Who will be Schapiro’s successor?

With Mary Schapiro expected to step down at some point after the election, speculation has begun as to who might replace her as SEC chairman.

The job won't be easy, as the next SEC leader must corral an increasingly contentious commission.

“You need someone who can figure out how to break that logjam,” Barbara Roper, director of investor protection at the Consumer Federation of America, said of the partisan infighting — sparked mainly by the implementation of the Dodd-Frank Act — that has slowed SEC rule making.

If President Barack Obama remains in office, Mary Miller, Treasury undersecretary for domestic finance, is a possible replacement for Ms. Schapiro, who is expected to leave regardless of who wins the election.

In her position, Ms. Miller helps oversee financial institutions. Before joining the government, she was director of the fixed-income division and a member of the management committee at T. Rowe Price Group Inc., where she worked for 26 years.

Another possibility is Harvey Goldschmid, the Dwight professor of law at Columbia University. He has been on the Columbia faculty since 1970 and served as an SEC member from 2002 to 2005.

In 1998 and 1999, Mr. Goldschmid was SEC general counsel, and special senior adviser to SEC Chairman Arthur S. Levitt in 2000.

SEC, FINRA CANDIDATES

Two other Democrats who might be considered are sitting on the SEC — members Luis Aguilar and Elisse Walter, who briefly served as acting chairman before Ms. Schapiro was appointed, and usually votes with her.

Ms. Walter's term ended this year. She is serving until a replacement is appointed.

If Mr. Obama follows the precedent he set in 2009 by moving Ms. Schapiro from her position as chief executive of the Financial Industry Regulatory Authority Inc., he might consider current Finra CEO Richard G. Ketchum.

Meanwhile, sources said, SEC member Daniel Gallagher and former members Paul Atkins and Kathleen Casey are among those who could be considered by the Republican presidential nominee, former Massachusetts Gov. Mitt Romney, should he win the election.

Mr. Gallagher, the newest SEC member, has made speeches over the past couple of weeks addressing market structure, adviser oversight and calling for a review of self-regulatory organizations. The talks have raised his profile.

Mr. Gallagher replaced Ms. Casey on the commission last November. A former aide to Sen. Richard Shelby, R-Ala., on the Senate Banking Committee, Ms. Casey served at the SEC from 2006 until last summer.

She was instrumental in slowing down SEC consideration of a uniform fiduciary standard for retail investment advice when she joined fellow GOP member Troy Paredes in writing a dissent to an SEC report in January 2011 that recommended such a rule. Ms. Casey and Mr. Paredes said that the report lacked sufficient economic analysis.

Mr. Atkins was ap- pointed an SEC member by President George W. Bush and served from 2002 to 2008. He is now chief executive of Patomak Global Partners LLC.

DODD-FRANK

Regularly called to testify on Capitol Hill before the House Financial Services and Senate Banking committees, Mr. Atkins also is a frequent participant at financial reform events at the U.S. Chamber of Commerce and other venues.

Given his experience in the financial services industry, Mr. Romney might pick someone from that world to head the SEC.

He has targeted the Dodd-Frank financial reform law for criticism throughout his campaign, which could put choosing the SEC chairman front and center, should he be elected.

“Given the focus on Dodd-Frank and the SEC in recent years, it's possible a Romney administration would make that selection a higher priority” than it usually is, said Duane Thompson, senior policy analyst at fi360 Inc., a fiduciary-duty consulting firm.

The next SEC chairman must confront a host of challenges.

For instance, one recent flare-up involved money market mutual funds. Ms. Schapiro, who strongly backed further reform of the investment products, wasn't able to secure the three votes required among the five SEC commissioners to put forth a proposal.

The breakdown occurred amid fierce opposition from the financial industry, which mounted a months-long campaign against money fund changes.

In a less dramatic way, the path to a fiduciary-duty rule has been held up by the dissent that Ms. Casey helped write and pressure from Capitol Hill Republicans, who have warned the SEC not to move ahead without conducting a thorough cost-benefit analysis.

Whoever is selected will be “critical” in determining the fate of fiduciary duty, according to Skip Schweiss, managing director of adviser advocacy at TD Ameritrade Institutional.

“Come early 2013, the fiduciary issue could jump to the top of the list or get put off on the side,” he said. “There's no way to tell.”

But with Mr. Obama and Mr. Romney fighting tooth and nail in a contest that is too close to call, the composition of the next administration has taken a back seat to getting out the vote.

“It would be unwise for anybody to put any confidence in any prediction people are making right now,” said David Tittsworth, executive director of the Investment Adviser Association.

“I'd be surprised if Gov. Romney has a short list. They're focused on the election,” Mr. Tittsworth said.

At the Securities Industry and Financial Markets Association's annual conference last week, Ms. Schapiro indicated that she has no departure date in mind before her term ends in 2014.

If Mr. Romney wins, she almost certainly will step down early next year.

[email protected] Twitter: @markschoeff

Related Topics: Securities and Exchange Commission