H. David Kotz

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H. David Kotz
Born Harold David Kotz[1][2]
(1966-06-24) June 24, 1966 (age 51)
Toronto, Canada
Education
Employer Berkeley Research Group
Title Director

H. David Kotz is a Managing Director with the consulting firm of Berkeley Research Group LLC.[3]

Kotz was a litigation associate at three law firms from 1990–99, and then worked as an attorney/advisor and as Chief of the Office of Labor and Employee Relations at the U.S. Agency for International Development from 1999–2002. He worked at the Peace Corps in the Office of General Counsel as well as Inspector General, from 2002–07.[4]

He then was Inspector General at the U.S. Securities and Exchange Commission (SEC) from December 2007 until his resignation in January 2012.[5][6][7][8]

Education[edit]

Kotz graduated cum laude from the University of Maryland, College Park in 1987, with a B.A. in Government and Politics, and earned his J.D. at Cornell Law School in 1990.[9]

Law firms (1990–99)[edit]

In his early career, Kotz worked as a litigation associate at three law firms, working on commercial litigation, discrimination, personal injury, and sexual harassment matters: Graham & James (1990–92) and Stults & Balber (1992–94) in New York City, and Pepper Hamilton LLP (1994–99) in Washington, DC.[10][11][12][13]

US Agency for International Development (1999–2002)[edit]

Kotz worked at the US Agency for International Development (USAID) from 1999–2002, where he was an Attorney Advisor in the Office of the General Counsel and later a Chief in the Office of Labor and Employee Relations.[9][13][14]

Peace Corps (2002–07)[edit]

Kotz joined the Peace Corps in 2002, and worked there until 2007, during which time he handled labor arbitrations, employee grievances, and prosecutions of rapes, sexual assaults, and other violent crimes against volunteers.[12][14] For three years, he was an Associate General Counsel.[9] Starting in 2006, he worked for the Peace Corps as Inspector General.[9]

SEC (2007–12)[edit]

In December 2007, Kotz became the Inspector General at the Securities and Exchange Commission (SEC), following the resignation of his predecessor, Walter Stachnik.[8][15] He was tasked with conducting independent objective audits of SEC procedures and practices to promote economy, effectiveness, and efficiency. His reports involved many issues, including the SEC not uncovering the Madoff and Stanford Ponzi schemes, the Bear Stearns collapse and the SEC's office-leasing program after the Dodd-Frank financial overhaul.[9][16][17][18]

Investigations[edit]

Madoff[edit]

Kotz investigated why the SEC failed to detect the $19 billion Madoff fraud.[8] Madoff pleaded guilty to fraud and is now serving a 150-year sentence.[19] In September 2009, Kotz issued a 477-page report that described numerous failures on the part of the SEC in failing to uncover Madoff's Ponzi scheme, despite three examinations and two investigations.[8][19][20][21] Kotz followed that up with extensive recommendations for improvements to SEC procedures and training.[22] The report detailed six substantive complaints against Madoff which was received by the agency.[23] Kotz's investigation did not find evidence that any SEC personnel who worked on an SEC examination or investigation of Bernie Madoff had any financial or other inappropriate connection with Bernie Madoff or the Madoff family that influenced the conduct of their examination or investigatory work.[24] His investigation did find that the SEC received more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination and/or investigation of Bernie Madoff for operating a Ponzi scheme, and that despite three examinations and two investigations being conducted, a thorough and competent investigation or examination was never performed.[25]

Stanford[edit]

In March 2010, Kotz issued another report finding the SEC also failed to uncover a $7 billion Ponzi scheme perpetrated by Allen Stanford.[26] Kotz found that the Fort Worth, Texas office of the SEC conducted examinations of Standford in 1997, 1998, 2002 and 2004, concluding in each case that Stanford's Certificates of Deposit were likely a Ponzi scheme or a similar fraudulent scheme, but did not order a formal investigation until 2005.[27][28] Kotz also found that the former head of Enforcement in Fort Worth, Spencer Barasch, played a significant role in quashing investigations of Stanford and sought to represent Stanford on three occasions after he left the SEC. The report found that in 2006, Barasch did briefly represent Stanford.[28][29] In 2012, Barasch agreed to pay a $50,000 fine to settle a Justice Department conflict of interest claim.[30]

Pequot Capital[edit]

In October 2008, Kotz concluded in a 191-page report that there was evidence raising serious questions about the impartiality and fairness of the SEC's investigation of possible insider trading at Pequot Capital Management. The report criticized the "common practice" of giving outside lawyers' clients access to high-level SEC officials when they had complaints about front-line investigators.[31]

Pornography[edit]

In 2010, Kotz released a summary of investigations he conducted of 33 employees and contractors who used government computers to access and download pornographic images during business hours.[32][33][34][35][36]

SEC office lease[edit]

In 2011, Kotz issued a report criticizing the SEC for its 900,000-square-foot, $557 million, 10-year lease for new office space.[37][38][39] The report found that the SEC's Office of Administrative Services made a deeply flawed and unsound analysis to justify the need for 900,000 square feet, and grossly overestimated the amount of space needed. The analysis was based on estimates of increased funding from Congress to meet new duties for the SEC under the financial overhaul law that Congress enacted in July, the report said.[40][41]

Departure

On January 17, 2012, Kotz resigned from the SEC to join Gryphon Strategies, an investigative firm, to focus on conducting corporate fraud investigations as well as assisting whistleblowers in exposing fraud and improving government accountability.[42][43]

Gryphon Strategies (2012)[edit]

In late January 2012, Kotz joined Gryphon Strategies, a small New York corporate fraud investigation firm, as its Washington representative and managing director.[44][45]

Berkeley Research Group (2012–present)[edit]

In August 2012, Kotz joined the anti-corruption team as a director in the Financial Institutions practice at Berkeley Research Group.[46] In 2013, at Berkeley Research Group, Kotz issued a report commissioned by the National Futures Association regarding a $215 million fraud perpetrated by Russell Wasendorf, as CEO of Peregrine Financial Group. The report found regulators missed warning signs as far back as 1994 and multiple opportunities to catch the fraud.[47]

References[edit]

  1. ^ H. David Kotz. Marquis Who’s Who Biography. Retrieved February 17, 2013. 
  2. ^ "Porter v. Shah, No. 09-5167". US DC Circuit. June 1, 2010. Retrieved February 17, 2013. 
  3. ^ "H. David Kotz | Securities | Investigations | Anti-Money Laundering | Compliance". www.thinkbrg.com. Retrieved December 26, 2016. 
  4. ^ "Kotz David CV" (PDF). www.thinkbrg.com/. Berkeley Research Group. Retrieved December 26, 2016. 
  5. ^ Robert Schmidt (November 9, 2012). "SEC Fires Investigator Who Alleged Ethics Lapses, Lawyer Says". Business Week. Retrieved February 10, 2013. 
  6. ^ Schmidt, Robert; Gallu, Joshua (October 6, 2012). "Former SEC Watchdog Kotz Violated Ethics Rules, Review Finds". Bloomberg. Retrieved February 17, 2013. 
  7. ^ Weidner, David, "SEC losing credibility with Kotz’s exit", MarketWatch, January 17, 2012. Retrieved January 17, 2012.
  8. ^ a b c d "H. David Kotz". The Washington Post. July 24, 2012. Retrieved February 10, 2013. 
  9. ^ a b c d e "H. David Kotz Named New Inspector General at SEC". U.S. Securities and Exchange Commission. December 5, 2007. Retrieved February 10, 2013. 
  10. ^ "Grassley comments on New IG for the SEC". Grassley.senate.gov. December 5, 2007. Archived from the original on November 4, 2009. Retrieved May 17, 2016. 
  11. ^ Mike Scarcella (January 17, 2012). "SEC's Inspector General Leaving For Private Investigations Firm". Legal Times. Retrieved February 10, 2013. 
  12. ^ a b "Written Testimony of H. David Kotz" (PDF). April 17, 2012. Retrieved February 10, 2013. 
  13. ^ a b "CV of H David Kotz" (PDF). Retrieved February 10, 2013. 
  14. ^ a b "United States Securities and Exchange Commission leadership directory" (PDF). United States Securities and Exchange Commission [SEC]. 2007. Archived from the original (PDF) on January 14, 2012. Retrieved May 17, 2016. 
  15. ^ Phyllis Diamond (December 20, 2010). "Kotz: IG Probes Could Result in Referrals to Criminal Authorities". Bloomberg BNA. Retrieved March 1, 2013. 
  16. ^ "SEC Inspector General H. David Kotz to Leave Commission (press release)". SEC. January 17, 2012. Retrieved February 10, 2013. 
  17. ^ Kang, Cecilia (September 27, 2008). "Report Says SEC Failed in Oversight of Bear Stearns". The Washington Post. ISSN 0190-8286. Retrieved December 26, 2016. 
  18. ^ "Insight: How Allen Stanford kept the SEC at bay". Reuters. January 26, 2012. Retrieved December 26, 2016. 
  19. ^ a b Diana B. Henriques, "Lapses Helped Scheme, Madoff Told Investigators", October 30, 2009, The New York Times
  20. ^ Jaffee, Mathew (September 2, 2009). “SEC Incompetent in Investigating Madoff Ponzi Scheme, Inspector General Finds”, ABC News
  21. ^ United States Securities and Exchange commission; Office of Inspector General (September 16, 2011). "Report of Investigation of Conflict of Interest Arising from Former General Counsel's Participation in Madoff-Related Matters" (PDF). Retrieved February 18, 2013. 
  22. ^ Kouwe, Zachary (September 29, 2009). “In Harsh Reports on S.E.C.’s Fraud Failures, a Watchdog Urges Sweeping Changes”, The New York Times
  23. ^ Stout, David (September 2, 2009). "Scathing Report on S.E.C. Failure to Uncover Madoff's Scheme". The New York Times. ISSN 0362-4331. Retrieved December 26, 2016. 
  24. ^ "Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme" (PDF). www.sec.gov. U.S. Securities and Exchange Commission. August 31, 2009. Retrieved December 26, 2016. 
  25. ^ "Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme" (PDF). www.sec.gov. U.S. Securities and Exchange Commission. August 31, 2009. Retrieved December 26, 2016. 
  26. ^ Robert Schmidt; Joshua Gallu (October 6, 2012). "Former SEC Watchdog Kotz Violated Ethics Rules, Review Finds". Business Week. Retrieved February 12, 2013. 
  27. ^ Margolies, Dan (April 16, 2010). "SEC suspected Stanford scheme for years: watchdog". Reuters. Retrieved February 17, 2013. 
  28. ^ a b "SEC suspected Stanford scheme for years: watchdog". Reuters. April 16, 2010. Retrieved December 26, 2016. 
  29. ^ "Report of Investigation Case No. OIG-526 Investigation of the SEC's Response to Concerns Regarding Robert Allen Stanford's Alleged Ponzi Scheme" (PDF). www.sec.gov. United States Securities and Exchange Commission Of Inspector General. Retrieved December 26, 2016. 
  30. ^ Harris, Andrew (January 18, 2012). "Ex-SEC Enforcer Settles Stanford Ethics Dispute With U.S". Business Week. Retrieved May 15, 2016. 
  31. ^ Docket, Securities. "Report by SEC's Inspector General Questions SEC's Impartiality in Pequot Case". Retrieved December 26, 2016. 
  32. ^ Edward Wyatt (January 17, 2012). "Inspector General to Leave S.E.C". New York Times. Retrieved March 1, 2013. 
  33. ^ David Lindroff (June 2, 2011). "Looking For The Bare Facts At The SEC". On Wall Street. Archived from the original on April 11, 2013. Retrieved February 19, 2013. 
  34. ^ Matthew Jaffe (June 1, 2011). "Security and Exchange Commission Inspector General David Kotz Caught Three More Employees Watching Porn at Work". ABC News. Retrieved February 19, 2013. 
  35. ^ "More Details on the S.E.C.'s Pornography Problem". New York Times. March 24, 2010. Retrieved February 19, 2013. 
  36. ^ O'Keefe, Ed (April 24, 2010). "Report says 33 SEC staff members viewed pornography at work". The Washington Post. ISSN 0190-8286. Retrieved December 26, 2016. 
  37. ^ "SEC Enforcers Frozen as Watchdog Unleashes 'Chilling' Probes". Business Week. November 8, 2011. Retrieved February 19, 2013. 
  38. ^ Protess, Ben (July 7, 2011). "S.E.C. Spending Questioned". New York Times. Retrieved February 19, 2013. 
  39. ^ Holzer, Jessica (July 7, 2011). "SEC Leasing Flap Intensifies". Wall Street Journal. Retrieved February 19, 2013. 
  40. ^ "San Diego News, California & National News - San Diego Union Tribune". www.sandiegouniontribune.com. Retrieved December 26, 2016. 
  41. ^ "Report of Investigation Case No. OIG-553 "Improper Actions Relating to the Leasing of Office Space"" (PDF). www.sec.gov. United States Securities and Exchange Commission Office of Inspector General. May 16, 2011. Retrieved December 26, 2016. 
  42. ^ Wyatt, Edward (January 17, 2012). "Inspector General to Leave SEC". Retrieved December 26, 2016 – via New York Times. 
  43. ^ "SEC Inspector General H. David Kotz to Leave Commission". www.sec.gov. U.S. Securities and Exchange Commission. January 17, 2012. Retrieved December 26, 2016. 
  44. ^ "Financial Services: Kotz". CQ Weekly. October 6, 2012. Retrieved February 17, 2013. 
  45. ^ "H. David Kotz, Former SEC Inspector General, Joins Gryphon Strategies as a Managing Director (press release)" (Press release). PR Newswire. February 7, 2012. Retrieved February 17, 2013. 
  46. ^ "Welcome New Sponsors". Corruption, Crime & Compliance. August 14, 2012. Retrieved February 17, 2013. 
  47. ^ Cohn, Scott (January 31, 2013). "Regulators Missed Peregrine Warning Signs as Early as 1994: Report". Retrieved December 26, 2016 – via CNBC.