SEC Chairman Schapiro Resigns, Leaving a Legacy of Achievement

Mary L Schapiro, one of the longest serving SEC Chairman, announced her resignation, effective December 14, 2012. Ms. Schapiro’s action has been long rumored. The White House immediately appointed Commissioner Elisse Walter as Chairman, a position she can hold over the next year until the President appoints a person to a full term.

Ms. Schapiro has served through one of the most difficult periods in the Commission’s history. Taking office in January 2009 she was immediately faced with an agency whose one proud enforcement program, critical to its investor protection mission, was in disarray following a series of scandals which kicked-off with the Madoff debacle. At the same time the agency faced the aftermath of the worst market crisis in history.

Rising to the task under Ms. Schapiro’s leadership, the Commission initiated the largest reorganization of the enforcement program in the history of the agency. Following the passage of the ground breaking Dodd-Frank legislation, she led the Commission through an unprecedented period of rule writing to implement legislation which is designed to completely rewrite the rules governing the financial markets.

Critical achievements under Ms. Schapiro’s tutelage include:

• Reorganizing and reinvigorating the enforcement division;

• Creating new specialty groups within the enforcement division;

• Crafting a whistleblower program;

• Bolstering expertise in key areas such as risk management, quantitative analytics, trading, portfolio management and valuation skills;

• Filing a record number of enforcement actions;

• Returning over $6 billion to harmed investors;

• Bringing a series of market crisis actions, including those against major Wall Street players;

• Building a risk based approach into the examination program while fostering the cooperation of that program with the enforcement division;

• Establishing a new division to focus on risk and economic analysis;

• Engaging in one of the most robust rule making periods in the history of the agency which, in part, helped create a new framework for derivatives;

• Implementing a variety of circuit breakers to delimit the impact of technology errors in the markets;

• Requiring broker dealers to adopt risk controls and effectively prohibit unfiltered access to the exchanges; and

• Approving a first-ever consolidated audit trail system.

No doubt Ms. Schapiro has compiled an enviable record as Chairman. Still her successor will be faced with a daunting array of issues. The enforcement program is still a work in progress. Rule writing under Dodd-Frank is an on-going and challenging process. And, there are a series of other challenges ranging from high speed trading to the municipal markets and money market funds which must be addressed. Nevertheless, Ms. Schapiro has moved the agency forward in an effective, positive and constructive manner which gives her a proud legacy as Chairman.

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