A Re-Energized SEC
Speech by SEC Chairman:
Remarks at the SIFMA C&L Conference
by
Chairman Mary L. Schapiro
U.S. Securities and Exchange Commission
Miami, Florida
March 20, 2012
Good morning. It is a pleasure to be here. I always enjoy speaking at the annual C&L conference because I know that we share an understanding – an understanding that markets work best when they offer investors of every variety access to the accurate information that supports informed decisions; when trading venues are fair and honest; when rigorous internal compliance programs protect against abusive practices; and when there is a vigorous examination and enforcement regime to deter, detect, and punish.
When I returned to the SEC as Chairman just over three years ago, the nation, the financial industry and federal regulators were grappling with the fallout from one of the worst financial crises of the past century. Following years of underfunding, the SEC was struggling to effectively pursue its mission. A bright spotlight was focused on us. And we were being challenged to handle not only a growing volume of day-to-day demands, but the need to mount a significant response to the financial crisis and to begin restructuring the agency itself.
It is testament to the talent and dedication of our staff that we were able to move rapidly not just to indentify and repair structural weaknesses in the financial system, but to aggressively identify other areas where the SEC could protect investors and help to stabilize markets – all while in the course of significant organizational change.
That effort – which continues to this day – is more than just a series of discrete restructurings and rulemakings, driven by backward-looking responses to past events. It is, in fact, a comprehensive, forward-looking strategy designed to fundamentally restructure, re-orient, and refocus the SEC in ways that make us a much more effective regulator – regardless of the challenges we might face.
A Re-Energized SEC
Almost immediately upon my return we set about on one of the busiest rulemaking agendas in the past two decades, making tremendous progress in reforming the rules by which Wall Street plays. We passed rules to make money market funds more resilient. We strengthened the custody controls that investment advisers must have in place to protect investor assets; we adopted rules to end “pay-to play” practices by advisers to public pension plans and we required better and more timely disclosure of material events related to municipal securities.
We required investment advisers to disclose more information about their qualifications and conflicts – and made that information easily accessible to the public.
We significantly improved the quality of the information in proxy statements so investors know about the qualifications of board members as well as corporate policies and compensation practices that encourage risk. And we gave shareholders a greater say on executive compensation, with “say on pay” rules.
As we were moving forward with our investor protection agenda, we were also supporting Congressional progress on what became the Dodd-Frank Act. Signed into law in 2010, the Act assigned the SEC a host of significant responsibilities.
We now have in place new rules requiring hedge fund and other private fund advisers to register and report important data to the public and systemic risk information to the regulators. We have required greater disclosure from the issuers of asset backed securities and begun to reduce investor reliance on credit ratings. And in short order, we established a new whistleblower program that is now producing higher quality leads and shortening the length of investigations. All told, we have proposed or adopted more than three-quarters of the more than one hundred rules we are directed by Dodd-Frank to write.
And across the agency, staff is adopting a proactive approach to their duties. We reorganized the Enforcement Division, putting more attorneys on the front lines, giving them greater authority to launch investigations and negotiate penalties, and creating specialized units to build in-house expertise in key areas like structured products or asset management.
Last year, the SEC brought more cases than ever before, won orders for over $2.8 billion in judgments and returned $2.2 billion to wronged investors. We worked with the Justice Department to win civil and criminal convictions of more than 24 individuals involved in the largest insider-trading ring ever broken up. And since 2009, we have brought nearly 100 actions against people and firms whose conduct contributed to the financial crisis.
Over the last two years, our examination unit (OCIE) has put in place a new National Examination Program that has brought changes in the way examination teams are assembled – OCIE now precisely matches examiners’ skills with the unique challenges each examination offers.
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