Mary Schapiro's Job Was to Fix the Sec. She Didn't Stop There.

1557 Words Apr 8th, 2014 7 Pages
The US Securities and Exchange Commission (SEC) was reeling in the wake of harsh but justified criticism for failing to predict, control or even contain the global financial crisis.
Under its watch, fraudster Bernard Madoff managed to ¬operate the largest Ponzi scheme in history and Wall Street stalwart Lehman Brothers collapsed, taking billions of dollars, business confidence and reputations down with it.
It was a heady time with traders investing in schemes they, let alone the regulators, didn’t understand and whose behaviour they couldn’t predict. Related: SEC skirmishes over standards The SEC, along with many of the world’s financial regulators, was starkly exposed as ill-equipped to deal with the chaos erupting across the
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She called it the investor- focused agenda, a hallmark of her stewardship.
There was a sign on her office door that read: “How does it help investors?” And she ¬expected everyone from staff to bankers to members of an exchange to address the question in their discussions with her.
“Because if it doesn’t, we don’t really have time for it right now. Maybe someday, but right now we are all about how do we help investors,” she used to say.
“I wanted to ensure we were on top of the largest investment banks that were our responsibility and what risks they were presenting. What rules did we need to write or actions did we need to take to make sure we understood this industry we were regulating?”
In this period hedge funds were registered for the first time and the agency’s examination program was revised to make it more risk based. Rules also were set for over-the-counter derivatives and asset-backed ¬securities.
In July 2010 the SEC reached its largest-ever settlement with a financial institution when Goldman Sachs was fined US$550 million for committing fraud by misleading investors about mortgage securities before the US housing market collapsed in 2007.
Schapiro says one of the most glaring lessons from the financial crisis was the lack of attention to risk at every level of an enterprise – starting with the board and senior management and flowing down to all levels of decision making. “There has to be ¬attention at every