SEC Lures Prime Enforcer Who Says Harder Punishment Is Coming

Since taking on on the Wall Road watchdog, Mr. Grewal has signaled larger fines for wrongdoing are on the horizon, together with efforts to take away extra malefactors from Wall Road jobs. “We will’t arrest them,” Mr. Grewal mentioned in an interview. “We will get them out of the business.”

Mr. Grewal’s lengthy profession in authorities, the place he navigated partisan politics and managed numerous law-enforcement businesses and personnel, is uncommon for an SEC enforcement chief. The company’s head enforcer, one in every of its highest-profile figures, is often a former prosecutor who rose to the highest ranks of the protection bar, the place they battled with the SEC and Justice Division on behalf of company shoppers.

Mr. Grewal, 48 years outdated, was a federal prosecutor in New Jersey and New York earlier than he was tapped by two governors—one Republican and one Democrat—to supervise law-enforcement businesses in his house state of New Jersey. These posts raised his profile and made him one of many nation’s most outstanding Sikh People.

“I don’t suppose he has ever tried to be a politician, however he finally ends up succeeding in the way in which a politician succeeds,” mentioned Jud Welle, a former prosecutor and colleague of Mr. Grewal who now leads cybersecurity investigations at Nardello & Co. “He treats individuals with respect and takes care to not hustle via an interplay simply because individuals is probably not serving his speedy curiosity.”

Mr. Grewal was born in Jersey Metropolis and grew up within the state’s northern suburbs. Diplomacy was his first alternative of profession after graduating from Georgetown College, he mentioned, however a federal hiring freeze within the mid-Nineties blocked that path. He discovered his calling after Sept. 11, 2001, when tons of of Sikh People had been victims of racial profiling and violent assaults dedicated by individuals who mentioned they had been taking revenge over the terrorist assaults. (Practising Sikh males put on a turban and a beard. Their religion, primarily based on the worship of 1 God and a perception in social justice and equality, is the fifth-largest unbiased world faith.)

Then a younger lawyer in personal observe, Mr. Grewal mentioned he absorbed racist taunts directed at him as he walked round downtown Washington a number of days after 9/11. At his regulation agency, he felt excluded from consumer conferences earlier than discovering a mentor who helped him advance. He determined to change into a federal prosecutor, believing he might change individuals’s misunderstandings and biases as a member of regulation enforcement.

Adam Abensohn, a pal from their shared time within the Brooklyn U.S. lawyer’s workplace, mentioned Mr. Grewal was a intelligent and resourceful younger prosecutor whose capacity to attach with individuals and earn their belief set him aside.

“He mentioned one thing that caught with me: that he took an amazing quantity of delight in standing in entrance of a jury and saying he represented the USA, and inflicting some individuals who is likely to be stunned by that to see that somebody who seems to be like him can characterize the U.S. and characterize the easiest of us,” Mr. Abensohn mentioned.

Later, as a federal prosecutor in Newark, N.J., Mr. Grewal led the economic-crimes unit, together with overseeing the prosecution of merchants who illicitly obtained market-moving company information stolen by hackers. He additionally gained a case in opposition to convicted Ponzi schemer Eliyahu Weinstein, whose 24-year sentence was commuted in January by then-President Donald Trump. Mr. Grewal wrote on Twitter on the time that he was “disgusted” by Mr. Trump’s transfer, saying it was “one huckster commuting the sentence of one other.”

In 2018, Mr. Grewal turned the nation’s first Sikh state lawyer normal when Democratic Gov. Phil Murphy elevated him from Bergen County prosecutor, a job to which he was nominated by former Republican Gov. Chris Christie. As lawyer normal, he carried out new use-of-force insurance policies for New Jersey’s 37,000 law enforcement officials and intervened in a case to protect deportation protections for immigrants enrolled within the Deferred Motion for Childhood Arrivals program, which a federal decide invalidated in July.

He additionally oversaw the state’s securities regulators however didn’t straight work on their circumstances. Simply after Mr. Grewal left state authorities to work for the SEC, New Jersey turned the primary state to order BlockFi Inc., a widely known cryptocurrency firm, to cease providing unregulated interest-bearing accounts for crypto deposits. The state mentioned BlockFi did not deal with the product as a safety, which might have required registration with the state.

BlockFi has mentioned the accounts are authorized and proceed to be allowed in New Jersey whereas the corporate discusses the matter with the state.

Working in New Jersey’s political system was grueling, Mr. Grewal mentioned, and he was contemplating his future when a high adviser to SEC Chairman Gary Gensler contacted him in Might. The company wanted a brand new enforcement director when Mr. Gensler’s first alternative for the job resigned after a decide questioned her conduct in a lawsuit involving Exxon Mobil Corp.

A number of progressive economic-policy teams cheered Mr. Grewal’s rent, having criticized Mr. Gensler’s first alternative for director as a result of her expertise principally concerned representing companies in authorized battles. Different specialists say Mr. Grewal’s lack of expertise within the personal sector might make him too susceptible to punish misconduct as intentional when it actually stemmed from errors or negligence.

“That’s the place you see pro-regulatory and pro-prosecutorial attitudes sweeping too broadly, and that impacts the efficiencies of the market,” mentioned Andrew Vollmer, a former SEC deputy normal counsel now affiliated with the Mercatus Heart at George Mason College. “The massive concern about Grewal is he has a prosecutor’s mentality.”

Since becoming a member of the SEC, Mr. Grewal has given a number of speeches speaking robust about the way forward for enforcement, together with that penalties may need to go up if corporations or people are repeating dangerous acts that the SEC has repeatedly punished.

Talking to the New York Metropolis Bar Affiliation final month, Mr. Grewal mentioned some People have grown cynical about how enterprise and authorities businesses work together, partly as a consequence of “the notion that we, the regulators, are failing to carry them appropriately accountable, or worse nonetheless, the assumption by some that there are two units of guidelines.”

Harder sanctions may assist fight that view, he mentioned. The SEC will search to require some defendants to confess to wrongdoing after they settle, a tactic the company tried in the course of the Obama administration however used sometimes as a result of admissions can damage firms in associated personal litigation. (SEC defendants usually settle circumstances with out admitting or denying the company’s claims.)

Mr. Grewal mentioned he gained’t be a spokesman for the large social and political points he confronted as lawyer normal. However “as a visual minority,” he can nonetheless have an effect on how American firms and massive regulation corporations observe inclusion.

“Possibly if you see individuals like me on this place, a regulation agency is extra attentive to range points and it’s OK,” he mentioned. “As a result of once I was there, I felt prefer it wasn’t OK to appear like me.”

Write to Dave Michaels at dave.michaels@wsj.com