More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
As widely anticipated, Securities and Exchange Commission Chairwoman Mary Schapiro announced Monday morning that she would depart from the agency on Dec. 14.
Schapiro, 57, who has more than a year left on her term, said in a statement, “It has been an incredibly rewarding experience to work with so many dedicated SEC staff who strive every day to protect investors and ensure our markets operate with integrity.” Over the past four years, Schapiro said that the SEC had “brought a record number of enforcement actions, engaged in one of the busiest rulemaking periods, and gained greater authority from Congress to better fulfill our mission.”
President Obama designated SEC Commissioner Elisse Walter as the new SEC Chairwoman after Schapiro's departure. "I'm confident that Elisse's years of experience will serve her well in her new position, and I'm grateful she has agreed to help lead the agency," Obama said in a statement.
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.
Schapiro, who became chairwoman in the wake of the financial crisis in January 2009, is credited with strengthening, reforming and revitalizing the agency. She’s credited with overseeing a more rigorous enforcement and examination program, and shaping new rules for Wall Street.
Schapiro is one of the longest-serving SEC chiefs, having served longer than 24 of the previous 28. She was appointed by President Obama on Jan. 20, 2009, and unanimously confirmed by the Senate.
Reached by AdvisorOne just as the news broke, former SEC Chairman Harvey Pitt said Schapiro had been a “superb” SEC chairwoman. “She has worked tirelessly to advance the interests of investors, led the SEC in bringing record numbers of enforcement actions, led the agency’s incredible rulemaking efforts, and brought the agency back from the brink of extinction. She has left a remarkable legacy.”
What happens to the SEC’s rule to put brokers under a fiduciary mandate? While industry observers have been adamant that the SEC’s fiduciary process has stalled, Schapiro told AdvisorOne in a recent interview that while “it may appear from the outside it has stalled, work has been going on here [at the agency] to advance the issue.”
Schapiro told AdvisorOne that the fiduciary issue remains “really important,” and that she was “ready to go” on releasing a request for information to allow the public to help inform a “more detailed” cost-benefit analysis on the agency’s fiduciary rule.
Industry officials remain optimistic that the fiduciary rule will maintain momentum at the agency regardless of Schapiro’s departure. As Blaine Aikin, president and CEO of fi360 wrote in a recent article, “the imperative for [fiduciary] reform … has created enough momentum that it would be virtually impossible for a complete reversal in course.”
However, David Tittsworth, executive director of the Investment Adviser Association in Washington, told AdvisorOne on Monday that until a successor to Schapiro is nominated, confirmed, and sworn in “it is unlikely that any controversial proposal will move forward.” Because there will be two Democratic commissioners—Elisse Walter and Luis Aguilar—and two Republican commissioners—Troy Paredes and Daniel Gallagher—“nothing will happen on any rulemaking unless there are at least three votes.”
Furthermore, Tittsworth adds that given the need to deal with fiscal cliff issues, “it is certainly possible that there will be a period of time where an Acting Chairman will be leading the agency—probably Commissioner Elisse Walter—until a permanent successor is confirmed by the Senate.”
Industry officials reached by AdvisorOne said that Miller was, indeed, “qualified” to fill Schapiro’s shoes. As Under Secretary for Domestic Finance, Miller is responsible for developing and coordinating Treasury’s policies and guidance in the areas of financial institutions, federal debt financing, financial regulation and capital markets.
Indeed, there is also industry banter that Richard Ketchum, CEO of FINRA, is interested in throwing his hat into the ring as a potential Schapiro replacement. Ketchum declined to comment on the speculation, however.
Sallie Krawcheck, the former Bank of America and Citigroup executive, has also popped up as another possible candidate to fill Schapiro’s shoes.
Check out these related stories at AdvisorOne:
- Schapiro recounted some of her accomplishments as SEC Chairman in a November speech at SIFMA.
- View AdvisorOne’s election morning-after story for insights into who else may be leaving regulatory posts in the near future.
- In a exclusive interview in September with Melanie Waddell, Schapiro spoke about the possibility of a a fiduciary standard for all advice givers.