Last month, I wrote a column discussing the recent study by the American Accounting Association that put the claims that SEC enforcement is compromised by a "revolving door" problem under the microscope for some rigorous, scientific testing. As I noted in the column, 

The study -- the first to collect and analyze empirical evidence on the consequences of the revolving door phenomenon at the SEC -- found that the intensity of SEC enforcement efforts was unaffected when an SEC lawyer later left to join a law firm. In fact, the study found that enforcement was actually more aggressive when an SEC lawyer later left to join certain types of law firms. “Our evidence is thus inconsistent with popular concerns that revolving doors undermine the SEC's enforcement efforts,” the AAA stated.

The AAA study is consistent with my own view on this issue: that SEC lawyers who are interested in someday leaving the SEC for private practice are motivated to gain experience and get noticed by bringing important, high-impact cases -- and not to engage in "lax" enforcement, as critics of the revolving door allege.

Others had different reactions to the AAA study, however. In her On the Case column, Alison Frankel wrote that the AAA study should not be believed because, among other things, she doubted "whether the authors could account for the subtle influence SEC alumni might exert on their former colleagues before matters become enforcement actions."

In fairness to Frankel, the point of her column was not necessarily that the revolving door caused weak enforcement, but rather that the study might be unable to evaluate certain "unmeasurables" such as the influence of SEC alumni. Regardless, Frankel's "Don't Believe the Study" column drew an immediate reply from the SEC, which asked Frankel if SEC Enforcement Director Robert Khuzami could write a guest post in response. Frankel agreed, and that response was posted here today -- and it pulls no punches.

In his post, Khuzami states that the conclusion reached in the AAA study is not at all surprising to him based on his own years of public service. He argues that

Enforcement staff, having landed a highly sought-after and difficult-to-obtain job, often passing up other opportunities in the process, would not risk reputation and career and even jail by undermining an investigation for a possible future job prospect. Any enforcement staff member who would consider such a betrayal would be so lacking in respect and credibility as to be of no value to future employers. Nor would they get hired -- to put it bluntly, would you hire someone so dishonest, so without principle and held in low esteem by former colleagues (which they would have to be to consider such an act of deceit) to represent you in matters of importance? I have seen no evidence of such a betrayal in my years at the SEC, or in my 15 years in public service. To believe the critics on this point is to have a disturbingly cynical and misguided view of public service and the dedicated and professional members of the Enforcement Division.

In addition, Khuzami points out that "enforcement recommendations are made by teams of attorneys, with multiple levels of review and scrutiny throughout the agency -- all of which means that it is virtually impossible for any one person to make decisions on a case based on anything other than the facts, the evidence, and the law."

Finally, Khuzami concludes his post with the following parting shot: 

In the face of overwhelming proof to the contrary, and armed with nothing but cynical assumptions and speculation, commentators perpetuating this revolving door myth do a disservice to the hard-working and dedicated enforcement staff. Equally importantly, they create unfounded cynicism about public institutions and public servants, and the last thing any of us need is more cynicism.

Amen.

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