Schapiro urges more risk-based oversight

In her first public speech since becoming chairman of the SEC, Mary Schapiro said risk-based oversight of broker-dealers and advisers needs to be strengthened.
FEB 06, 2009
By  Bloomberg
In her first public speech since becoming chairman of the Securities and Exchange Commission, Mary Schapiro today said risk-based oversight of broker-dealers and investment advisers needs to be strengthened. Speaking at the “SEC Speaks” conference in Washington, sponsored by the Practising Law Institute of New York, she listed initiatives she will take to try to restore confidence to the agency, which has been badly damaged by questions about not detecting massive fraud at Bernard L. Madoff Securities LLC of New York as well as not detecting problems connected with subprime-mortgage assets which led to the credit crisis. Mr. Madoff has been reported to have cost investors as much as $50 billion in an alleged Ponzi scheme that could be the largest in history. Highlighting initiatives she plans to pursue as priorities, Ms. Schapiro listed “strengthening risk-based oversight of broker-dealers and investment advisers, and improving the quality of audits for non-public broker-dealers, and promoting the safe and sound custody of customer assets by any broker-dealer or adviser.” The quality of credit ratings must be improved “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,” she said. The SEC should reduce systemic risk in markets by promoting and regulating centralized clearing houses for credit default swaps, Ms. Schapiro said. In addition, shareholders should have greater say on corporate boards and how executives are paid, she said. Ms. Schapiro announced steps she will take immediately to enable the SEC to move more quickly in enforcement cases. She announced that this week, she is ending a two-year pilot program put in place by past SEC Chairman Christopher Cox under which enforcement staff had to get special approvals from the commission to impose civil penalties for public companies found to have engaged in securities fraud. Also, Ms. Schapiro is ending the prior practice of requiring investigations to be approved by all five commissioners. “These special procedures have introduced significant delays into the process of bringing a corporate penalty case” and have sometimes resulted in reductions in penalties, she said. The SEC will review the way it handles tips and whistle-lower complaints, and it will soon form an investor advisory committee representing both large institutional investors and small individual investors to “ensure that the commission hears firsthand about the issues most concerning to investors,” Ms. Schapiro said.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave