As a federal prosecutor, Robert Khuzami gained a reputation as an aggressive investigator whose doggedness helped convict a blind Egyptian cleric and nine others for a failed plot to blow up New York City landmarks in the 1990s.

Khuzami’s experience and hard-nosed approach attracted the attention of Mary Schapiro, who recruited him early this year to put the teeth back into the Securities and Exchange Commission’s Division of Enforcement after several years of benign neglect.

Khuzami, 53, has been doing just that, with a series of high-profile enforcement actions. Only last month, the SEC filed civil charges against Galleon Management hedge fund boss Raj Rajaratnam, five other fund managers and corporate executives and New Castle Funds, a New York–based hedge fund, for allegedly running an insider trading ring that generated $25 million in illegal gains. In June, Khuzami’s unit filed civil fraud charges against Angelo Mozilo, founder of Countrywide Financial Corp., for allegedly misleading investors about the company’s subprime risks and using insider knowledge to trade in Countrywide stock. ....

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