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New York (HedgeCo.Net) – Mary Schapiro, who most recently was the CEO for the Financial Industry Regulatory Authority, is now the head of the Securities and Exchange Commission. The Senate approved Schapiro yesterday, a month after being nominated President Barack Obama.
Schapiro takes over the SEC at a crucial time, when the agency along with former head Christopher Cox received an abundance of bad press over lax regulation in a faltering economy.
In a year where hedge funds have taken a beating and some of the world’s most reputable financial institutions have come crumbling down, all eyes are on the SEC as to how and why they could not prevent or foresee disaster.
Even as more light is shed on the Bernard Madoff debacle after losses amounting to over $50 billion, questions still arise as to how the agency could have missed the pink elephant in the room. Schapiro, who has taken flak for clearing Madoff from fraud, says that the broker dealer watchdog did not have the jurisdiction to investigate his investment advisory business.
Many are suprised at the appointment of Schapiro simply because she has been a staple in government regulation agencies since the Reagan era. Some argue that this will not provide the "change" we need, especially since Schapiro was at the center of an agency that many feel is corrupt, or at the least, too forgiving.
Schapiro is the first woman to chair the SEC.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
The Washington Times – Hedge-fund managers say Bernard L. Madoff may succeed where Christopher Cox failed: forcing regulation of their $1.5 trillion industry.
Mr. Madoff’s purported bilking of investors by up to $50 billion begins to uncover a part of the investment industry that has skirted government scrutiny. Although the 70-year-old was registered with the U.S. Securities and Exchange Commission, the agency Mr. Cox heads, fund executives who fed him customers’ money weren’t.
"This is an Enron moment for hedge funds," said Peter Rup, chief investment officer at New York-based hedge fund Orion Capital Management LLC, with $400 million in assets under management. "Regulation would be welcome, primarily from a trust standpoint."
Washington, D.C., Jan. 3, 2008 – The Securities and Exchange Commission has received and posted on its Web site the text of the RAND Corporation’s final report on practices in the investment adviser and broker-dealer industries. The Commission has been anxious to receive RAND’s study of the investment adviser and broker-dealer industries, and the nature of their relationships with customers. The report will assist the Commission’s efforts to update our regulations to improve investor protections in today’s new marketplace," said SEC Chairman Christopher Cox. Our staff is now studying the report and the potential regulatory implications of its findings. RAND produced the report under contract with the Securities and Exchange Commission (http://www.sec.gov/news/press/2006/2006-162.htm). The report is the product of more than a year of empirical study and analysis. Following a March 2007 Court of Appeals decision that overturned a 2005 SEC rule permitting non-adviser broker-dealers to charge fees to investors based on account size, the SEC and RAND agreed that RAND would deliver its final, peer-reviewed report in pre-publication format on Dec. 31, 2007, three months earlier than the contract had originally required. The text of the posted report is final and has been peer-reviewed. Neither the data nor the analysis on which it is based will change.
