SEC’s Office of Risk Assessment: Withered, but Revitalized in 2008

Today’s in-depth Washington Post interview with SEC Chairman Christopher Cox includes a discussion of the reduction of the SEC’s Office of Risk Assessment from seven people to one person during Cox’s tenure.  It states:

Another staffing shift was underway at the Office of Risk Assessment, formed by Cox’s predecessor, William H. Donaldson, to spot emerging problems in the financial markets. But under Cox, the office, which once had slots for seven people, eventually dwindled to just one. “That office withered away,” said Bruce Carton, a former SEC enforcement lawyer. “It died on the vine under Cox.”

While my quote above is accurate, in fairness to the Cox and the SEC it should also be noted that, as I wrote about at length in two articles for Compliance Week (click here and here), in 2008 the ORA was restored to its former size under Cox and the new Director of ORA, Jonathan Sokobin.  As I wrote here in late October,

According to Mr. Sokobin, when Chairman Cox arrived at the SEC in 2005, the ORA did employ 7 people. By the time then-Director Charles Fishkin left ORA in early 2007, however, that number had fallen below 7, and those who did remain were gradually moved out of ORA and integrated into risk assessment functions elsewhere in the agency in the over one year it took for the SEC to replace Mr. Fishkin with Mr. Sokobin. As a result, Mr. Sokobin acknowledges that as Mr. Turner testified, he “inherited an office of one” when he was appointed to the Director position in March 2008.

Mr. Sokobin further explained that since taking over as ORA Director in March 2008, he has been able to quickly rebuild his staff back up to 7 people.