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Compliance May 8, 2009
Schapiro Plans to Increase SEC Enforcement
Chairman Mary Schapiro today outlined new plans for enforcement of the Securities and Exchange Commission (SEC).
Reported by Ellie Behling
Speaking at the annual gathering of the Investment Company Institute (ICI), Schapiro said a new system of financial regulation must accommodate “lively competition for capital’ while also protecting individual well-being.
In a time when the SEC has been criticized for not spotting financial fraud such as the Madoff Ponzi scheme earlier, Schapiro noted the importance of investor trust in financial intermediaries. “They must be able to trust that those intermediaries deal with them honestly and fairly and with investors’ well-being as their sole goal,’ she said
Outline for New System
Schapiro said the new system should include:
- an entity responsible for the regulation of the markets for investment capital
- an entity or entities responsible for regulating banking institutions
- an entity responsible for monitoring and averting risks to the financial system as a whole
- an entity responsible for resolution of troubled institutions.
Those proposals are based on principles of protecting investors and institutions, Schapiro said. “Though we are not, as some would have you believe, focused solely or even primarily on retail transactions, and we regulate institutions and markets, our focus has been and must remain on how our actions benefit the workers, savers, and investors of the United States,’ Schapiro said.
She added that regulation should help facilitate fair and efficient trade but not supplant the markets. “Events of the last year provide a brutal reminder that markets are neither self-regulating nor self-correcting,’ she said. “A strong and steady regulatory hand is needed to assure their continued survival. But that hand must not be so intrusive as to point to winners and losers, lest we lose the benefits of competition.’
Schapiro also noted the importance of transparency: “Any new regulatory structure must preserve the integrity and independence of those charged with the responsibility for setting standards of financial disclosure.’
The full speech is available here.