With the fallout from Bernie Madoff's alleged $50 billion Ponzi scheme still fresh in the minds of many, new Securities and Exchange Commission Chairwoman Mary Schapiro today introduced a variety of changes to make sure that "a strong and reinvigorated SEC will be on the beat like never before to catch wrongdoers."
"As the current market crisis has unfolded, the SEC, along with the entire regulatory structure, has been put under a microscope," Schapiro said in a speech at the Ronald Reagan International Trade Center in Washington. "This crisis has exposed weaknesses and gaps in the regulatory system and areas where the SEC particularly must recommit its resources and talents in order to restore investor confidence. We must help to restore that lost confidence; that is our challenge."
The SEC has come under withering criticism for failing to adequately protect investors.
Harry Markopolos, a whistleblower who tried to warn regulators about Madoff for years, told Congress earlier this week that "right now, the SEC staff consists of 3,500 chickens.
"I think it was a combination of incompetence and an unwillingness to take on a major player like Mr. Madoff," Markopolos told a House Financial Services subcommittee Wednesday.
Some members of congress were equally critical. "You couldn't find your backside with two hands if the lights were on," Rep. Gary Ackerman, D-N.Y., told SEC officials.
"We thought the enemy was Mr. Madoff," he said. "I think it was you."
In her first public speech today as the new SEC boss, Schapiro announced numerous changes, including termination of a two-year practice that she criticized for causing "significant delays into the process of bringing a corporate penalty case."
The "penalty pilot" experiment required enforcement staff to get a special set of approvals in cases that involved civil monetary penalties for public companies engaging in securities fraud.
Schapiro also said she would speed up the approval process to enable officers to get subpoenas. In the past, formal orders of investigation had to be obtained in a meeting of all five commissioners. Now, Schapiro said such consent could be obtained by a series of written approvals from the commissioners or, in some cases, by just one commissioner.
The new SEC chief also announced the formation of an Investor Advisory Committee to help the investor community share its concerns with the commission.
"The challenges we face are historic," she said. "But they're not insurmountable. It will take determination, hard work, toughness and, above all, an unrelenting will to stand up for investors."