By Collins, Daniel P.
Futures (Cedar Falls, IA) , Vol. 40, No. 8
At the beginning of 2009 the Securities and Exchange Commission (SEC) faced enormous challenges. Errtbafrassing revelations regarding its failure with the Bernie MadofT scandal were coming to light as the unraveling credit crisis assured chat its next chairman would oversee a regulatory overhaul not seen since the Great Depression. The chairman would need vast experience and the ability to work well across the aisle and with fellow regulators. Maty Schapiro was a logical choice. She served as an SEC commissioner from 1988-1994, including a brief stint as acting chairman, before being named chairman of the Commodity Futures Trading Commision (CFTC) in 1994. She left the CFTC to become president of NASD Regulation in 1996, where she remained through its transition to the Financial Industry Regulatory Authority (Finra), serving as its chairman and CEO until being capped for SEC chair by President Elect Obama. We talked to Schapiro about what she has been able to accomplish over several volatile years and what important missions are on the horizon for the SEC.
FUTURES: You joined the SEC at an historic and difficult time. What has been accomplished in your tenure and what are your priorities going forward?
MARY SCHAPIRO: It was an historic and an incredibly busy rime when I arrived here and it is a little hard to list the most important accomplishments because there have been many. The agency has done a pretty remarkable job of reforming the way it operates. I would point out in particular putting in place measures that have helped to prevent another flash crash from happening, implementing important reforms for money market funds after the financial crisis, assembling a pretty big team of experts to write all the rules that are mandated by Dodd-Frank and pushing those rules through the process as well as conducting a number of the studies and pursuing some of the most complex enforcement action coming out of the crisis. That is just a handful; there are a lot more.
There were a lot of things on our agenda before Dodd-Frank, some of which we have been able to accomplish, many more that we still hope to get to. On the equity side, we have further efforts to reform market structure coming out of this highly fragmented marketplace. We are anxious to go forward with a project we call "proxy plumbing.1' It is an in-depth investigation around how proxies are voted by shareholders.
FM: Some of the Dodd-Frank deadlines have been delayed and there is legislation that would push them back much further. How has the political pushback affected you and your staff's ability to work on the rules?
MS: We really try to ignore the politics and do what the law requires and what we believe is in the best interest of investors. Of the more than 90 mandatory rulemaking provisions [under Dodd-Frank], we already have proposed or adopted rules for about two-thirds of them. That has been a huge undertaking, especially for an agency of our size. While some deadlines will pass, the important thing is to get the rules right.
FM: Even when Dodd-Frank takes effect, Congress can alter it greatly by restricting the budgets of regulators. Are you looking at contingencies for the possibility of having a greater workload without additional - or perhaps fewer - resources?
MS: Even before the added responsibilities that we got from Dodd-Frank, we were an agency with a significant role to play and not always enough resources, so it is a set of issues we have dealt with over many years. ...Frankly, resources always have been a challenge for the agency. And now with the new responsibilities that we are taking on under Dodd-Frank - our share of the currently unregulated derivatives industry, hedge funds that will be required to register with us for the first time, extensive new responsibilities for credit rating agencies, registration of municipal advisors and oversight ofthat very large group - [it] absolutely will tax the agency going forward. …