SEC's Schapiro Announces Enforcement, Investor Initiatives; Becker Returns To SEC

In her first public address at the helm of the SEC – presented at PLI’s SEC Speaks conference earlier today – SEC Chairman Mary L. Schapiro said, “In the days ahead, we will rise to the new challenges of today's financial and regulatory realities, both by embracing new approaches and by maintaining the great traditions that have defined this institution throughout its history.”

She added, “The challenges we face are historic. But they're not insurmountable. It will take determination, hard work, toughness, and above all, an unrelenting will to stand up for investors.”

“But make no mistake,” Shapiro stated. “Regulation is a two-way street. The ‘regulated’ need not wait for a regulator's reforms, though they will come.”

Proxy Access, Say on Pay
Describing her vision that “A strong and reinvigorated SEC will be on the beat like never before,” she added, “there needs to be a new era of responsibility on Wall Street and throughout our markets to ensure that wrongs don't occur in the first place.”

Indicating she will not shy away from certain hot button issues that have plagued prior Chairmen, Schapiro said, “There is much we can do to accelerate that process, including giving shareholders a greater say on who serves on corporate boards, and how company executives are paid.”

Changes Being Made to Strengthen Enforcement and Investor Advocacy

Among the specific initiatives Schapiro plans for the SEC are:

• empowering the Enforcement staff by ending the two year ‘penalty pilot’ that required Enforcement staff to obtain certain approvals from the Commission
• providing for more rapid approval of formal orders of investigation, including subpoena power, by returning to the prior policy of timely approval by seriatim or by a single Commissioner acting as duty officer
• improving the handling of tips and whistleblower complaints and focusing on areas where investors are most at risk
• making further improvements in the coming weeks and months to ensure swift and vigorous enforcement
• forming an Investor Advisory Committee to ensure that the Commission hears first hand about the issues most concerning to investors.
• improving the quality of credit ratings by addressing the inherent conflicts of interest credit rating agencies face as a result of their compensation models and limiting the impact of credit ratings on capital requirements of regulated financial institutions
• reducing systemic risk to investors and markets by promoting — and regulating appropriately — centralized clearinghouses for credit default swaps.
• strengthening risk-based oversight of broker-dealers and investment advisers.
• improving the quality of audits for nonpublic broker-dealers and promoting the safe and sound custody of customer assets by any broker-dealer or investment adviser
• working closely with Congress to ensure that legislative restructuring of our financial regulatory system will preserve and strengthen our commitment to transparency, accountability, disclosure, and most of all, investor protection.

Schapiro concluded her remarks, “No other agency does what we do. Because of the unique role the SEC plays in our markets, I am confident the SEC will emerge from this process stronger and more relevant than ever before.” Further details are in Schapiro’s PLI speech.

David Becker Named SEC General Counsel and Senior Policy Director
Separately, the SEC issued a press release earlier today announcing that David M. Becker will reprise and expand on his prior tour of duty as General Counsel of the SEC – a position he held under former Chairmen Arthur Levitt, Jr. and former Chairman Harvey Pitt – by returning to that role and also taking on the new position of Senior Policy Director.

Becker leaves his current position as a partner with law firm Cleary Gottlieb Steen & Hamilton LLP. He also served on the PCAOB’s Standing Advisory Group (SAG); some of his remarks at SAG meetings on topics ranging from CIFiR’s (the SEC Advisory Committee on Improvements to Financial Reporting) proposals for a professional judgment framework, to ACAP’s (the Treasury Advisory Committee on the Auditing Profession’s) proposals for audit engagement partner signatures can be found in our summaries of the Oct. 2008 SAG meeting and the Feb., 2008 SAG meeting (see Feb. 28 post).

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