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David Meister is waging legal battles against some of the biggest names in finance.
But now, Mr. Meister is poised to step down from his role as head of the Commodity Futures Trading Commission's enforcement unit, a move that may put the future of those cases in question.
Mr. Meister is expected to announce his departure on Tuesday, capping his effort to embolden an agency once dismissed as "the watchdog that didn't bark."
(Read more: )
Over a nearly three-year stretch, Mr. Meister helped write new rules to expand the enforcement unit's authority, overhauled the unit's management ranks and filed a record number of actions against the financial industry. An investigation into the banking industry's manipulation of benchmark interest rates—a crackdown on banks like UBS and Barclays—defined his tenure.
Mr. Meister's departure foreshadows the exit of Gary Gensler, the agency's chairman, whose term expires in December. Mr. Gensler hired Mr. Meister and, much to the dismay of Wall Street, has imposed dozens of new regulations in the wake of the financial crisis.
Yet skeptics remain, by turns attacking the agency as too tough or too lenient. One of the agency's own commissioners, for example, questioned Mr. Meister's decision to impose only nominal fines on certain companies.
For his part, Mr. Meister points to the recent onslaught of enforcement cases. And unlike in past years, the agency opted to litigate rather than settle many of the cases. That change reflected a policy Mr. Meister outlined his first week in office in January 2011, when he told the enforcement staff, "While we won't bring cases we don't think we can win, if the best settlement a defendant offers is beneath what we think is acceptable, we won't hesitate, and we won't go lower," according to a person who attended the speech.
In an interview on Monday, Mr. Meister said that he was leaving an invigorated enforcement unit. "We're really in an upward trajectory," he said, adding that he has not begun to search for another job. "There is a real energy in the agency."
It is unclear whether Mr. Meister and Mr. Gensler will take some of that energy with them. Their exit comes at an awkward time for the agency, which is locked in litigation over some of its biggest cases.
The JPMorgan investigation centers on whether the bank's traders in London built a position so big that they manipulated the market for financial contracts known as derivatives. While the agency has not sued JPMorgan, the enforcement unit began drafting charges after settlement talks broke down in recent weeks, people briefed on the case said.
The sticking point, the people said, was Mr. Meister's demand that the bank acknowledge wrongdoing. The bank balked at that demand, though it was open to paying a $100 million fine.
JPMorgan and the agency reopened settlement talks about a week ago, the people said. Still, Mr. Meister may leave before a decision emerges.
Mr. Meister adopted a similarly aggressive stance with the CME Group, known to possess cozy ties to the trading commission. In the agency's first ever action against CME, filed in February, Mr. Meister accused it of releasing confidential customer information to an outside broker.
CME, which continues to fight the case, has said that the "incidents have already been addressed and handled appropriately, and involved no harm to any customer or the markets."
In pursuing Mr. Corzine, who ran MF Global when the brokerage firm collapsed two years ago, the agency never offered to settle. Instead, the agency sued Mr. Corzine in June, accusing him of failing to supervise an MF Global employee who misused customer money.
Mr. Meister's departure, people close to the agency said, raises questions about whether his successor will hold steady, or choose to settle these cases.
Mr. Meister argued that the enforcement unit "was a great place before I came" and that many of the same enforcement officials would continue to oversee these same investigations. The agency is expected to announce that one of Mr. Meister's deputies, Gretchen Lowe, will become the acting enforcement director. Ms. Lowe played a leading role in the agency's rate-rigging cases.
"I have no doubt that the new acting director will do what's right," he said.
Mr. Meister, who took a 7 a.m. flight to Washington every Monday for three years, said he was leaving to spend more time with his family in New York. His youngest son, he said, is in his senior year of high school.
But early next year, he is expected to land in the private sector, people briefed on his plans said. Such a move would reignite concerns about the metaphorical revolving door that shuttles government employees to the private sector and back again.
"Clearly, the C.F.T.C. has taken a strong stance against Wall Street after the financial crisis, but in a broader context we do worry that the revolving door can make enforcement officials more sympathetic to the companies they oversee," said Michael Smallberg, an investigator at Project on Government Oversight, a nonprofit group.
Mr. Meister is forever banned from handling any case that he investigated and will face a one-year "cooling off" period during which he cannot contact the agency for business reasons.
Mr. Meister, who is 50, arrived at the agency after long stints at the white-shoe law firms Clifford Chance and Skadden, Arps, Slate, Meagher & Flom. He also spent more than three years as a federal prosecutor at the United States attorney's office in Manhattan, where he focused on insider trading and other financial fraud cases.
At the trading commission, Mr. Meister's tenure has not been without controversy. Last year, after settling with Goldman Sachs for $1.5 million over accusations that the bank failed to supervise a rogue trader, one of Mr. Meister's colleagues objected to the size of the fine.
"I believe that the monetary penalty should be significantly higher in order to represent a sufficient punishment," Bart Chilton, a commissioner at the agency, said at the time. Others, however, have praised Mr. Meister for ramping up the enforcement unit. As the number of employees in Mr. Meister's unit fell about 10 percent over the last three years, the number of cases jumped more than 90 percent. And, at Mr. Gensler's urging, Mr. Meister eliminated several layers of management to speed up investigations.
(Read more: Next up for JPMorgan: A fight with the CFTC)
"He built the C.F.T.C.'s strongest enforcement program in memory," said Lorin Reisner, the head of the criminal division at the United States attorney's office in Manhattan who worked with Mr. Meister at that office in the 1990s.
Mr. Meister's most significant victory came in the rate-rigging cases. After years of investigation, the trading commission concluded that some of the world's biggest bank's manipulated the London interbank offered rate, known as Libor.
Mr. Meister's first target was Barclays. As in the JPMorgan case, people briefed on the case said, Barclays initially balked at the agency's demands, prompting Mr. Meister's unit to prepare charges. Weeks later, however, the bank agreed to a $200 million fine and to adopt new controls to prevent a repeat of the problems.
That case paved the way for a $700 million settlement—the biggest in the agency's history—with UBS. In that case, Mr. Meister and Mr. Gensler negotiated directly with the bank's chairman, Axel Weber.
"David understands the importance of a vigorous enforcement arm," Mr. Gensler said in an interview. "He didn't shy away from a tough case."
—By Ben Protess for The New York Times' DealBook