"SEC nominee's past actions challenged" by NEW YORK TIMES | January 12, 2009
WASHINGTON - Mary L. Schapiro, who appears this week at a confirmation hearing on her selection to head the Securities and Exchange Commission, has been accused in two lawsuits of making misleading statements to quickly complete a merger of regulatory organizations that resulted in a 57 percent raise in her pay.
Just who we want supervising the cesspool of Wall Street, 'eh?
The merger involved the regulatory units of the New York Stock Exchange and the NASD two years ago. Schapiro, then NASD's head, spent months traveling the country to persuade its 5,100 members to support it. The merger created the Financial Industry Regulatory Authority, or FINRA, where Schapiro is chief executive. The Securities and Exchange Commission relies on FINRA to police Wall Street.
Among misstatements she is accused of making is that the Internal Revenue Service prohibited NASD from paying each member more than $35,000 as part of the merger. An NASD statement said the IRS would not permit more compensation, but the IRS did not rule on the matter until long after the deal closed and three months after members approved it.
Smells like a cover-up to me.
Lawyers for Schapiro and FINRA have fought to keep the IRS ruling and court references its details under seal. Last January, a federal judge denied a request by The New York Times to unseal documents in the case. Schapiro's lawyer has denied the lawsuits' allegations and has said the second suit is an opportunistic effort to pressure the defendants to settle. The first, dismissed by a federal district judge in New York, is on appeal.
Smells like SHE has SOMETHING to HIDE, doesn't it?
At the SEC, Schapiro would lead an agency battered by setbacks, including its failure to uncover the apparently long-running fraud at Bernard L. Madoff Investment Securities. A recent report by the SEC's own inspector general said the agency had failed to adequately police the markets and regulate Wall Street's largest investment banks. Congressional critics say SEC shortcomings contributed to the financial crisis.
Looks like that won't be changing, either.
The strongest proponents of the merger that created FINRA were the more than 200 firms that were members of both the NASD and the New York Stock Exchange. The merger significantly lowered their regulatory expenses, but many of the smaller members were concerned about what benefits they might receive from it. In an effort to get enough votes from smaller firms, NASD offered each member $35,000.
