Thomas White Global Investing
Global Players

Global Players

June 2009

Mary Schapiro, Chairperson, Securities and Exchange Commission

Mary Schapiro

“When I left here 15 years ago, it was a much simpler world. The commission was riding very high. Now I worry, how do we get back our high level of confidence?”

— Mary Schapiro in an interview with the New York Times

Being appointed the chief of an organization teetering on the edge is not exactly every woman’s fantasy job. But that is just what Mary Schapiro, chairperson of the Securities and Exchange Commission (SEC), has been facing.

Schapiro was appointed in January 2009, when the SEC, the primary independent regulatory agency for the nation’s securities industry, lay broken in splinters after the fall of two Wall Street giants and the failure to discover the $50 billion Bernard Madoff Ponzi scandal. Stepping into the SEC at this crucial point in time was not easy.

But, Schapiro, 54, has been a prime figure on Wall Street and involved with financial regulation in the U.S. for 20 years, working with four past Presidents beginning with Ronald Reagan. She is not new to the SEC, having served as Commissioner for six years, and it will not be the first time that she has headed a regulatory agency during a financial crisis. In 1996, she joined the National Association of Securities Dealers (NASD), when the self-regulatory body was facing criticism for failing to adequately patrol brokerage firms. Schapiro ended up earning respect and admiration for deftly cleaning house for the agency and toughening the organization’s presence. She was one of the key elements in the merging of the NASD into a new entity titled the Financial Industry Regulatory Authority (FINRA), which she headed before joining the SEC once again.

Yet this time, Schapiro was greeted by an SEC that was quickly garnering a reputation as an ineffective government agency. According to Senate documents in May 2008, previous SEC chairpersons had expressed disappointment with the SEC, saying that it “lacks the money, manpower, and tools it needs to do its job”. In the wake of the bank sector meltdown and Madoff scandals, the Obama administration proposed a plan to create a financial czar to oversee the financial industry, which would sap quite a bit of power from the SEC and transfer it to Treasury Secretary Timothy Geithner. The future of the SEC was now on the line.

Not intimidated, Schapiro stood her ground, making it clear that reducing the power of the SEC couldn’t be done, “without really damaging the fabric of the entire investor protection regime.” Recently, Schapiro notched up a small but significant victory when officials said that the administration would not alter the foundational powers of the SEC. But Schapiro is not content with small triumphs. As the government geared up to draw new legislative boundaries for the nation’s financial regulators, she continued rallying to retain the full powers of the SEC.

It seems a lot of her efforts have paid off. According to new proposals unveiled on June 17, the Obama administration has decided to bestow the SEC and the Commodity Futures Trading Commission (CFTC) with full authority to “police and prevent fraud.” For the SEC, whose life hung in balance, this is a renewal of faith. But for Schapiro, it is time to bask in the sweet light of a battle well won.





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