Yesterday , SEC Chairman Mary Schapiro testified before the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises. In opening the hearing, entitled SEC Oversight: Current State and Agenda, Chairman of the Subcommittee, Rep. Paul E. Kanjorski (D-PA), applauded Chairman Schapiro’s efforts, while heaping criticism on her predecessors at the SEC. In his remarks, Representative Scott Garrett (R-NJ) warned of the unintended consequences of hasty rulemaking.
Chairman Schapiro’s written testimony, outlined an agenda for the SEC consistent with her previous testimony before Congress and public statements, but adding several new items on the SEC’s regulatory agenda.
In doing so, Chairman Schapiro trumpeted the SEC’s Division of Enforcement 's activities since January of this year. Specifically , Chairman Schapiro cited that the division had:
- filed actions seeking at least 42 emergency temporary restraining orders, compared with 16 for the same period last year.
- opened more than 439 investigations, compared with 395 for the same period last year.
- issued at least 224 formal orders, compared with 93 for the same period last year.
In her testimony, Chairman Schapiro highlighted recent efforts by the SEC to develop safeguards regarding custody requirements for investment advisors, addressing abusive short-sales, and increasing shareholder rights, including proxy access. Chairman Schapiro also announced that she has instructed the Staff of the SEC to investigate the possibility of “develop[ing] investor-oriented enhancements to the municipal securities market within the constraints posed by the current limitations on the Commission’s authority,” and to “explore possible new regulations in this area, including limiting the potential for rating shopping.” Also, Chairman Schapiro stated that the SEC would be seeking to develop new regulations for so called “Dark Pools,” or automated trading systems that do not display quotes in the public quote stream.
Chairman Shapiro also stated that she intends to shortly announce plans to reinvigorate the Division of Enforcement, by removing a layer of management, improving training, fostering dialogue among enforcement personnel, streamlining internal processes and harnessing technology for better risk assessment and operational efficiency. With respect to the Office of Compliance Inspections and Examinations (OCIE), Chairman Shapiro discussed efforts to improve the SEC's risk-based oversight of broker-dealers, investment advisers, mutual funds, and other industry participants, These efforts include increased training and the recruitment of industry professionals with expertise in securities trading, portfolio management, valuation, forensic accounting, information security, derivatives and synthetic products, and risk management to serve as Senior Specialized Examiners in OCIE or as fellows in the Office of Risk Assessment.