SEC Chairwoman Mary Schapiro announced this week that she plans to vacate the position on December 14. According to The New York Times, she leaves behind a stronger SEC that underwent an overhaul because of her focus on “detail and meticulous preparation.”
Schapiro became SEC chairwoman following the tenure of former SEC chairman Christopher Cox. Following her appointment in 2009, Schapiro, who is the first woman to serve as SEC head, revamped the agency’s management and obtained it more Congressional funding (an approximately 50% budget bump). She also has been credited with reviving the enforcement unit, speeding up the investigative process by eliminating a policy mandating that enforcement attorneys get the SEC’s permission before they can begin a probe, getting the enforcement division to combine over 70 tip lines into one, and selecting former federal prosecutor Robert Khuzami to head up the unit. Also, in just the last two years of her tenure, the SEC’s enforcement division has filed a record number of enforcement actions against firms and individuals, even winning a securities fraud case against Goldman Sachs (GS) that required the firm to pay a $550 million fine.
Commenting on Schapiro’s departure, Shepherd Smith Edwards Kantas founder and stockbroker fraud lawyer William Shepherd said: “Any credit given Ms. Schapiro can only be as a comparison to her deplorable predecessor. She has been an instrument of the investment community her entire career. Proof of this lies a single statistic: Her SEC filed actions against 129 people and firms tied to the financial crisis – yet no top banking official was ever named.”
During Schapiro’s tenure as SEC head, consumer advocates complained that she was too slow when it came to fighting against a new law that loosened certain protections for investors, writing new rules for the financial industry, or pushing back when necessary. Her approach to the job, which some have described as consensus driven, met with disapproval by some, as did her handing of the Jumpstart Our Business Startups Act. Although Schapiro wrote a letter to government officials voicing her opposition to the JOBS Act, she only publicly addressed it once in a speech that she gave to the media. Meantime, her efforts to get money market mutual funds to adopt safety measures that were bolder hit a wall comprised not just of the industry but also of three of the five SEC Commissioners.
Reuters says that Schapiro’s departure likely means that a key reform she had been pressing for, which would mandate that security brokers meet a fiduciary standard when offering investors advice that prioritizes the clients’ best interests, will remain stalled-at least for now. (Schapiro is concerned that the financial benefits that brokers’ earned on certain investment options makes it harder for them to remain clear and objective and serve the clients’ needs rather than their own pockets.)
Elisse B. Walter will be taking her place. Walter became an SEC commissioner in 2008 and is a Schapiro ally. She will be appointed directly as SEC Chairwoman rather than in an interim position because she was already confirmed as a commissioner.
Schapiro’s exit leaves broker fiduciary plan up in air, Reuters, November 27, 2012
Rebuilding Wall St.’s Watchdog, New York Times, November 26, 2012
More Blog Posts:
SEC Chairman Mary Schapiro Stands By Agency’s 2011 Enforcement Record, Stockbroker Fraud Blog, May 15, 2012
SEC Chairwoman Defends ‘No Wrongdoing’ Settlements, Institutional Investor Securities Blog, February 27, 2012
Texas Congressmen Seek Answers from SEC Chairwoman Regarding Conflict of Interest Related to Madoff Debacle, Stockbroker Fraud Blog, March 8, 2011