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SEC chief points to stepped-up enforcement
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By The Associated Press
| 07/20/2010 |
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WASHINGTON (AP) -- The head of the Securities and Exchange Commission said Tuesday the agency has stepped up enforcement in the wake of the financial crisis and past agency failures.
SEC Chairman Mary Schapiro was appearing at a House subcommittee hearing, in her first public testimony since the passage of sweeping financial regulation that gives the agency new powers. Her comments also are coming after the agency agreed to let Wall Street giant Goldman Sachs Group Inc. pay $550 million to settle civil fraud charges.
"We worked to reform the ways we operate. We began modernizing our systems," Schapiro said in testimony prepared for the hearing.
She said the agency has been revamping itself, strengthening enforcement efforts and taking measures to protect investors in the wake of the financial crisis and past agency failures.
"We brought in new leaders across the agency. We streamlined our procedures. We worked to reform the ways we operate. We began modernizing our systems," Schapiro said in her prepared testimony.
Rep. Paul Kanjorski, D-Pa., chairman of the Financial Services subcommittee, said Schapiro "has pursued an ambitious, results-oriented agenda aimed at protecting investors and restoring market confidence."
She also faces hurdles in the coming months, particularly in writing new rules to put into action the new financial overhaul, Kanjorski said.
It is Schapiro's first public appearance since the $550 million settlement announced Thursday with finance powerhouse Goldman Sachs, the largest against a Wall Street firm in SEC history, over allegations that the firm misled buyers of mortgage-related investments. Lawmakers may question whether the settlement is a serious show of enforcement muscle by the SEC in the trail of the mortgage meltdown or just a blip for a firm that earned that much in about two weeks last year.
The $550 million Goldman is paying also represents nearly half the White House's budget request of $1.2 billion for the SEC for the fiscal year starting Oct. 1. That would bring the agency staff to about 4,200 people, to police burgeoning and sophisticated markets, and some 35,000 registered companies, investment funds and other entities.
And the overhaul package approved by Congress last week, which slaps the stiffest new curbs on U.S. banks and financial institutions since the Great Depression, adds new powers and responsibilities to the SEC's plate. Among other things, the agency gains oversight of hedge funds and bolstered technological capacity.
Schapiro says in her written testimony that the coming months for the SEC will be dominated by rule-writing for the new legislation. The agency is charged with writing nearly 100 new rules.
The SEC chief also is discussing the agency's response to the May 6 "flash crash," a panicked disruption that saw the Dow Jones industrials lose nearly 1,000 points in less than a half-hour. Under a new system of "circuit breakers" for individual stocks put in last month by the SEC, U.S. stock exchanges must briefly halt trading of major stocks that mark big swings. Trading of any Standard & Poor's 500 index stock that rises or falls 10 percent or more in a five-minute span must be halted for an additional five minutes.
In addition, the SEC put forward proposed new rules spelling out when and at what prices stock trades deemed erroneous would be canceled.
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