November 26, 2012

By: SEC Chair Schapiro To Step Down

In a written release by the SEC this morning, Chairman Mary Schapiro announced her resignation, indicating she will depart the Commission on December 14, 2012.

Chairman Schapiro was appointed by President Obama at the beginning of his first term, taking over the reigns of the Commission at a low point in its history.  Prior to Schapiro’s appointment, the SEC had sustained significant criticism for being impotent both in the run-up to and during the financial crisis of 2008.  It’s most publicly embarrassing legacy was the failure to discover Bernard Madoff’s multi-billion dollar Ponzi scheme, despite receiving specific tips regarding the scheme for several years prior to Madoff  turning himself in at the end of 2008.

Chairman Schapiro led the Commission through a period of significant change, including a marked increase in enforcement actions, investment in the upgrading of the SEC’s market intelligence capabilities, and implementation of rules for the SEC Whistleblower Program as mandated by Dodd-Frank.  According to the release announcing Schapiro’s resignation, “In each of the past two years, the agency has brought more enforcement actions than ever before, including 735 enforcement actions in fiscal year 2011 and 734 actions in FY 2012.”

According to several news outlets, the favorite to replace Chairman Schapiro is Mary J. Miller, currently serving as an under secretary in the Treasury Department.  Miller was reported to have played a significant role in support of Secretary Geithner in the debt ceiling debates in 2011.

A dark-horse candidate is Neil Barofsky, the former special inspector general for the Troubled Assets Relief Program (TARP), and a former federal prosecutor.  He ruffled some feathers with his outspoken criticism of Secretary Geithner and others regarding how TARP was executed.   He detailed many of these concerns in his book, Bailout:  An inside Account of How Washington Abandoned Mainstreet While Rescuing Wall Street.  It is not believed that anyone within the administration has floated Barofsky’s name as a candidate, though a strong argument in his favor was made by Professor Simon Johnson in the Economix Blog of the New York Times, on November 22.  Here is a link to his post: http://economix.blogs.nytimes.com/2012/11/22/mary-miller-vs-neil-barofsky-for-the-s-e-c/.

The link to the entire release announcing Chairman Schapiro’s resignation is here.  http://www.sec.gov/news/press/2012/2012-240.htm