The Non-Revolving Door

Journal of Corporation Law (April 2021 Forthcoming)

78 Pages Posted: 26 Aug 2020 Last revised: 24 Sep 2020

Date Written: August 14, 2020

Abstract

For decades, commentators have warned about the “revolving door” between the SEC and the regulated industry. So far, however, the debate has overlooked a different “door” SEC attorneys might walk through. Joining a plaintiffs’ side securities litigation firm would seem to be an appealing option for SEC attorneys looking to continue pursuing the same core mission of protecting investors and holding companies accountable for fraud and misconduct. Courts, Congress and SEC leaders consistently describe private litigation as a vital “complement” to the SEC’s own work. There is substantial overlap between the legal regimes, types of cases, and legal skills relevant to both SEC enforcement and private securities litigation. As to compensation, I estimate the revenues per lawyer at one elite plaintiffs’ firm and find that this figure compares very favorably with the RPL of leading defense firms. And, in at least some other areas, attorneys seem to move easily between public and private enforcement.

Given all this, one might expect that SEC attorneys regularly make their way to the plaintiffs’ bar, and vice versa.

But it is not so.

This paper shows that the door between the SEC and the plaintiffs’ bar does not revolve. Among other things, I show that none of the ten leading plaintiffs’-side firms employ anyone with recent SEC experience doing plaintiffs’ side litigation; none of the enforcement attorneys I identified as working for the agency in 2015 left to do plaintiffs’ side litigation; none of the current upper- and middle-managers in the SEC’s enforcement division have any prior plaintiffs’ side experience; and only five of the enforcement attorneys I identified as working for the agency in 2019 had prior plaintiffs’ side experience.

This “non-revolving door” between the SEC and the plaintiffs bar is an intriguing, overlooked feature of the securities enforcement in the United States. Among other things, it raises the prospect that SEC attorneys might have come to embrace the defense bar’s hostile and skeptical view of the social value of securities class action litigation, with significant consequences for the securities enforcement landscape.

Keywords: Public and Private Securities Enforcement; Securities Regulation; Revolving Door

Suggested Citation

Platt, Alexander I., The Non-Revolving Door (August 14, 2020). Journal of Corporation Law (April 2021 Forthcoming), Available at SSRN: https://ssrn.com/abstract=3674179

Alexander I. Platt (Contact Author)

University of Kansas School of Law ( email )

Green Hall
1535 W. 15th Street
Lawrence, KS 66045-7577
United States

HOME PAGE: http://law.ku.edu/alexander-platt

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