Head of SEC inspections office leaving in August

WASHINGTON — The official who has headed a key division at the Securities and Exchange Commission since its creation in 1995 is leaving the agency.

Lori Richards is director of the SEC’s Office of Compliance Inspections and Examinations, which conducts inspections of brokerage firms, investment advisers, hedge fund managers, mutual funds and other entities. She is leaving on Aug. 7, the SEC said Wednesday. John Walsh, the office’s associate director and chief counsel, will serve as acting director.

Several other high-level officials have departed since SEC Chairman Mary Schapiro took the helm in January. The longtime enforcement director, Linda Thomsen, was replaced by Robert Khuzami.

The SEC came under intense congressional scrutiny and widespread criticism after revelations in December that it failed to detect the massive pyramid scheme run by disgraced money manager Bernard Madoff, despite red flags raised to its staff by outsiders over the course of a decade. Richards was among several SEC officials who received a grilling before congressional committees on the Madoff affair early this year.

An investigation by the SEC’s inspector general to determine what went wrong has been examining the operations of Richards’ office and the enforcement division.

Richards worked in the government for about 20 years. Before leading the inspections office, she was executive assistant and senior adviser to then-SEC chairman Arthur Levitt. She also held a high-ranking enforcement position in the SEC’s Los Angeles regional office and other positions in that office from 1985 through 1994.