After nearly four years in office, Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro announced her resignation as the chairwoman of the agency today. She also will relinquish her seat as one of the agencies five commissioners.
The move, which follows a difficult tenure in office, was telegraphed widely. Schapiro has confided in staff members for more than a year that she was exhausted and hoped to leave after the November elections, according to a New York Times article.
According to the SEC statement, Schapiro will step down on Dec. 14. “It has been an incredibly rewarding experience to work with so many dedicated SEC staff who strive every day to protect investors and ensure our markets operate with integrity,” Schapiro said in the agency’s statement. “Over the past four years we have brought a record number of enforcement actions, engaged in one of the busiest rulemaking periods, and gained greater authority from Congress to better fulfill our mission.”
Schapiro, a lifelong regulator, ascended to the top position at the SEC in January 2009 at a time when extreme economic turmoil had shaken investor confidence in the markets. Additionally, just weeks before beginning her tenure, Bernie Madoff was accused of running a decades-long Ponzi scheme, further damaging the SEC’s credibility because of missed warning signs.
Prior to joining the SEC, Schapiro held a number of other high-ranking regulatory positions, including at the Commodity Futures Trading Commission and the Financial Industry Regulatory Association.
Although Schapiro's appointment to the SEC initially was met with cautious optimism, criticism of her leadership has grown steadily. On OpenMarket.org, John Berlau says he was impressed with the "independent-mindedness" she had shown in other governement appointments and had hoped she would bring that same spirit to the SEC. " But I and other hopeful observers have been beyond disappointed with her tenure. It’s true Schapiro can’t fully be blamed for Dodd-Frank’s hundreds of new rules that threaten both economic growth and investor protection by placing the SEC focus outside its scope to far-flung subjects such as 'conflict minerals,'" he says. "But she can be held accountable for the SEC’s not following basic cost-benefit procedures on the rule creating a ”proxy access” platform in shareholder elections for unions and other special-interest groups to nominate their own director candidates. This rule was so flawed a unanimous federal appeals court panel struck it down last year."
Of particular note, Berlau criticizes Schapiro's handling of the Jumpstart Our Business Startups (JOBS) Act. He says she has "slow-walked provisions to lift barriers so the smallest startups can raise capital through crowdfunding." Seven months after the bill was passed, the SEC still has not put forth a draft crowdsourcing rule.
Others have faulted Schapiro for not being aggressive enough in stepping up the agency's enforcement actions. Andrew Stoltman, a securities lawyer in Chicago, says some questioned her appointment because of her ties to industry self-regulatory organizations. “While she did increase morale at the SEC post the Bernie Madoff debacle, her tenure in terms of accomplished investor protection issues is minimal,” Stoltmann says. “She failed to bring actions against major banks and brokerage on the civil side and provided little assistance to the Department of Justice in bringing criminal charges against senior bank and brokerage firm executives.”
Schapiro’s departure is the first major transition in the Obama administration’s team of financial regulators. According to the New York Times, there is no clear successor, but possible replacements include Mary J. Miller (a senior Treasury Department official), Sallie L. Krawcheck (a former top executive at Citigroup and Bank of America) and Robert Khuzami (the agency’s enforcement chief).
Elisse B. Walter, a commissioner at the SEC, will step in to serve as interim chairwoman until a new one is confirmed.