NEW YORK (Reuters) - Benjamin Lawsky is stepping down as New York state’s financial regulator in June, after four years of running the newly created agency and gaining a reputation as a maverick in bringing cases against global banks over misconduct.
Lawsky is leaving the New York State Department of Financial Services (NYSDFS) after helping extract record settlements from foreign banks licensed to operate in New York, and often proving a thorn in the side of other U.S. authorities who have expressed frustration at his negotiating tactics and at times his going after banks over alleged misconduct without coordination.
The news was announced on Wednesday just hours after Lawsky and other U.S. authorities announced a near-$6 billion settlement with major global banks over manipulation of foreign exchange rates.
Lawsky plans to open his own New York-based legal and consulting firm, according to a person familiar with the matter. He will handle financial work, including cyber security and payments technology, the person said.
Come fall, he also will be a visiting lecturer at Stanford University’s “Cyber Initiative,” the person said, which deals with cyber vulnerability, according to its website.
Lawsky could not be reached for comment on Wednesday. On Monday, asked to respond to a tip that he was expected to leave in early June, Lawsky told Reuters he had not made any decisions about his future.
Lawsky’s departure raises questions over whether the agency he supervises will maintain its reputation as an aggressive and unconventional overseer of Wall Street and foreign banks.
But speaking at the Reuters Financial Regulation Summit last week, he stressed that the agency would continue its strong oversight of financial markets whether he is in the job or not.
“You don’t stay in these kinds of jobs forever. Whether I’m in the corner office or someone else is into the future, my hope is that DFS is going to keep doing the work it’s doing,” he told the Reuters Summit.
“At the end of the day, it’s not Ben Lawsky’s DFS, it’s Andrew Cuomo’s DFS. He put together the agency initially because he thought it could be an effective regulator and I hope we’ve proved him correct,” Lawsky said, referring to the New York Governor who set up the agency four years ago.
Cuomo’s intervening in a landmark $8.9 billion agreement with BNP Paribas last year raised questions of whether record bank penalties had been influenced by politics.
As Reuters reported in July, citing sources, officials involved in the talks were told that Lawsky would not sign off on his portion of the settlement unless a side agreement involving the extra money for the state was reached.
Lawsky’s signature was crucial to the larger agreement because he had the ability to pull BNP’s all-important license to operate in New York as the bank was set to plead guilty to criminal charges over the violations in both state and federal court.
A former chief of staff for Cuomo, Lawsky was nominated to be head of the department by Cuomo in 2011. He grabbed headlines in 2012 when he threatened to revoke Standard Chartered Plc’s license to operate in New York after accusing the London-based bank of hiding $250 billion of Iran-linked transactions from regulators.
Using a banking license as public leverage was an unusual move, creating an uproar that swept across the Atlantic and paving the way for a quick $340 million settlement between Standard Chartered and Lawsky.
Since then, the regulator has been viewed as a force to be reckoned with, and has made a mark on other landmark agreements with foreign banks over sanctions and tax-related violations, forcing resignations, business suspensions, and reforms.
Barclays, which was fined a record $2.4 billion on Wednesday for trying to rig the foreign exchange market, has also agreed to fire eight bank employees in a related deal with the New York regulator.
The agency is also conducting a separate probe into Barclays and other New York-licensed banks over whether they used computerized programs to favor their own interests at the expense of clients. (Additional reporting by John McCrank and Jonathan Stempel, Editing by Richard Chang, Bernard Orr)