CFTC to tap New York prosecutor to head enforcement unit -sources

WASHINGTON/NEW YORK (Reuters) - The top U.S. derivatives regulator is planning to tap a federal prosecutor in Manhattan to oversee the agency’s enforcement division, according to people familiar with the matter.

James McDonald, an assistant U.S. Attorney for the Southern District of New York, is slated to become enforcement director of the Commodity Futures Trading Commission next month, the sources said, speaking anonymously because a public announcement has not been made.

McDonald declined to comment through a spokesman at the U.S. Attorney’s Office for the Southern District of New York.

In tapping McDonald, the CFTC’s acting Chairman J. Christopher Giancarlo is taking steps to make good on a promise that the agency will go after law-breakers, even as it seeks to ease regulations deemed too costly and burdensome.

Giancarlo, a Republican who was nominated by President Donald Trump to serve as permanent CFTC chairman on Tuesday, said in a speech before the Futures Industry Association’s members on Wednesday that “there will be no pause, let up or reduction in our duty to enforce the law and punish wrongdoing in our derivatives markets.”

He also announced additional steps to bolster the enforcement division, including by moving the agency’s market surveillance unit into the division to better assist on investigations.

The hiring of McDonald marks the continuation of a recent trend at the CFTC of retaining former New York federal prosecutors to head the enforcement division.

Other former prosecutors who served in the position have included David Meister and Aitan Goelman, who departed the CFTC recently.

Goelman, in an interview with Reuters, said he believes that tapping another prosecutor to replace him sends a strong message.

“I think Chris genuinely believes in vigorous enforcement and I don’t think you hire someone like this if you don’t,” said Goelman, who had no independent knowledge of the hiring decision.

McDonald currently works in the public corruption unit at the U.S. Attorney’s office. He served on the trial team which led to the conviction of former New York State Assembly Speaker Sheldon Silver.

If chosen, “Jamie McDonald has the judgment, the ethics and the skills necessary to be a wonderful director of enforcement for that agency,” said New York attorney Carrie Cohen, a former federal prosecutor who led the Silver prosecution.

Prior to working as a prosecutor, McDonald was an associate at Williams & Connolly and clerked for U.S. Supreme Court Chief Justice John Roberts from 2009 to 2010.

Reporting by Karen Freifeld in New York and Sarah N. Lynch in Washington; Editing by Lisa Shumaker