Law360 Features Philip Khinda for Practice Leaders Q&A

March 22, 2013

Q&A With Steptoe's Philip Khinda

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Law360, New York (March 21, 2013, 12:15 PM ET) -- Philip Khinda is a partner in Steptoe & Johnson LLP's Washington, D.C., office. He co-chairs the firm's U.S. Securities and Exchange Commission enforcement practice and is a member of its white collar criminal defense practice. He is also chairman of the ethics and investigations subcommittee of the ABA's Corporate Governance Committee. He regularly assists corporate boards and management in conducting internal investigations, and in addressing sensitive governance and financial issues, including in connection with related securities litigation and government investigations, particularly those by the SEC and federal and state prosecutors.

Khinda is a former member of the SEC’s enforcement staff and has represented individual, corporate and board committee clients in connection with investigations and litigation involving Rite Aid, Enron, Adelphia, Global Crossing, AOL Time Warner, and the Southern District of New York-based insider trading matters. His leadership of the CalPERS Special Review, its fee recovery of more than $200 million for the nation's largest state pension fund, and its March 2011 public report on pay-to-play and public corruption issues are among his more recent efforts.

Q: What is the most challenging case you have worked on and what made it challenging?

A: The best cases, to my mind, are those with multiple fronts and dimensions that pose unusual legal, business and practical challenges. Our ongoing work for CalPERS is a good example.

In addition to completing an 18-month internal investigation, we negotiated a series of new strategic relationships with its leading money managers that faced placement agent issues. We’re also still assessing claims it may have against others, and working with federal and state authorities, including the U.S. DOJ, the SEC and the California Attorney General, as they pursue those that harmed the pension fund. We’ve also addressed issues raised by the IRS, the California Public Records Act, the California Fair Political Practices Commission and by related litigation in federal and state courts in California and elsewhere — and all of it done under intense media scrutiny. It's been an extraordinary series of challenges and successes over the last three years, and a privilege to serve the institution.

Q: What aspects of your practice area are in need of reform and why?

A: The pendency of government investigations. Many complain about how long it takes for the SEC, for example, to close the matters it decides not to pursue. As someone who’s spent years counseling boards and institutions often waiting for some form of redress, I can tell you that it’s how long they take investigating even when you want them to bring an enforcement action that’s as much the problem. Hopefully, the Supreme Court’s recent decision in Gabelli, holding the government to a five-year limitation from the occurrence of the misconduct, will help resolve that. Absent an ongoing cover-up or conspiracy to obstruct justice, there is no good reason that a serious fraud can’t be discovered and investigated within a five-year span.

Q: What is an important issue or case relevant to your practice area and why?

A: Leadership at the SEC and its enforcement division. Too much time has been spent over the last few years simply addressing the perceived survival risk associated with the SEC — a bureaucrat’s approach. The agency needs to take back its place as chief regulator, policy maker and enforcer of our securities markets.

To that end, Mary Jo White’s nomination to serve as SEC chair is an exceedingly good one. Not simply because of her law enforcement experience, but because of her management experience. She’s run substantial organizations in both government and private practice with great success and, indeed, ran the largest multinational investigation the profession has ever seen in Siemens — and did the latter in less than five years, I might add.

As to enforcement priorities, it’s astounding to me that financial fraud cases are at a 10-year low given that they were once a core segment of the SEC’s enforcement program. I’m hopeful that the tone she sets at the top will inspire the commission and its staff to reclaim their old glory and standing among the most elite agencies in government.

Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.

A: I've had the good fortune of working against and alongside many of the greats over the years, both in government and private practice. In public service, there isn't anyone better than Peter Mixon, the general counsel of CalPERS. Clear-headed and courageous when facing a crisis, and as thoughtful and passionate a public servant as you'll find anywhere.

In private practice, we certainly have our fair share here at Steptoe and, looking elsewhere, two come to mind very quickly, both extraordinary gentlemen: Ralph Ferrara of Proskauer, one of the grand masters in securities law circles, who taught me never to underestimate the power of creativity and force of will; and Brad Karp, the chairman of Paul Weiss, a diplomat and extraordinary litigator whose work ethic is like a force of nature.

Q: What is a mistake you made early in your career and what did you learn from it?

A: Twenty years in Washington teaches you to be a passionate believer in the good, quiet result. At least, that’s what working here did for me early on. Resolving government investigations without charges ever being filed, or any public disclosure of the government's interest ever being made, is a specialty of sorts and the best result for any client. Getting that from the government requires not only command but grace and diplomacy. You won’t see your face in the paper or your work on the evening news and, like the agents in Argo, you have to be completely comfortable knowing that the world may never know all that you did for others. That’s what’s best for the client. In the end, no one really wants to win on appeal. They want to be at a cocktail party two years from now and, if asked about some awful matter, be able to smile and say that it quietly went away.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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