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Reputation of SEC's Khuzami is on the line vs. Goldman | McClatchy

WASHINGTON -- In the painful months following Wall Street's flirt with financial ruin, no big player has yet been punished. Robert Khuzami's reputation now rests on Goldman Sachs becoming the first.

The enforcement chief at the Securities and Exchange Commission has spent his first year remaking his office, which was chock full of top managers, but light on investigators.

When Khuzami arrived last year, he inherited a demoralized agency, widely ridiculed as the most ineffectual of federal regulators. Faced with salary restrictions, the agency had promoted top-level people to administrative positions at a pace that left the agency top heavy and without enough cops on the beat.

Khuzami set out to change that, leaving top salaries in place but forcing those administrators out of desk jobs and back into investigations.

His office has prosecuted private equity firms for alleged pay-to-play activity in the state of New York, and late last year brought a high-profile insider trading case against Galleon Management, a large hedge fund that invests on behalf of the ultra wealthy.

But that pales next to what is ahead for the SEC in taking on Wall Street's most influential and politically connected player.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Apr 18th, 2010 at 11:46:30 AM EST
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