SEC Chairman Mary Schapiro Stands By Agency’s 2011 Enforcement Record

Batting away criticism that many of the Security and Exchange Commission’s enforcement actions for fiscal year 2011 were actually follow-on administrative proceedings and not new actions, Chairman Mary Schapiro stood by the agency’s record. She also noted that in some instances, follow-ons are key to enforcing federal securities laws. Schapiro made her statements to a House Appropriations panel.

Per recent media findings, over 30% of the SEC’s FY 2011 735 enforcement actions (the agency has never filed this many in a fiscal year before) were follow-on administrative proceedings. Schapiro, who was testifying in front of the House Appropriations Financial Services Subcommittee on the White House’s proposed $1.566 billion FY2013 budget for the SEC, noted that some of the enforcement actions were the most complex to ever occur and included those involving municipal securities market-related bid rigging, misleading sales practices related to structured products, Foreign Corrupt Practices Act-related violations, and insider trading. She also pointed to the number of senior level people that have been the target of many of last year’s SEC enforcements.

Schapiro said that even as the SEC has already proposed or adopted regulations for over three-fourths of the duties it was tasked with under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the most challenging ones, including proposals to enhance disclosures for companies that use conflict minerals or pay governments for access to natural gas, minerals, and oil, are still on the horizon. So is the SEC’s joint proposal with banking regulators on the Volcker rule, which exempts insurance firms from proprietary trading restrictions while preventing financial institutions and affiliated insurers from being able to invest in private equity and hedge funds. She said stated the SEC is “rethinking” how it deals with its Volcker rulemaking.

The SEC Chairman also said that she hoped the Commission could finalize the Dodd-Frank Title VII-related derivatives rules by year’s end. Another rule, over the proposal to enhance disclosure for extraction users, should be completed by midyear, A rule over registering municipal advisors was expected to be adopted also by the year’ end. As for the White House’s proposed budget, Schapiro said that the SEC’s information technology needs, as well as its examinations program ,would be affected if the agency isn’t given the $1.566 billion.

Regarding MF Global Inc., Schapiro said that the failed brokerage firm had only 318 active securities accounts and 40,000 futures accounts. SEC staff is working with Securities Investor Protection Corporation trustee James Giddens to find investors’ missing funds and they plan to work with him to recover the monies.

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Chairman Defends SEC Enforcements In FY 2011, Says Numbers ‘Not Misleading,’ Bloomberg/BNA, March 7, 2012

Read SEC Chairman Schapiro’s Testimony, SEC, March 6, 2012

More Blog Posts:
SEC Chairwoman Defends ‘No Wrongdoing’ Settlements, Institutional Investor Securities Blog, February 27, 2012
SEC is Finalizing Its Whistleblower Rules, Says Chairman Schapiro, Stockbroker Fraud Blog, April 28, 2011

Reductions to SEC’s Budget Will Cause Staff Furloughs, Says Schapiro, Stockbroker Fraud Blog, March 24, 2011