What does 2009 hold in store for the SEC? A good indicator is Mary Schapiro’s testimony to the Senate Nominating Committee yesterday. Ms. Schapiro is President-elect Obama’s nominee to serve as Chairman of the SEC.
In contrast to previous sentiments as head of FINRA that she would like to reduce overly burdensome regulation (according to the New York Times), Ms. Schapiro called for more regulation and more oversight in her statements to the Senate. Whether genuine or not, and despite previous comments to the contrary, it would be difficult for her to argue that in the current economy and following the Bernie Madoff scandal what the SEC needs is less oversight power.
Specifically, Schapiro called for:
- Registration of hedge funds;
- More oversight of insurance companies, which are mostly regulated by state law;
- More regulation for credit rating agencies;
- More regulation of credit default swaps, which are at their core privately negoiated contracts that do not have the same type of market transparency associated with securities;
- Reexamination of U.S. corporations adopting international accounting standards;
- Reexamination of a short-selling uptick rule, which would presumably prohibit short selling if the price of a stock has already started moving down; and
- Consideration of an easier process for dissenting shareholders (with significant but not controlling ownership) to propose and elect directors.