After months of deliberation, Mary Jo White is finalizing her inner circle.
Ms. White, who became chairwoman of the Securities and Exchange Commission 10 months ago, has privately indicated her plans to name a new leader of the agency’s division of trading and markets, a powerful unit that monitors the day-to-day functioning of stock exchanges and the broader financial system. Her likely pick, according to people briefed on the matter, is Stephen Luparello, a former regulator turned corporate lawyer.
Mr. Luparello, a partner at the law firm Wilmer Hale, previously spent 16 years at the Financial Industry Regulatory Authority, Wall Street’s self-policing organization. And before that, he spent nearly a decade at the S.E.C., making his latest potential move something of a homecoming.
Ms. White has not formally offered him the job and has not finalized her decision, the people briefed on the matter said, but she is expected do so in the coming weeks. An announcement does not appear to be imminent.
Ms. White’s decision would fill the last top spot on her S.E.C. roster. A former federal prosecutor, Ms. White had already put her stamp on the agency, naming a new enforcement director and general counsel. On Wednesday, she appointed the first head of the agency’s Office of the Investor Advocate.
The choice for trading and markets was trickier. The role is akin to a top deputy, a Mr. or Ms. Fix-It in times of crisis.
The trading and markets division, for example, was on the front lines of repairing Facebook’s botched initial public offering and the so-called flash crash of May 2010, when a problematic trade led the Dow Jones industrial average to plummet more than 700 points in just minutes, only to mostly recover moments later. The mishaps came to a head in August, when a problem shut down all trading in Nasdaq stocks for three hours.
With the markets appearing more problematic by the day, the new leader of the S.E.C.’s trading and markets unit would inherit a long to-do list. For one, the agency is considering plans to revoke the special authority that exchanges have to regulate the same trading they host, a divisive issue for the agency and the markets. The unit’s new leader would also grapple with writing several new rules under the Dodd-Frank Act, the regulatory overhaul law passed in response to the 2008 financial crisis.
Mr. Luparello was long rumored to be Ms. White’s choice for the role. But the talks were informal at first, the people briefed on the matter said, throwing the job up for grabs.
Ms. White and Mr. Luparello resumed the talks this year. And Mr. Luparello probably had support from another S.E.C. commissioner, Dan Gallagher, who is thought to be close to Mr. Luparello. Mr. Gallagher, a Republican who is often skeptical of Dodd-Frank and other regulatory efforts, was the acting director of the trading and markets division after the crisis until he left the agency to join Wilmer Hale.
A spokesman for the S.E.C. declined to comment. Mr. Luparello also declined to comment.
Bloomberg News reported earlier that Mr. Luparello was in consideration for the role.
If the hiring does proceed, Ms. Luparello would succeed John Ramsay, known at the S.E.C. as a steady hand while filling the role on an interim basis. Mr. Ramsay, who is thought to be friends with Mr. Luparello, is eventually expected to return to the private sector.
Mr. Luparello spent the last year in the private sector - he works in the securities department at Wilmer Hale, a go-to firm for Wall Street banks - but his resume is heavy on the regulatory side. Indeed, his career often tracked the regulatory roles of Mary L. Schapiro, the former S.E.C. chairwoman.
At the S.E.C. more than two decades ago, he worked with Mr. Ramsay as an aide to Ms. Schapiro, who was a commissioner at the time. At the Commodity Futures Trading Commission, Mr. Luparello and Mr. Ramsay were aides to Ms. Schapiro, who was chairwoman at the time.
Mr. Luparello also worked with Ms. Schapiro at Finra, the self-regulatory group that she ran before rejoining the S.E.C. At Finra, Mr. Luparello rose to the role of vice chairman, in which he oversaw the group’s regulatory and enforcement efforts.
