April 22, 2014

MEMBER SPOTLIGHT: Interview with Keith Higgins


What's the ideal work experience to become the Director of the SEC's Division of Corporation Finance? Easy. Keith Higgins’ resume: 30 years as a corporate and securities lawyer, over 50 IPOs, an abundance of mergers and acquisition deals. After all, Higgins was called the dean of Boston lawyers in IPOs and the securities area. 

"Keith is a widely-respected expert on the securities laws with a wealth of knowledge and experience in the many issues confronting the Division," said Securities and Exchange Commission Chief Mary Jo White, upon naming Higgins as the new Director in May 2013. 

In addition to his 30 years as a corporate and securities lawyer at Ropes & Gray LLP, Higgins also served as the Chair of the Federal Regulation of Securities Committee for the Business Law Section of the American Bar Association. He earned a B.A. in history at Florida State University (Phi Beta Kappa) and an M.A. in history at the University of Virginia. He went on to earn his law degree (summa cum laude) from Boston University School of Law. 

Higgins is approaching his one-year anniversary as the director of the SEC's Division of Corporation Finance. With his staff of 500, he's helping implement the Jumpstart Our Business Startups Act (JOBS), which aims to make it easier for smaller companies to raise capital. He's also tackling the 2010 Dodd-Frank law and regulations, designed to curb systematic risks in the financial services industry. Then there's the day-to-day work as the nation's top securities regulator, overseeing the disclosure of 10,000 publicly traded companies and the millions of public filings. "Under Chair White's leadership, it's an agency that has continued to deliver in excess of what my expectations had been," says Higgins. 

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You were a history major in college, then went onto earn your M.A. in history. What inspired you to study law? 

When I went to college in the late 60s and early 70s, it was a good time to be a liberal arts major. I wasn't thinking about what I would do for a living. I just thought I would study something that interested me. History, I found fascinating, but I probably had enough credits to have majored in English as well, because I liked reading novels. My particular focus, and what I went on to study at the University of Virginia, was U.S. history. My focus was from the Revolution to the Civil War – known as the Jeffersonian Period at the University of Virginia. History was interesting to me because I was very interested in the origins of the country where I had grown up. 

After graduate school, I went back to Tallahassee, Florida, where I had been living, and went to work in the state government there, where I'd worked before graduate school. I spent some time in the executive branch and in the legislative branch. I was there about four years, when I realized it wasn't a career I wanted. Obviously, when you're working in a legislative body, you run into a lot of lawyers, and it looked to me like they had a pretty good gig of problem solving and that sounded interesting to me. It wasn't until I went to law school and spent the summer working at Ropes & Gray that I got interested in being a corporate and securities lawyer. 

You were at Ropes & Gray for over 30 years, specializing in securities and corporate law. What's the value of staying at one firm for so many years? 

When you get the opportunity to work with people who are really smart – smarter than you are – who like to work hard, have a good ethical compass, and are very commercial at the same time, it's a great opportunity. I really enjoyed the collegiality of my former firm. 

You completed over 50 IPOs. Is there a memorable IPO? 

That's like asking which of your children you like the best, right? Given my position now, I can't talk about any currently public companies. But there are some that are no longer public that probably bear mention here. When I was a relatively new partner, I did an offering for the first publicly traded ambulance company called American Medical Response, which back then was known as a rollup. American Medical Response was put together by a couple of entrepreneurs who I'd done some work for over the years. They acquired four ambulance companies from different parts of the country, and on that same day, took the combined company public on the New York Stock Exchange. 

It was a complicated transaction, which required us to get the financing done simultaneously with the acquisitions. What I particularly liked is that the two entrepreneurs, the CEO and the CFO, were two gentlemen I had worked with a lot and who I worked with directly. I also got to meet with a lot of mom and pop ambulance companies all around the country. Most of the them didn't have any sort of exit plan. This publicly traded vehicle provided them with a plan. It went on to become a billion dollar company that was ultimately sold to a big Canadian company. 

What about a memorable merger/acquisition deal? 

Again, this is a company that isn't public any longer. In 2005 I represented Reebok when they were sold to the large German athletic company, Adidas. The thing that was particularly noteworthy about that is that 20 years before that, I had been the third-year junior associate on the Reebok IPO. It had been a very hot IPO back in ’85. So I had the opportunity to watch them grow over the course of 20 years, and it was very satisfying to sell them for close to $4 billion 20 years after having taken them public. 

What did you most enjoy about practicing law and what did you least enjoy?

I like to problem solve, particularly in the securities regulation area, because you're achieving a result. It's not purely a privately negotiated result. You're often navigating a regulatory scheme, so you need to know the intricacies and the ins and outs of that scheme. It's challenging and it's fun. I loved providing that value-added service to a client.

What I least liked about it? The law biz has become very competitive. There's too many lawyers chasing too little business. 

You didn't mention the long hours. 

Listen, if you like what you're doing, the long hours are great. I work just the same long hours here as I did when I was in private practice, although there are fewer really late nights. 

You served as the Chair at the Federal Regulation of Securities Committee for the Business Law Section of the ABA. What was the highlight of this experience? 

As Chair of the committee, I enjoyed very much the opportunity to develop good relationships with senior staff members at the Commission and particularly in the Division of Corporation Finance. I doubt that I would be sitting here talking to you today, had I not served as Chair, gotten to know people here, and what Corp Fin does in a deeper way than I had as a practitioner. 

When you were Chair of that committee, you were involved in the comment letter drafting process. Now that you're on the receiving end of those letters, do you have suggestions for those who are doing this work?

Polonius's advice, “Brevity is the soul of wit.” Lawyers sometimes write too much. They go on and on and on and on. I would urge people in writing comments to make their points and do the analysis. Then spend the time to make it shorter and better. That's the same advice we give to issuers about their company disclosures. 

Was it a difficult decision to leave private practice? 

Yes, because I really liked what I did in private practice. But serving as Director is a terrific opportunity. Obviously, it would have been even a greater opportunity if the SEC were located in Boston, which is where I live. And so, that made it the most difficult decision because I'm away from my wife during the week, though my kids are out of the house so that's not an issue any longer. But that was the toughest part. 

In an interview with the Boston Globe, you said you had a "wonkish" quality. What does that mean? 

I like the rules. I like to understand how the rules work, what's behind the rules, and what the policy is behind them. But it's one thing to interpret and understand rules, and quite another thing to look at a blank piece of paper and imagine what the rules should say, and, in particular, the unintended consequences. I've found it a very challenging job to be a rule writer as opposed to someone who just interprets and understands them. 

You've been in your position almost a year. Do you see securities regulation differently? 

Look, of course, you have new perspectives when you join a new organization, and you see things. But as a private lawyer, my goal was to get the disclosure right. My goal here is the same. 

In private practice, I dealt with clients, who, by and large, wanted to do the right thing. But there are a whole lot of companies that are public registrants where maybe that same sense of wanting to do the right thing isn't there. You can certainly see that in the enforcement calendar every week. So, you get perspectives that you didn't have in private practice. I think that my former clients would tell you that I challenged them on their disclosures in the same way I do in my new role as the director. 

As director, what have you found most surprising? 

The most surprising thing to me is just the incredibly extensive workload of the Commission. And believe it or not, it's not all about Corp Fin. People have observed that our releases are longer, they're challenging. We work with the Division of Economic and Risk Analysis on all of our rulemaking projects because economic analysis is such an important part of our rulemaking. 

We work with the General Counsel’s Office to make sure that our rulemakings will withstand the both the test of time as well as the test of the courts which we're increasingly seeing. We also work with Enforcement to share our view about the law. 

We've done joint rulemakings with the folks from the Commission's Investment Management and from Trading and Markets on the crowd funding rule proposal. The dedication, the talents, and the expertise of the SEC staff are really beyond compare. It's an agency that has continued to deliver in excess of what my expectations had been. 

I heard you were a runner. Given the workload, how do you fit that in? 

I used to be a big runner, but I've taken up cycling pretty avidly, although I find it a little bit hard to do it down here. Still, I get up at 5:15 to exercise. At home on the weekends, when the roads are not full of snow and ice, I get out on my bike. 

What are you most proud of so far? 

It's a little early to be taking victory laps, I think. I will say that I'm happy that we have continued to make solid, methodical progress on the Dodd-Frank and JOBS Act rulemakings that were mandated by the Congress, and what the Chair had listed as one of her top priorities. 

What's been the highlight so far? 

I enjoyed testifying before the Senate Subcommittee on Securities, Insurance and Investment on the progress we're making under the JOBS Act. We prepared quite extensively before going up to the Hill. The summer after college, I sat in front of the TV, watching the Watergate hearings and seeing John Dean testify. It was fascinating. So, I would definitely say it was a highlight. Besides, I got to send a link to my mother. 

What did she say? 

She liked it. She thought it was good. 

When you've finished your term, what do you hope you've accomplished? 

I do want to have accomplished all of the Dodd-Frank and JOBS Act rulemakings, making sure the Commission has put into place thoughtful and balanced rules. Beyond that, we're very enthused about trying to improve the state of company disclosure through our rules and the way in which information potentially gets delivered. Disclosure is the life blood of the securities markets. It's what makes our markets the best markets in the world, and we need to make sure that our disclosures are the best in the world. We need to examine this notion of information overload, disclosure overload; we need to see what's behind it, and we need to make sure that we have a system where we can make disclosure shorter, simpler, and better. I believe both companies and investors would benefit from that effort.