SIFMA Annual Meeting: SEC is focused on informing Wall Street and consumers, Schapiro says - SmartBrief

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SIFMA Annual Meeting: SEC is focused on informing Wall Street and consumers, Schapiro says

3 min read

By Sean McMahon 05/26/16

Leadership

This post is by SmartBrief Finance Editor Sean McMahon, who is reporting live from the annual meeting for the Securities Industry and Financial Markets Association today in New York. For more coverage of the meeting, follow @SBFinance on Twitter and sign up for SIFMA SmartBrief.

Securities and Exchange Commission Chairman Mary Schapiro said her agency is working to inform Wall Street about the type of conduct that will be expected as the industry adjusts to the rules and regulations under the Dodd-Frank Act.

Schapiro recounted the efforts the SEC has made to reach out to the industry with regard to rulemaking, as well as how the agency plans to staff itself for a new regulatory landscape. “We’ve really reached out …  to the industry to help inform the rulemaking process,” Schapiro said.

Schapiro said she realized that she’d need to make changes to the staff when she took over the agency. “We’re trying to bring even greater expertise into the rulemaking process than we already have in house,” Schapiro said, detailing how the agency has sought to hire people with diverse backgrounds, including financial advisors and those with experience working with hedge funds.

When asked about the role consumers played in the financial crisis, Schapiro stressed that greater steps need to be taken to educate investors about finance – from grade school, right on up to educational outreach initiatives by the financial services industry.

Among Schapiro’s other comments about issues facing the industry:

  • On the assertion that the SEC’s action earlier this year against Goldman Sachs was a “shot across the bow” of the financial services sector: Rather, Schapiro said, the goal of that regulatory action was to educate Wall Street. “It informed the industry broadly about conduct that we think is problematic in the conduct of a securities business.”
  • On how the SEC will interact with other regulatory agencies to achieve the optimal form of regulation: “It is certainly not a credential any regulator is looking for to be the ‘lightest touch’ regulator.”
  • On working with a new Republican Congress: Schapiro pointed to the agency’s track record of successfully working with both parties and said she expected much of the same.
  • On the Flash Crash: The frailty of the markets frightened retail investors.
  • On the Madoff scandal: “We tried to make Madoff a real learning experience for the SEC. The SEC clearly didn’t perform well. … I asked the [SEC] staff to read letters from victims.”
  • On efforts to craft rulemaking that affects liquidity without increasing volatility: “It is the regulator’s lot to be balancing all the time.”
  • On whether any of the lessons from Enron might have already been forgotten: “We do seem to have to repeat the learning of lessons in this country … on some kind of cyclical basis.”