A former Goldman Sachs Group Inc. managing director has been named to a top position at the Securities and Exchange Commission, the agency tasked with regulating the multinational investment bank and numerous others. According to a press release, Andrew J. "Buddy" Donohue will become the SEC’s chief of staff, leaving his previous positions as managing director, associate general counsel and investment company general counsel at Goldman Sachs. Donohue was previously the director of the SEC’s division of investment management.
In Donohue's new role, he will be senior adviser to the chair of the SEC for matters related to policy, management and regulatory issues. “I am thrilled that Buddy will be returning to the SEC to provide his extensive knowledge and expertise to the agency,” said SEC Chair Mary Jo White in the release. “Buddy is a seasoned professional whose previous SEC and private sector experience will be invaluable in advancing all aspects of the agency’s mission.”
Similar employment moves have been identified as problematic by consumer financial advocates, including Massachusetts Sen. Elizabeth Warren and the Project on Government Oversight, who say it can blur the lines between the regulatory agency and the organizations it is tasked with regulating. The process -- commonly referred to as the revolving door because of the exchange between public and private sector -- has its benefits but also poses risks, according to Joe Newman, the director of communications for the Project on Government Oversight.
“When we see these people returning, almost immediately, they have extreme knowledge of the process -- and that’s fine, that something they will use to their advantage -- but we do think it gives them a leg up in many cases on the public interest,” Newman said. “They have the ability to bypass receptionists and go directly to their friends who are still working at the SEC.”
Goldman Sachs is one of the world’s largest investment banks, and has faced hefty fines from the SEC in the past, including $550 million to settle charges that the bank misled investors during the 2007 financial crash. Donohue has previously held positions as a partner in the Investment Management Practice Group at Morgan Lewis & Bockius LLP, at Merrill Lynch Investment Managers and Massachusetts Mutual Life Insurance Company.