Washington Lawyer - March/April 2020 - 41

MEMBER SPOTLIGHT
investments are covered. Investors also need
to exercise ongoing diligence in evaluating the
broker-dealers they invest with. Anyone who
invests should understand market risk, as well
as the limits of SIPA protection.
As SIPC general counsel, you oversaw some
of the biggest broker-dealer liquidations in
U.S. history, including the Madoff and
Lehman Brothers cases, resulting in
astounding recoveries for investors. How
did these cases shape your career?
Looking back, I've been fortunate to work at SIPC
when our ability to help investors was greater
than ever. When the financial crisis struck in 2008,
I had 25 years' experience working on many
challenging cases that most people probably
haven't heard of: Bevill, Bresler & Schulman, First
Interregional, and Stratton Oakmont, the case
that inspired the movie The Wolf of Wall Street.
Each case was an opportunity for me to learn
and grow. Also, as a young lawyer, I looked for
other avenues to hone my craft. The D.C. Bar has
a wonderful pro bono program, and I took on
the occasional pro bono case, not only because
it was the right thing to do - to give back as an
attorney - but also because it gave me the
experience of going into court and representing
clients outside of SIPC.
I became general counsel in 2004, and when
the Lehman and Madoff cases broke, they
received a lot of media attention. Madoff, in
particular, has generated much litigation and
presented novel issues under SIPA. It's been a
challenging case for many reasons, not the least
of which is that innocent investors, although
duped, benefitted from the fraud. Those investors may have thought they were earning
investment profit, but, in fact, their "profit" was
money taken by Madoff from other customers.
In trying to recover fake profit not only from
investors but also from bad actors, the Madoff
trustee and his attorneys, with SIPC's support,
have faced many new issues while litigating
against some of the top legal talent in the
country. To date, the trustee has recovered
some $14 billion out of about $20 billion owed
to customers - an extraordinary accomplishment in the bankruptcy world. And those
recovery efforts continue today.
Working on these cases emphasized for me the
value of hard work and the power of strong
teams. Our successful case outcomes have been
driven by several factors. Our legal teams focus
on practice fundamentals - mastering the
facts and law, developing persuasive

arguments, and abundant preparation. But our
favorable results wouldn't be possible without
the outstanding work and support of the entire
SIPC team: the staff, the trustees, assisting law
and accounting firms, and, perhaps most
importantly, the SIPC board. I realize how fortunate I am to work with self-motivated people,
both inside and outside of SIPC. While some
luck is part of all careers, there are no shortcuts,
either at SIPC or elsewhere. I've always set high
standards for myself and for my teams, and the
results have followed.

My legal background has been very useful.
Legal training, which emphasizes identifying
and analyzing issues, and weighing alternatives
and consequences, develops skills that deepen
and become intuitive throughout our careers
and lives. While lawyers may be perceived as
risk-averse, I've become comfortable over time
with making decisions that involve risk. Every
decision presents risk, and I'm not impulsive by
nature. After weighing key factors and consequences, I'm decisive and take responsibility
for my decisions.
What initiatives would you like to focus on?

Working on these
"
cases emphasized for me
the value of hard work
and the power of
strong teams.

How did your legal experience prepare you
for your new role as president? Was there
any concern that a lawyer would be too riskaverse as the top manager?
So far, it's felt like a natural transition, but being
president/CEO is different from being GC. One
advantage of my longevity is that I know SIPC's
history, people, board, and standards of performance. That familiarity enabled me to hit the
ground running. What's different in my new role
is that I have an even deeper sense of responsibility for my decisions. As an attorney, I was
a counselor; management made the final decisions. Now, it's my call. Of course, my decisions
are informed through advice from others, but I
answer to the board, and that's a different level
of responsibility.
When the president/CEO opportunity arose,
I thought long and hard about whether I wanted
the top spot. I'd spent many fulfilling years at SIPC
and never felt that my time here was due to complacency. But I realized the level of responsibility
I would be taking on. After a lot of soul-searching,
I realized I wanted the job not only because I knew
I could do it, but also because I felt I still had much
to contribute to SIPC.

I'd like to make sure that SIPC is prepared to
deliver on its mission into the future. We're
working to modernize SIPC by adopting better
tools to handle and analyze data. We're looking
at how we integrate technology to create more
value and support for our employees. We're also
creating an online broker-dealer member portal,
evaluating cloud storage, and innovating ways to
make engagement with our members and the
investing public faster and more secure. Like all
organizations, we're dealing with managing our
cyber-risks while striving to offer better service.
We're also looking at how the evolving world
of virtual assets may impact SIPC's mission.
For example, whether and under what circumstances digital currencies might be considered
"securities" under SIPA could significantly
impact our mission. We work closely with the
Securities and Exchange Commission, the
Financial Industry Regulatory Authority, and
other organizations to stay on top of developments in this area.
How do you like to spend your downtime?
I have several long-term interests but I enjoy
trying new things, too. While I strive for a level of
balance in my life, it's never been easy and hasn't
gotten easier over time. For relaxation, I turn to
art, music, tennis, the occasional yoga class, and
keeping up with family and friends. I've volunteered for many years at a local art museum and
regularly go to music and dance performances.
More recently, I've even started to take piano
lessons. I'd wanted to learn to play piano for years,
but I'm finding that mastering piano is much
more challenging than practicing law! Music is
one of the few areas where I have a five-year plan.
After piano, I plan to tackle the cello.
Kathleen Troy is an attorney and founder of
strategic general counseling who practices in the
Washington, D.C., area.

MARCH/APRIL 2020

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Washington Lawyer - March/April 2020

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