At a time when lawmakers are considering rewriting financial services regulations, even restructuring the whole system, the new Securities and Exchange Commission Chairman Mary L. Schapiro is planning to prove her agencys merit by stepping up enforcement and penalties, The Washington Post reports.
Schapiro is reportedly going to do away with a rule that requires the enforcement division to first get the permission of the SECs attorneys before imposing penalties on wrongdoers. Since the rule was put into place three years ago, fines levied by the SEC have fallen 85%.
She reportedly is also going to ask Congress for additional money so that she can assign up to 15 lawyers per case instead of the current seven or eight; heavy caseloads in recent years have prompted turnover at the SEC, with the number of lawyers in the enforcement division now down by 10%.
As Schapiro herself said in her inaugural speech, This crisis has exposed weaknesses and gaps in the regulatory system that have led to a loss of investor confidence. We must help to restore that lost confidencethat is our challenge. Success in this endeavor demands that we as an organization engage in serious self-evaluation. That means taking an honest look at everything we are doing and how we do it.
If Schapiro takes the same steps as she did when she became head of the regulatory division of the NASD in 1996, she is likely to replace key people, including the current head of the division of enforcement, Linda Chatman Thomsen, who has been with the SEC for 13 years. Certainly, there are a number of key openings she needs to fill, among them general counsel, chief accountant and head of corporate finance.
She is also likely to revisit the Office of Risk Assessment, which former SEC Chairman William H. Donaldson created to detect systemic risk.