SEC's top enforcer to leave agency

By Rachelle Younglai and John Poirier

WASHINGTON (Reuters) - The Securities and Exchange Commission's top enforcement official, Linda Thomsen, will resign, the agency said on Monday, less than a week after a congressional panel chastised her for failing to follow up tips that might have uncovered Bernard Madoff's alleged $50 billion fraud.

Thomsen's departure date was not given. She will stay at the agency for a period to ensure a smooth transition, an SEC spokesman said.

The agency declined to comment on who would take over the top enforcement job. A source familiar with the matter told Reuters over the weekend that former assistant federal prosecutor Robert Khuzami was expected to succeed Thomsen.

Thomsen's enforcement division has been heavily criticized for rebuffing Wall Street tipster Harry Markopolos, who urged agency officials for nine years to thoroughly investigate Madoff's investment business. Madoff was arrested in December.

At a House Financial Services subcommittee hearing last week, several members expressed irritation and frustration when Thomsen and four other SEC officials declined to answer specific questions about Markopolos' tips, citing continuing investigations. The SEC's new chairman, Mary Schapiro, sent a letter to the subcommittee leaders after the hearing ended, offering to find a way to give information to lawmakers without hurting the civil and criminal investigations of Madoff.

William McLucas, a former SEC director of enforcement, defended Thomsen.

"The reality is that Thomsen was not the person who sat down with the whistle-blower," said McLucas, now in private practice at WilmerHale. "Let's assume that (SEC staff) missed something, that's not a personal failure by the director of enforcement."

Former SEC Chairman Harvey Pitt said Thomsen has done a spectacular job.