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Mary Schapiro: How Do The Disaffected Feel?

Posted by Larry Doyle on November 27, 2012 9:06 AM |

The news released yesterday that SEC chair Mary Schapiro is leaving her post comes as no surprise. There have been many indications over the past four years that Ms. Schapiro has not exactly ‘enjoyed’ the challenges that came with her position.

Her departure a full year before the end of her five year term has been met with standard gratuitous comments by many in the financial industry, atop Capitol Hill, and in the press.

What do I think of the reviews of Ms. Schapiro’s tenure at the SEC? 

They strike me as going a mile wide and an inch deep. As such, the American public continues to be cultivated like a bevy of mushrooms. That is, keep us in the dark and feed us a steady dose of horse manure.

In regard to Ms. Schapiro, this blog actually owes a debt of gratitude to President Obama for nominating her to be the head of the SEC. Why so? Sense on Cents was in test mode back in January 2009 when Ms. Schapiro went to Capitol Hill for her confirmation hearing. The charade perpetrated by the members of the Congressional committee charged with vetting Ms. Schapiro immediately sent me to Schapiro’s predecessor organization, Wall Street’s SRO FINRA, to learn more about this woman who would lead our nation’s financial police. The rest as they say is history.

With the departure of Ms. Schapiro and the appointment of career regulator Elisse Walter to finish out Schapiro’s term, President Obama sent a swift and strong signal to Wall Street and the American public that business will remain as usual between Wall Street and Washington.

Walter’s appointment will certainly provide plenty of opportunity for Sense on Cents to dig through the horse manure being fed to the American public. As for the truth, transparency, and integrity? Those virtues will likely remain hard to find.

Let’s get back to Mary’s legacy. I have seen very little  reference to many disaffected groups and individuals for whom Schapiro’s tenure at both FINRA and the SEC has meant little more than excruciating pain and perpetual disappointment. Which groups and individuals?

1. Holders of auction-rate securities

2. Madoff investors

3. Stanford investors

4. Smaller broker-dealers abused by FINRA and the SEC literally and figuratively

5. Whistleblowers

6. Former SEC and FINRA staff silenced while trying to promote transparency

7. MF Global clients

8. Investors and individuals compromised by the manipulation of Libor and mortgage fraud

9. Individual traders who get abused by the front-running promulgated by the HFT crowd throughout our equity exchanges

Need I go on?

Let’s hear from people who count themselves in these categories. What do you think of Ms. Schapiro and her tenure not only at the SEC but also at FINRA? Let’s give Mary a going away card. How many people from these groups and the American public at large can we get to “sign” this farewell?

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mail, an RSS feed, on Twitteror Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

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, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.


  • Ross

    Dear Mary,

    I hope you had a wonderful tenure on the government side of the revolving door. A few questions, a debriefing shall we say, regarding your departure.

    When I get an order with a fill that is in the hundreds or thousandths of a penny by a firm that gets a cash rebate from the exchange for trading with me, is that a hundred or a thousand times better than the market maker model that lasted 100 years prior?

    When clients have their investments stolen due to belligerent and egregious fraud, is that better or worse than them handing the money over to the SEC in the vain hope someone will get off PornHub and try to regulate the securities markets?

    How about the Facebook IPO? Was that the best IPO ever, or just the most successful IPO since 1999 to bilk the public? Or, GroupOn or Zynga. Again, would those investors have been better off just giving the money to the SEC?

    Finally, what dirt does Jon Corzine have on the 2008 bailout that makes him completely untouchable despite his blatant hijack of customer funds to support a margin call on a proprietary trade?

    Anyway, Mary. Wishing you well as you sidle up to the corporate trough.

    • Beth

      I think you’ve covered just about everything… I’m wondering about the ‘Corzine’ handsoff deal too… what exactly does Corzine know.

  • fred

    I assume that Mary remained on the job just long enough to qualify for the maximum allowable federal pension and retirement benefits.

    She’ll probably also be pulling down a social security check in a few years as we cascade over the “fiscal cliff”.

    LD, so 1)when exactly did inept/corrupt bureacrats take over the world and 2)how do we expunge them from the system before it’s too late?

    • LD


      My sense is that the corruption has been getting increasingly worse over the last twenty years. That period is consistent with the growth of the financialization and securitization models that developed on Wall Street. In the process of these developments, the concept of disseminating risk so as to lessen it actually promoted the growth of risk exponentially along with the profiteering by political and financial heavyweights throughout the process.

      The securitization process is not by itself an inherently unhealthy model. The cronyism and illicit practices that developed to corrupt the model need to be rooted out.

      What had to happen to allow this process to grow?

      Regulators needed to step aside.

      Not that regulators have not been compromised for a long time but with the massive growth in leverage in the markets, the regulators not only did not keep pace but actually were compromised. The evidence of this reality is very strong.

      What can we do about it?

      Continue to bring it into the public domain.

      To do just that I welcome telling you and others that my work will include a book to be published sometime in the latter half of 2013 or early part of 2014. I hope and believe that work will further disseminate the message, put forth a number of ideas that need to be implemented, and provide a MUCH larger platform than that developed here at SoC.

      In the meantime, we will continue the fight to promote capitalism and exorcise the cronyism that has corrupted our markets and nation.

      • fred


        Good luck with the book, history will surely hold it in high esteem.

      • fred


        I know your focus is Wall St-Washington incest but there is an even bigger picture here, the fleecing of the American public by “insiders” in general.

        It doesn’t matter whether your talking about sky high gas prices, the failure of our educational system, 10 b 1 plans, identity theft, TARP, HFT stock trading, credit card fraud, foreign trade agreements, etc., the American public’s interest is constantly under attack from persons with an insider’s knowledge that the regulatory skill set cannot or will not match. Is that the price of capitalism or can we do better?

        Sure Steve Cohen and Jon Corzine built themselves moats of protection while the likes of Bernie and Raj failed to anticipate high tide, but why is everyone looking for “cracks” to exploit at public expense? Why is the public interest always the loser on the other side of the transaction?

        Aren’t regulators suppose to protect the public interest? Even if you give the “regs” the benefit of the doubt with corruption that leaves ineptness; our regulators simply must be more effective.

        Every administrative regulator’s performance should be judged on only one criteria, is the public interest better protected because of actions I took in my tenure as a fiduciary?

        Bye bye Mary, hello Elisse? At least Schapiro recused herself from expressing an opinion on SRO’s, Walters is an openly strong proponent.

        How can a known supporter of SRO’s defend and protect the public interest as Chairperson of the SEC? Shame on you Mr. President for your nomination.

        Past prosperity, whether real or purchased on credit, provided cover for regulatory failure, a LT deleveraging America can no longer afford the cost of cronyism, affirmative action w/o merit or reward for term of service.

  • Bill

    As I have posted previously, I fail to understand the logic of having rules requiring segregation of customer funds in the face of blatant violation of same with impunity, such as occurred with MF global under the control of Corzine. It would be akin to having a highway speed limit of 70 mph with certain select folks regularly going over 100 with no consequence. That analogy is quite appropriate considering when Corzine was New Jersey Gov. he was doing just that on one occasion, but of course he crashed and was injured, no tickets issued.

  • Peter Scannell

    The ICI and the fund industry have the SEC trapped like rats.

    Fortunately for mom and pop mutual fund shareholders, I’m not a rat – I’m a whistle blower.

    Hells bells.

  • Mark J. Novitsky

    When Schapiro (Holder, Geithner, Rubin, Bernanke, Summers, Daly…) got the nod from President Obama and “somehow” breezed through the confirmation process…Any reasonably astute person with a moderately functional frontal lobe knew the “fix was in”…from the start. I thought “Chris Cox in a dress”…it was worse. This woman was not qualified to be dog-catcher. Walks away with $$$$ into a new gig with more $$$$. – Funny…MSM media pretty much completely…despite all the SEX,SEX,SEX pretty much has ignored the story. My case…handed over an estimated $250M drop dead fraud/corruption case…Attacked and screwed over by SEC, SEC FOIA, SEC OIG & congress…in 2007 blew the whistle on the still open “SEC/CEO “Hotline” to Stop or Stall SEC Investigations” ignored by MSM. Same sh!t different day. Caveat Emptor!

  • Al Lewis

    She was a go-along-to-get-along gal taking office at at time when the financial world needed someone who had the chops to prosecute.

  • Randee

    Allow me to throw a name out there to be new SEC Chief – Grover Norquist. He is tough but fair, members of Congress know and generally appreciate him, he is hard working and will deal with corruption in a hard-nosed manner.

  • Mark J. Novitsky

    The Holder DOJ remains full of Bankster Defense Attorneys (Covington Burling) who made their $$$ defending / lobbying for Banksters. Do the math…

  • YMH

    Category 5 here (not hurricane):

    Best SEC Chairman ever, that includes Levitt. Donaldson comes in a close 2nd.

    Why so many grown men kvetching? Any of you boys actually taken down any “fraudsters?” If not maybe it’s time to stop the whining and find something grown up to do.

  • LD

    Assuming that you are serious, if you believe that Ms. Schapiro is the BEST SEC commissioner ever, might that be the equivalent of characterizing her as the world’s tallest midget?

    Are all those disaffected in the above referenced scams also whining given that they thought they were protected by regulators at both FINRA (NASD) and the SEC?

    Perhaps you may care to review these commentaries here where Attorney Richard Greenfield calls out MS for lying in the proxy statement used for the merger of the NASD with NYSE Regulation.

    Still the best? Or were all the other chairs even bigger liars?

    Attorney Richard Greenfield Brands Mary Schapiro and FINRA Execs as Liars

    NASDAQ Sale: Why Would Schapiro and FINRA Execs Lie?

    BTW, Ms. Schapiro and her FINRA cronies hid under the veil of absolute immunity rather than facing and refuting the charge. The caqse was appealed all the way to the SCOTUS but regrettably was not heard.

    Still the best?

  • Russ

    Mary Schapiro sucked. She was a typical DC bureauacrat who did nothing but maintain the status quo at the SEC. It’s almost as if Obama sent her in with the express instructions to simply perpetuate the same shitty oversight that the SEC has become known for during the days before her arrival.

    She prompty fucked the Madoff victims by siding with SIPC as to the definition of “net equity,” therefore enriching the Wall Street brokerage firms and setting precedent for SIPC never having to pay insurance again.

    Please explain how under her watch internal Madoff documents got shredded at the SEC, insuring that nobody would ever find out what the SEC knew about Madoff and when they knew it. Where is the outrage about that?

    Doesn’t the SEC want to know what the motivation of SIPC was to utilize their current (and fluid) definition of “net equity?”

    Under her watch, she also threw the Stanford victims under the bus. I didn’t see any internal investigations started at the SEC about why nothing was said when the SEC discoverd that Stanford was a fraud years ago and they they did NOTHING about it.

    How could any leader of the SEC not press for criminal charges to be leveled at John Corzine? Let me see if I understand this; customer money that is supposed to be isolated from firm funds by a Chinese firewall, somehow magically found its way into the MF Global operating account. Corzine claims he doesn’t know how that happened. Either, 1) he’s lying or 2) he’s a complete moron, that is incompetant. In either case, he should be charged with a crime. Where’s Mary on that?

    Mary Schapiro is the face of the NEW SEC, which coincidentally, is the same as the face of the OLD SEC.

    • Peter Scannell

      Hey Russ, they missed this one.

      RE: Other Limit Order Referrals Page 1 of 2
      RE: Other Limit Order Referrals 8/7/20015 :16:17P M
      From: Harris, Sandr
      To: Cutler, Stephen
      Steve (who is now handling the case) is reviewing th and Madoff materials. After she has
      compl we will contact you to set up a call. Sandy
      —–Original Message—–
      From: Cutler, Stephen
      Sent: Tuesday, August 07, 2001 1:44 PM
      To: Harris, Sandra J.
      Subject: RE: Other Limit Order Referrals
      I’d like to discuss. I need more analysis of and madoff.
      Stephen Cutler
      US SEC
      —–Original Message—–
      From: Harris, Sandra J.
      To: Cutler, Stephen
      Sent: Tue Aug 07 14:45:31 2001
      Subject: RE: Other Limit Order Referrals
      Steve – Art Richardson no longer works here. The nvestigation has been -My recollection from
      various discussions with Valerie and others is that olations appeared to be more serious than the oth
      firms. Because we are not recommending action again t does not seem to be appropriate to do so agains
      and Madoff, both of whom were taking steps to correct oblems discovered during the exam. Please let m
      if you would like to discuss this. Sandy
      —–Original Message—–
      From: Cutler, Stephen
      Sent: Monday, August 06, 2001 3:19 PM
      To: Richardson, Arthur W.
      Cc: Harris, Sandra J.
      Subject: F-W: Other Limit Order Referrals
      Arthur — Could you give me an update on the and Madoff limit order referrals?
      —–Original Message—–
      From: Richards, Lori A.
      Sent: Monday, August 06, 2001 4:16 PM
      To: Cutler, Stephen
      Subject: PW: Other Limit Order Referrals
      —–Original Message—–
      From: McCarthy, John A.
      file:~c:\documenatsn ds ettings\wilsonch\locsaelt tings\tempvl(\c 6\email.html 8/4/2009
      Enforcement Staff
      Attorney #2
      Personal Privacy
      Examination Material
      RE: Other Limit Order Referrals · Page 2 of 2
      Sent: Monday, August 06, 2001 3:14 PM
      To: Richards, Lori A.
      Subject: FW: Other Limit Order Referrals
      —–Original Message—–
      From: Barry,TinaC.
      Sent: Monday, August 06, 2001 2:57 PM
      To: McCarthy, John A.
      Subject: RE: Other Limit Order Referrals
      On March 8,2001, we sent a package to Arthur Richar cement attor taining all the information he
      had requested regarding the limit order display referral Madoff, and
      Since then, I haven’t heard anything about or Madoff.
      —–Original Message—–
      From: Cutler,Stephen
      Sent: Monday, July 30, 2001 10:26 AM
      To: Richards, Lori k; McCarthy, John A.
      Subject: Other Limit Order Referrals
      Lori and John — I’m trying to remember where we·are viz nd Madoff, which also had h
      limit order compliance. O just forwarded to Lori a memo ing that we shouldn’t pursue I
      knowt hatw e asked@ acki n Novembera) numbero f questionsth atw e wantedt o havea nsweredb efore ther
      of these,a ndI just don’tr emembewr heret hingsw entf romt here. (Nowt hat I’m 40, I can’tr ecallm ucha bouta nything.)I f
      either of you has a better memory of these items than I, please fill me in. Thanks.

  • Susan


    Great article. Walter has been Mary’s bottom feeder for years. Your conveyance that Obama is making a statement the business will remain as usually is right on the mark.

    New blood is needed deperately.

  • mikaele

    Aloha and mahalo from Hawaii for the auction rates Mary!

  • Hal

    What a disappointment she was, I remember people couldn’t wait till she arrived because Mary would clean things up !

    Until they really enforce the make believe laws nothing is going to happen. What’s up with Jon Corzine, I guess you can do wrong and get away with it, just pathetic !

    Too many elected officials getting too much money from special interests to really help the people who elected them.

    They really need someone to come in with a club and whack these people to set an example ! Enough said !

  • Mark J. Novitsky

    The praise and accolades being bestowed upon Mary Schapiro by pols & press drown out the facts that she has been more of a serial criminal than a cop. GAO vs. SEC GAO-12-625 _ the SEC isn’t in compliance with Sarbanes-Oxley…why should anyone else be? – As always Platinum Parachute instead of Perp Walk.

  • Mark J. Novitsky

    GAO 12-424R Management Report: Improvements Needed in SEC’s Internal Controls and Accounting Procedures. April 2012 – Sesame Street Elmo puppeteer got MUCH more media attention than this story.

  • Frank

    Where do I sign?

    Seems the only words that woman said were “We’re studying that!”

  • Russ

    Hey Larry,
    How about Corzine getting a pass from Congress today? WTF! Let me get this straight; under his watch $1.2 billion was diverted from customer accounts to cover Corzine’s bets (clearly illegal).

    Congress gives him a pass. The Madoff and Stanford VICTIMS are being pursued to the ends of the earth because they withdrew their money from their accounts.

    Welcome to Cuba.

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