtable of Current and Former SEC Enforcement Directors
April 3, 2018
Roundtable of Current and Former SEC Enforcement Directors

Oral Histories

October 29, 2018

Andrew J. Ceresney

Made possible through the generous support of Debevoise & Plimpton LLP

Andrew J. Ceresney served as Director of the SEC’s Enforcement Division from 2013 – 2017 under Chair Mary Jo White where he supervised law enforcement efforts in a range of matters including those related to financial reporting and accounting, asset management, insider trading, market structure, and the Foreign Corrupt Practices Act (FCPA), and helped broaden the use of the SEC’s analytical tools to detect and investigate financial misconduct.

February 20, 2019

Rob Khuzami

Robert S. Khuzami was appointed in 2009 by SEC Chair Mary Schapiro as Director of the SEC’s Enforcement Division where he served until January 2013. During his tenure he initiated the Division’s most significant restructuring in the agency’s history creating specialized prosecution units to concentrate on the high-priority areas of enforcement. The Division also hired private sector and other experts, adopted targeted and risk-based investigative approaches, and increased its overall expertise in the products, transactions, and practices that occur in the securities markets it polices. An Office of Market Intelligence was created to revamp the way the Division handles tips, complaints and referrals. Khuzami also created a program authorizing the use of cooperation agreements to incentivize assistance with SEC investigations and enforcement actions. During his tenure, the agency also established the Office of the Whistleblower to implement the whistleblower program authorized by the Dodd-Frank Act.


13 September 2012

Bingham Presents 2012: Criminal Enforcement of Securities Laws

Moderator: Lisa Fairfax
Presenter(s): George Canellos, Susan Merrill, Marc Minor
11 April 2012

Ponzi Scheme Puzzles

Moderator: Eric Roiter
Presenter(s): Tamar Frankel, Donald Langevoort, Francis Morrissey

Permission for Use

The virtual museum and archive is copyrighted by the SEC Historical Society. The Society reserves the right to restrict access to or use of the museum by any user at any time.

Users are prohibited from sharing or downloading any material for publication or commercial purposes without written permission from the Executive Director. Requests for permission must be submitted by email and specify the material requested and for what purpose.

Material used with the Society's permission should be credited to: