6.2.2009 SEC Chairman Mary Schapiro testified before the U.S. Senate Committee on Appropriations’ Subcommittee on Financial Services and General Government. Chairman Schapiro started her testimony by summarizing several changes in the SEC aimed at reinforcing the SEC’s focus on investor protection and market integrity and redirecting the SEC’s energies toward restoring investor confidence:

  • Ending the two-year “penalty pilot” program, which had required the Enforcement staff to obtain a special set of approvals from the SEC in cases where the staff sought fines against public companies that violated the law;
  • Bolstering the SEC’s Enforcement program to provide for more rapid approval of formal orders of investigation, which allows SEC staff to use the power of subpoenas to compel witness testimony and the production of documents.
  • Hiring a new enforcement director, a longtime federal prosecutor who served as Chief of the Southern District of New York’s Securities and Commodities Fraud Task Force, charged with focusing the SEC’s enforcement efforts on bringing meaningful, high-impact cases quickly.

The Chairman stated that the SEC is committed to vigorous enforcement of the securities laws and is mindful that the 21st century markets are complex. The Chairman stated that the agency must improve its ability to process and pursue appropriately the hundreds of thousands of tips and referrals it receives annually. To that end, the Chairman announced that the SEC has retained the Center for Enterprise Modernization, which began work immediately on a comprehensive review of internal procedures to evaluate tips, complaints and referrals and is in the process of creating a system that will centralize this information so that the SEC can track it, analyze it and more effectively identify valuable leads for potential enforcement action and compliance exams.

The Chairman also stated that the SEC is working on the following: (1) strengthening examination and oversight; (2) improving transparency and investor protection; (3) combating abusive short-selling; (4) filling regulatory gaps; (5) strengthening shareholder rights; and (6) improving money market and mutual fund regulation. To accomplish its goals, the Chairman asked for additional resources, including funding for staff and technology.

Click http://www.sec.gov/news/testimony/2009/ts060209mls.htm to access Chairman Schapiro’s testimony.