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U.S. Securities and Exchange Commission


Tenure Includes Agency's Historic Cases Relating to Enron, WorldCom, Adelphia, Qwest, Tyco and HealthSouth, as Well as Crackdowns Against NYSE Specialists, Research Analyst Conflicts and Mutual Fund Abuses


Washington, D.C., April 14, 2005 - Stephen M. Cutler, Director of the Securities and Exchange Commission's Division of Enforcement, announced today that he intends to leave the Commission in a month's time. Mr. Cutler, 43, said he plans to return to the private sector. He was named Enforcement Director in October 2001.

"Steve Cutler has been an outstanding leader of the Commission's enforcement program. America's investors have been enormously well-served by Steve's keen intellect, superb judgment and abiding sense of justice," said SEC Chairman William H. Donaldson. "He is what every prosecutor should be: tough but fair. We will miss Steve's dedication, leadership and integrity as we continue our critical efforts to pursue and root out wrongdoing in our marketplace."

Mr. Cutler said, "I have had the very good fortune to work with an extraordinary group of colleagues during an historic period for the Commission and our capital markets. I am proud to have been a part of the agency's efforts and considerable accomplishments in the enforcement arena."

Mr. Cutler has overseen the agency's investigations of some of the largest financial reporting failures in the nation's history, including those at Enron, WorldCom, Adelphia, Qwest, Tyco and HealthSouth. These investigations led to enforcement actions against, among others, Kenneth Lay, Jeffrey Skilling, Andrew Fastow, Scott Sullivan, John Rigas, Joseph Nacchio, Dennis Kozlowsi and Richard Scrushy.

During Mr. Cutler's tenure, the Commission also obtained judgments in enforcement actions totaling more than $6 billion in penalties and disgorgement, more than $4.5 billion of which is being returned to harmed investors. Among them were WorldCom's $750 million penalty (the largest against a public company in Commission history) and the more recent $300 million penalty against AOL-Time Warner. Of the 12 largest penalties in Commission history, ten were obtained in cases brought under Mr. Cutler's leadership.

In addition, Mr. Cutler

  • led the Commission's groundbreaking efforts against banks, insurance companies and other financial intermediaries for their roles in a number of public company financial reporting failures, including the Commission's cases against Merrill Lynch, Citigroup, J.P. Morgan and CIBC in connection with Enron's collapse; and the cases against AIG for its transactions with two different public companies;
  • helped bring some of the agency's significant financial reporting cases involving foreign companies, including Parmalat, Royal Ahold, Royal Dutch Shell, Hollinger, TV Azteca and Vivendi;
  • oversaw the agency's investigations that led to historic cases against the New York Stock Exchange, its specialist firms and a number of individual specialists for inter-positioning and trading ahead violations;
  • spearheaded the agency's crackdown against illegal IPO allocation practices on Wall Street, leading to significant cases against Credit Suisse First Boston, J.P. Morgan, Goldman Sachs and Morgan Stanley;
  • led the agency's enforcement efforts against mutual fund abuses, including the agency's revenue sharing (or "shelf space") cases against Morgan Stanley, Pimco, Franklin Templeton, Putnam, MFS, Edward D. Jones and others, as well as the agency's cases involving market timing and late trading against Bank of America, Strong Capital Management, Janus, Pilgrim Baxter, Alliance Capital, Invesco and others;
  • played a key role in the historic "global settlement" with Wall Street brokerage firms over research analyst conflicts of interest, which called for payments totaling nearly $1.5 billion, as well as significant reforms;
  • stepped up the Commission's efforts to hold audit firms (as well as their personnel) accountable for misconduct, including significant cases against, among others, KPMG for its audits of Xerox and Gemstar, and Ernst & Young and PriceWaterhouseCoopers for their violations of the auditor independence rules; and
  • initiated a comprehensive review and self-assessment of conflicts of interest by the country's largest financial services firms, an initiative that has been emulated by other regulators around the world.

Prior to joining the Commission as the Deputy Director of the Division of Enforcement in January 1999, Mr. Cutler was a partner at the Washington, D.C., law firm of Wilmer, Cutler & Pickering. Previously, he served as a Visiting Fellow at the Center for Law in the Public Interest in Los Angeles and as a law clerk to Judge Dorothy W. Nelson of the United States Court of Appeals for the Ninth Circuit.

Mr. Cutler received his B.A. summa cum laude from Yale University and his J.D. from Yale Law School, where he was an Editor of the Yale Law Journal.

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Modified: 04/13/2005