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SEC official brings a prosecutor’s resume

Agency’s new Boston chief may cast a colder eye on region’s financial industries

Paul Levenson, 56, is bringing his criminal-law experience to the SEC’s civil oversight of $8 trillion worth of hedge funds, mutual funds, and brokerages across the region.
Paul Levenson, 56, is bringing his criminal-law experience to the SEC’s civil oversight of $8 trillion worth of hedge funds, mutual funds, and brokerages across the region.(WENDY MAEDA/GLOBE STAFF)

Paul Levenson is a longtime criminal prosecutor who doesn't shy away from a courtroom fight. He relishes the chance to bring a complex fraud case to trial and convince a jury he's right.

That's the kind of lawyer the Securities and Exchange Commission's chief, Mary Jo White, had in mind when she set out to put more bite into federal regulation of the investment industry. In choosing Levenson to lead the SEC in Boston, she tapped an assistant US attorney with 24 years of experience, most recently pursuing white-collar crime.

Now Levenson, 56, is bringing his criminal-law experience to the SEC's civil oversight of $8 trillion worth of hedge funds, mutual funds, and brokerages across the region.

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"A huge chunk of the retirement savings of America is under management in New England,'' said Levenson, who took over the SEC office in late October. "Making sure that it is safe, making sure that people who administer it and manage it are treating customers fairly, are just critical missions.''

It's a tall order, as the world saw when the SEC and other regulators missed the growth of risky investments on balance sheets of banks and brokerage giants in the run-up to the financial crisis.

And Levenson faces a learning curve of his own, now leading a staff of 150 that's responsible for routine examinations as well as enforcement, up from a team of about a dozen at the US attorney's office.

Wiry and energetic, Levenson is a Harvard College and Harvard Law School graduate who wasn't even sure he wanted to be a lawyer. His first job was as a union organizer for garment workers.

At the US attorney's office, he prosecuted cases such as Centennial Technologies Inc., one of the hottest stocks of 1996, after its chief executive inflated sales and earnings figures to pump up the share price. Emanuel Pinez, the CEO, was sentenced to five years in jail and ordered to pay $150 million in restitution.

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Earlier in his career, Levenson won a conviction against Trevor Watson, in a South End shooting case. Watson served prison time but became a repeat offender who later stabbed former Boston Celtics star Paul Pierce.

Proving financial fraud usually involves "a complicated, nuanced story. And yet at the heart of it, there are real questions of right and wrong, good and evil,'' Levenson said. "Bringing that to bear in a way that 12 ordinary people can understand it clearly is both important and challenging.''

Colleagues call Levenson smart and cool under pressure.

"He's a great trial attorney,'' said Carmen Ortiz, the US attorney in Boston, who worked with Levenson for 16 years. Bringing Levenson into the SEC, she said, signals that the agency will be "more aggressive and inquisitive about matters that come before them. I think Paul will direct his staff that way.''

White, a former prosecutor who took the top job at the SEC in April, has made clear that she wants to take more cases to trial. That's a departure from the agency's usual approach of pursuing settlements with Wall Street firms and small-town brokers accused of breaking the law, in which even bad actors often do not have to admit they did anything wrong.

Walter Ricciardi, a former Boston SEC chief, said the trend toward hiring criminal prosecutors at the SEC started several years ago but is clearly continuing under White. He said that, in his experience, people who are skilled at criminal investigations do well on the civil side.

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Levenson also said he will readily share information with his former colleagues on the criminal side, as his predecessor, David Bergers, is widely said to have done. Collaboration among regulators has taken a higher priority since the financial crisis, and following the Bernard Madoff Ponzi scheme, an epic fraud the SEC failed to detect, even after the Boston whistle-blower Harry Markopolos brought it to their attention.

"That's always going to sting,'' Levenson said.

In the Madoff scandal, Boston SEC regulators could not persuade their New York counterparts to pick up the case.

"Every responsible organization should take any setback as an opportunity to look hard at themselves and see what can they do better,'' Levenson said.

Another more recent shift at the SEC has led to the creation of specialty units of people who focus on particular areas, such as asset management and structured products. Ricciardi said that reorganizing people at the agency around areas of expertise should help detect problems earlier. "You spend all your time investigating just those things, you're going to be a lot more sophisticated,'' he said.

The head of one of those units sits in the office next door to Levenson's, overlooking downtown Boston from a 25th-floor perch. LeeAnn Ghazil Gaunt oversees the Municipal Securities and Public Pensions group, an area of particular interest to Levenson.

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Other resources are tight at the agency, where the budget is frozen due to the federal sequester, but the SEC isn't skimping on its commitment to sort through 3,000 tips that come in nationwide over the phone, via e-mail, and by regular mail. In Boston, two attorneys and a paralegal are assigned to the tips, complaints, and referrals program.

That's good by Levenson, who's a big believer "you always take the call,'' so that no leads are missed. He's known to be good at separating the strong cases from the weak, a trait colleagues say will behoove him at the SEC.

"He'll be willing to push a case to trial if he needs to,'' said John Falvey Jr., a partner at Goodwin Procter in Boston and a former assistant US attorney who led the Centennial prosecution.

Now sitting on the opposing side of the table, Falvey expects to get a fair hearing when he faces Levenson. But he doesn't expect a pushover.

"He's a very cool customer,'' Falvey said. "But he can be a ferociously hard worker. And he can be tough.''

Paul Levenson

Age: 56

Education: Harvard College, Harvard Law School

First job: Field organizer, International Ladies' Garment Workers Union

Last job: Chief of Economic Crimes Unit, US attorney's office, Boston

High-profile case: Prosecuted Centennial Technologies fraud case in 1990s

Hobby: Cycling


Beth Healy can be reached at Beth.Healy@globe.com.