Wall Street Journal

Enforcement head leaves U.S. commodity agency

by ANN DAVIS
July 10, 2008

In the midst of a political battle over its oversight, the nation's futures-market regulator is losing its enforcement chief to a private law firm.

Gregory Mocek, 46 years old, is leaving the Commodity Futures Trading Commission to become a partner in the energy- and derivatives-markets practice of McDermott Will & Emery, in its Washington, D.C., office. He joined the commission in 1998 and became director of the enforcement division in March 2002. He is due to leave in roughly two months.

Gregory Mocek spent 6 1/2 years as CFTC enforcement chief.

He will be succeeded immediately on an acting basis by Stephen Obie, the CFTC's regional counsel, associate director and regional administrator in its New York office. Mr. Obie, 42, led the agency's cases against former energy giant Enron Corp. and failed hedge-fund manager Amaranth Advisors LLC, among others. Mr. Obie would be eligible for permanent appointment sometime after Mr. Mocek departs.

This year, as energy and food costs have soared and markets have become more volatile, several lawmakers are pushing broad overhauls to the futures markets and pressuring the CFTC to do more to rein in "excessive speculation."

Mr. Mocek has led the agency's crackdown on false reporting of energy trades and prices to industry publications, and brought a series of enforcement cases against Enron, Amaranth, BP PLC and several others. He broadened the agency's push to improve cooperation with international regulators in fraud and manipulation cases and spearheaded a fight against retail foreign-currency fraud schemes.

As trading mushroomed in global energy and other commodities markets, Mr. Mocek saw his staff dip from about 155 to as low as 110 recently before the financially strapped agency could expand hiring. Today, the agency's roughly 130-person enforcement team -- far smaller than that of the Securities and Exchange Commission -- is managing an increasingly complex investigative caseload.

In an interview, Mr. Mocek said that with the explosion of volume and change in the commodity markets this decade, his 6½ years in enforcement "have felt like dog years -- more like 42 years." Because the bull market has drawn far greater trading volume, there have been more cases to pursue. "The sheer volume of trading in these markets increases the occurrence of illegal conduct," he said.

His successor, Mr. Obie, is known at the agency for his knack for ferreting out critical evidence in big cases -- both getting witnesses to disclose information and spotting potential cases in a sea of subpoenaed documents, Mr. Mocek said.

The New York office has long had a focus on the energy markets. About a month ago, Mr. Obie was put in charge of a new national crude-oil team the CFTC organized to quarterback all investigations relating to the oil markets. The agency currently has more than a dozen pending investigations into the oil markets, including a probe the CFTC recently disclosed that it launched in December into "the purchase, transportation, storage and trading of crude oil and related derivative contracts."

Walter Lukken, acting CFTC chairman, said Mr. Mocek "reshaped the enforcement division to aggressively investigate and prosecute the most complex derivatives cases for the benefit of the public." The CFTC assessed penalties, restitution and disgorgement of more than $2.1 billion during Mr. Mocek's tenure, amounting to 70% of its $3.1 billion in settlements and judgments during the past 20 years.