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Won’t Have Mary Schapiro To Kick Around Anymore

Posted by Larry Doyle on September 10, 2012 9:09 PM |

Chairman Mary L. Schapiro Sense on Cents first crossed paths with current SEC chair and former FINRA head Mary Schapiro in mid-January 2009.

I have often thought Ms. Schapiro – more than any other single individual – knows where more of the bones are buried on Wall Street and throughout the incestuous Wall Street – Washington circle of influence and intrigue. I have tried to be fair but aggressive in questioning Mary’s lack of transparency on so many  fronts.

Well readers, if reports circulating around Washington have a measure of truth to them, we will likely not have Mary to kick around all that much longer. 

Investment News writes, Schapiro’s Endgame,

Mary Schapiro is nearly four years into her term as chairman of the Securities and Exchange Commission.

She may not see a fifth.

Speculation is mounting inside the beltway that, regardless of who wins the November election, Ms. Schapiro is on her way out — probably of her own accord.

“Who could blame her for leaving?” asked Barbara Roper, director of investor protection at the Consumer Federation of America. “She’s operating under incredible pressure, and I think she’d be the first to say she’s disappointed with her legacy.”

Mary is disappointed with her legacy, you say? Is that right? Is she also disappointed with the fact that prior to heading the SEC she was paid many, many, many millions of dollars as head of Wall Street’s self-regulatory organization, FINRA? While friends and foe alike may have differing opinions on Ms. Schapiro’s legacy, I pointedly ask, “Does her disappointing legacy at the SEC have anything to do with the legacy she left at her former FINRA haunt?” Let’s navigate.

How can we ever forget that in December 2009, Mary was quoted in The Washington Post as stating,

“Good corporate governance is a system in which those who manage a company — that is, officers and directors — are effectively held accountable for their decisions and performance. But accountability is impossible without transparency.”

Would anybody doubt that accountability is impossible without transparency? I think not. If that is the case, though, then Mary Schapiro MUST be held accountable for the following opaque situations in which American consumers, investors, and the public at large still wonder what happened. To wit:

1. Mary, what were the details surrounding the liquidation of approximately $650 million auction-rate securities from the FINRA portfolio in mid to late 2007 during your watch? Would you think that liquidation while the ARS market was imploding would rise to the level of front running and/or insider trading by an institution led by you and specifically charged with protecting investors? Just asking.

2. Mary, what was the true nature of your relationship with one Bernie Madoff? Care to release your calendar so the American public can ascertain these details? Why did Bernie describe you as “my good friend?” Just asking.

3. Mary, how about all of the questions posed by Amerivet Securities Lt. Colonel Elton Johnson regarding FINRA’s operations? If accountability is impossible without transparency, then why did you and your counsel play the absolute immunity card for FINRA’s defense? What were you hiding? Just asking.

4. Mary, can we ever forget how Attorney Richard Greenfield, counsel for Standard Investment Chartered,  branded you a liar for misrepresenting both verbally and in writing the proceeds paid to FINRA’s member firms in the midst of the merger of the NASD with NYSE Regulation to form FINRA? Mary, come on now, being branded a liar is a strong charge but you never responded. Might that be because plaintiff counsel placed the dollar value of the misrepresentation (the BIG lie) at between $175-350 MILLION. Once again, you and your FINRA colleagues  played the absolute immunity card all the way to the US Supreme Court. Stuff like this does not help one’s legacy, Mary. Just asking.

I could go on but I think you get the point.

If you care about your legacy, then you really should not worry all that much about a few token colleagues at the SEC and some haggling over money market reforms. That effort is important and I give you credit for pursuing it BUT it is all so many small potatoes compared to the questions posed above that America would really like to get addressed.

Who else has questions on these fronts? Bloomberg’s William Cohan who writes just today, Why Some CEOs Survive Wall Street Scandals,

Why do some Wall Street executives get to keep their jobs as scandals shake their firms, while others get the ax?

Bob Diamond, the chief executive officer of Barclays Plc (BARC), was fired a few days after his bank paid $453 million to settle charges with U.S. and U.K. regulators about its role in the Libor scandal. Yet Jamie Dimon, the chairman and CEO ofJPMorgan Chase & Co. (JPM), seems to have plenty ofjob security after traders at his bank unexpectedly lost $6 billion (and counting)?

Throughout the financial crisis and its aftermath, regulators in the U.K. have taken a much harder line than their U.S. counterparts on accountability, overcompensation, incentives and capital requirements. Why? It isn’t entirely clear. But it is very hard for me to imagine either Federal Reserve Chairman Ben S. Bernanke or Mary Schapiro, the chairman of the Securities and Exchange Commission, demanding the resignations of Dimon or Blankfein in the same way that Turner and King insisted on Diamond’s.

It’s also worth noting that before President Barack Obama appointed her to the SEC, Schapiro was the head of the Financial Industry Regulatory Authority, Wall Street’s self-regulatory organization. Before she left Finra, the group’s board — made up of Wall Street executives — gave her a present to remember them by: a $9 million exit bonus. Is it any coincidence that Dimon and Blankfein still have their jobs while Diamond does not?

Little bit of quid pro quo there, perhaps, Mary?

So many questions. Just asking. So few answers.

Mary, enjoy your retirement and please do not be a stranger. If you ever care to get transparent, you know where to come. Until then, though Mary, would seem to me that you and your cronies made this bed, so now you and they need to lie in it.

But you got paid.

I guess you can truly navigate comfortably and accordingly.

I thank the reader who brought the Investment News story to my attention.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Craig

    Regulatory Failure or Malfeasance?

    We need to demand Oversight, Transparency and Accountability…

    Very little has changed, until enough people feel the pain of predatory capitalism to organize and demand regulation and nationalization of our Infrastructure there will be no change.

    Infrastructure includes Health, Education, Transportation, Energy, Communications, Banking, Food, Water, Government, Homes and Justice!

    Americas infrastructure has been privatized by corrupt politicians, it’s time to nationalize our infrastructure!

  • fred

    Craig,

    As you describe, the federal gov’t can’t even handle it’s regulatory function properly ie. the emergence of “predatory capitalism”.

    What makes you think the gov’t can effectively manage entire industries (healthcare, education, transportation, energy, communications, banking, food, water, real estate, etc.) and a huge segment of our economy?

    Maybe we can entice Mary out of retirement to fill a newly created cabinet position of Economic Czar, eh?

  • Greg

    Truth is she never really moved into her office.

    Investors were poorly served by Ms. Shapiro.

    Upside? She’ll be a managing director at Goldman in less than a week.

  • joe

    DARCY FLYNN, A WHISTLEBLOWER FROM THE SEC, CLAIMED THAT THE SEC THREW AWAY 9500 DOCUMENTS OVER 18 YEARS. THIS IS WHY THE SEC AND DOJ HAVE NOT CAUGHT ONE BIG MONEY CRIMINAL AND NOBODY FROM THE SEC IS IN JAIL.

    MERRILL AND GOLDMAN INTENTIONALLY SENT US INTO A RECESSION IN 2008 TO MAKE A FORTUNE BY BUYING PUTS AND SHORTING STOCK, YET NO INSIDER TRADING WAS DETECTED BY ANYBODY. 60 MINUTES TELEVISION SHOWED TWICE THAT THE SEC KNEW THAT LEHMAN WAS GOING DOWN AND DID NOT LET TAXPAYERS KNOW, COSTING THEM BILLIONS OF DOLLARS.

    MARY SCHAPIRO WAS REGULATING NASD IN 1996 WHEN FRONTRUNNIBG WAS RAMPANT. GO BACK A FEW YEARS AND MADOFF IS THE HEAD OF NASD.

    THE SEC CORRUPTION WITH MADOFF WAS INVESTIGATED BY SEC OIG KOTZ. HE DID NOT TELL AMERICA THAT 2 DOCUMENTS AGAINST MADOFF WERE THROWN AWAY BY THE SEC. THE COMPLAINTS AGAINST MADOFF WERE THAT HE COULDNT BE GETTING THE RETURNS HE WAS MAKING NOR MAKING THE STOCK TRADES THAT HE WAS CLAIMING. IT IS IMPOSSIBLE FOR ALL THE INVESTIGATIONS OF THE SEC AND FINRA TO HAVE NOT CHECKED A STOCK TRADE UNLESS THEY WERE ORDERED TO BY MARY SCHAPIRO.

    WITH 9500 DOCUMENTS THROWN AWAY BY THE SEC, THERE WERE THOUSANDS OF LETTERS WRITTEN TO SEC OIG KOTZ,MARY SCHAPIRO AND ERIC HOLDER.

    NOT ONE STOOD UP FOR THE TAXPAYER EVEN THOUGH THEY KNEW THAT THE SEC IS CORRUPT.

    PRESIDENT OBAMA APPOINTED ALL 3 CRIMINALS TO A HIGH POSITION IN GOVERNMENT.

    WHERE IS OCCUPY WALL ST?

  • Small BD

    It is likely that Schapiro’s job dissatisfaction derives primarily from her low compensation package relative to FINRA.

    I suspect that “our” top politicians and regulators view Sovereign Immunity the old-fashioned way: It serves to protect the kings’ treasury and absolve Schapiro,- I mean, the king of any accountability.

    Schapiro exists in a world where people are not accountable. For instance, what possible legitimate reason could Schapiro have had for withholding an IRS opinion letter that supported her edicts? Why the hell would a judge feel that it was more important to seal this basic private letter ruling than to allow for a fair trial? I suppose that the judge new her place in society relative to the head of FINRA / SEC.

    The above only represents my personal opinions.






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