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Chertoff Touted as New SEC Chairman

The Justice Department official is seen as a frontrunner, but he appears uninterested.

November 15, 2002|Walter Hamilton | Times Staff Writer

NEW YORK — Michael Chertoff, the head of the Justice Department's criminal division who has helped spearhead this year's corporate-fraud crackdown, emerged early Thursday as a leading candidate to become chairman of the Securities and Exchange Commission.

But by the end of the day his lead appeared to have faded, perhaps at his own request.

The Justice Department issued a statement indicating that Chertoff would prefer to stay where he is.

"Michael Chertoff is happy in the job he currently holds, and he looks forward to helping the president and the attorney general continue fighting the war against terrorism," said Bryan Sierra, a Justice Department spokesman. He declined to comment further.

The Bush administration is scrambling to replace Harvey L. Pitt, who announced his resignation as SEC chairman last week after a political uproar over his choice of William H. Webster to head the nation's new accounting-oversight board. Webster resigned Tuesday.

Early Thursday, rumors swirled that Chertoff would get the nod. The assistant U.S. attorney general, 48, has helped lead investigations into alleged fraud at Enron Corp. and WorldCom Inc., and directed the criminal case against accounting firm Arthur Andersen. As a former counsel to the Senate, he ran the probe of former President Clinton's Arkansas land dealings.

He also has played a major role in the pursuit of terrorism suspects.

Chertoff's name has been mentioned prominently as a potential SEC choice in part because his law-and-order background and perceived lack of ethical conflicts would help to smooth a Senate confirmation.

He is a respected prosecutor who would help restore credibility at the SEC, which has been riven by the repeated controversies that dogged Pitt, legal experts said.

"He's a person of impeccable credentials and reputation," said Jonathan Macey, a Cornell University law professor.

Chertoff also has strong political skills, honed in part through his close work with the administration on terrorism and corporate crime, said Paul Fishman, who worked with Chertoff as a prosecutor in New Jersey.

"He's had a fair bit of experience dealing with politics," Fishman said. "He knows more than a little bit about the way the Hill works."

However, Chertoff's aggressive record as a prosecutor, and his lack of experience in regulatory matters, could provoke opposition, some said.

The prosecution of Andersen, which resulted in an obstruction-of-justice conviction stemming from the firm's work for Enron, effectively put Andersen out of business. Some critics said the punishment didn't fit the crime.

A Chertoff nomination could strike fear in the accounting industry, said John Coffee, a Columbia University law professor. "Chertoff is their real nemesis," Coffee said. "I suspect his appointment would send shudders across the accounting profession."

Also, Chertoff lacks a background in regulatory and technical financial issues, which some say are highly desirable in an SEC chief, given the markets' complexity.

Other names mentioned in recent days as Pitt successors include Mary Schapiro, vice chairwoman of NASD, the securities industry's self-regulatory group; former federal judge Stanley Sporkin; and Richard Breeden, a former SEC chairman.

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