CONCORD – Mark Connolly, the whistle-blowing former director of state Securities Regulation, took himself out of the running as a Democratic candidate for governor on Friday.

“I have decided to focus on needed changes in Concord right now and not mount a campaign for governor at this time,” Connolly said in a statement.

Connolly, 57, said he can better work to reform consumer protection laws and reduce the role of lobbyists in the Statehouse as a nonpartisan advocate.

“I believe focusing on such issues as diminishing the control of lobbyists, bringing needed regulatory reform in this state, improving our state’s consumer protection laws and other needed issues is where I can best be of help,” Connolly said.

“These issues are not and should not be viewed in the context of a partisan gubernatorial debate – too much regulation, who is to blame for this, et cetera.”

Connolly, of New Castle, wrote a book, “Cover Up,” charging that state officials in the banking and attorney general’s offices deliberately ignored signs of the growing scandal at Financial Resources Mortgage, which eventually became the state’s largest Ponzi scheme.

In the book, Connolly advocates returning power to state prosecutors to investigate consumer complaints about banking and insurance practices and exploring the creation of an inspector general to bring such scams as FRM to light earlier.

Connolly said he’s convinced the state’s image as an attractive place for business is at risk if laws aren’t changed to bring tougher regulation of shady financial offers.

“In New Hampshire, I believe if we don’t address certain issues, like improving our consumer protection laws, as well as diminishing the sometimes harmful influence of lobbyists and certain special interests in Concord, the strength of this state’s business climate, as well as its small-business development/entrepreneurial capital needed to sustain our growth, will be negatively impacted,” Connolly said.

The announcement came three days after former Barrington state Sen. Jackie Cilley confirmed she was in the Democratic primary hunt, joining former Senate Majority Leader Maggie Hassan, of Exeter.

On the Republican side, former state Board of Education Chairman Ovide Lamontagne, of Manchester, and socially conservative leader Kevin Smith, of Litchfield, are declared candidates.

North Hampton businessman Steve Kenda and Manchester Mayor Ted Gatsas have said they’re exploring Republican primary runs.

Connolly said he reserves the right to pursue a political future, as he believes that’s where true change can occur.

In 2010, Connolly explored a primary campaign for U.S. Senate against eventual nominee Paul Hodes, of Concord.

During his tenure at the Securities Regulation Bureau, Connolly oversaw several major securities enforcement cases, including actions against Tyco International, Ameriprise, ING, Pennichuck Corp., Morgan Stanley, Merrill Lynch and UBS.

The cases resulted in more than $55 million in securities fines and investor restitution.

But a run for statewide office in this election would have subjected Connolly to charges that he failed to do enough to blow the whistle on FRM before it closed and sought bankruptcy protection.

Hassan chaired a legislative study committee that faulted Connolly’s agency along with the Banking Department and attorney general for failing to work cooperatively on FRM.

Kevin Landrigan can reached at 321-7040 or klandrigan@nashuatelegraph.com. Also, follow Landrigan on Twitter (@KLandrigan) and www.nashuatelegraph.com/topics/livefeed.

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