July 16, 2013 / 6:29 PM / 4 years ago

U.S. SEC lawyer who oversaw financial crisis cases to leave

WASHINGTON, July 16 (Reuters) - Kenneth Lench, a 23-year veteran attorney at the U.S. Securities and Exchange Commission who oversaw many financial crisis-related cases against Wall Street, is retiring from the agency and returning to the private sector.

The SEC on Tuesday publicly announced Lench’s retirement, which had been expected by agency insiders for a few months.

Lench first joined the SEC’s enforcement division as a staff attorney in 1990 and rose through the ranks.

Since 2010, he has served as the head of the SEC’s structured and new products unit, one of five specialized enforcement sections. It focuses on cases involving asset-backed securities, derivatives and other complex products.

The unit’s most well-known case under Lench’s leadership involved a $550 million settlement with Goldman Sachs over allegations the bank misled investors about a collateralized debt obligation known as ABACUS.

Specifically, the SEC alleged that Goldman had allowed hedge fund Paulson & Co. to help select the assets underlying the CDO and later bet against it - a fact unbeknownst to investors.

Although the bank settled with the SEC, the SEC’s case against Goldman Sachs trader Fabrice Tourre is ongoing.

Tourre’s trial in a federal court in Manhattan got under way on Monday. [ID: nL1N0FL1FG]

In addition to the Goldman case, Lench oversaw numerous cases involving disclosures about asset-backed securities against banks including JPMorgan, Citigroup, Credit Suisse, Mizuho, Wells Fargo, Stifel Nicolaus & Co, and RBC Capital Markets, a unit of the Royal Bank of Canada, among others.

“Ken’s determination to always seek the right answers and his devotion to protecting investors by working tirelessly with his staff and colleagues made everyone around him better,” said George Canellos, a co-director of the SEC’s enforcement division.

The SEC’s announcement did not say where Lench will go, but there is speculation he will head to a law firm. In the past few weeks leading up to his departure, he has been recused on a variety of cases involving certain firms.

The SEC said that after Lench leaves, his deputy chief Reid Muoio will temporarily lead the unit until a replacement is named.

Lench is the latest in a series of high-profile attorneys to depart the SEC in recent months. Earlier this month the SEC said that Merri Jo Gillette, the head of the Chicago office, was also leaving.

Other departures this year have included the heads of the asset management and municipal securities specialized enforcement units, as well as the heads of the Boston and San Francisco offices.

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