As Official Drops Out, S.E.C. Race Shifts

The field of candidates to run the Securities and Exchange Commission is shifting after a contender dropped out of the race. Mary J. Miller, a senior Treasury Department official, removed her name from consideration in recent days, according to several people briefed on the matter who were not authorized to discuss the selection process. While some Washington insiders had considered Ms. Miller a sensible choice, several people close to her said she was “not interested” in the job. With Ms. Miller withdrawing, Sallie L. Krawcheck, a longtime Wall Street executive, has emerged as a potential front-runner. Over the last year, she has become a familiar face in Washington, making the rounds with lawmakers to discuss consumer issues. More in the New York Times here.

As we head for the cliff, Congress throws Corzine a lifeline

In case anyone missed the news — and judging by the fact that there aren’t angry mobs storming Washington, everyone missed the news — Congress recently absolved Jon Corzine of being criminally responsible for actions that “wiped out thousands of jobs and billions of dollars of customers’ and creditors’ money.” The congressional report states, “Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global’s fate.” Turns out, these choices include the unlawful transfer of its customers’ money. Oh well. We all make mistakes.
This statement of responsibility, which carries no punishment, comes from the same institution we’re expecting to steer us away from a series of fiscal measures so extreme that neither party would be able to stomach their implementation. Good luck with that.
More in the Baltimore Sun [...]

The SEC, from lapdog to watchdog

In the early days of the Obama administration, I sat in a Capitol Hill hearing room and listened to Harry Markopolos, the whistle-blower in the Bernie Madoff scandal, bemoan the toothless Securities and Exchange Commission. The SEC, which ignored his warnings about Madoff, is “captive to the industry it regulates, and it is afraid of bringing big cases against the largest, most powerful firms,” he said. “The SEC continues to roar like a mouse and fight like a flea. . . . I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow they couldn’t be bothered to conduct a thorough and proper investigation.” But since then, the private investigator has come upon a rather different trail of evidence. “There’s a total sea change at the agency,” Markopolos told me Tuesday. “They are aggressive. There’s no more free passes on Wall Street. They eagerly seek out big cases. . . . They used to be industry’s lapdog and now they’re actually an investor’s watchdog.” More in the Washington Post [...]

Elisse Walter Steps Out of Schapiro Shadow Into SEC Chairmanship

Elisse Walter, who has spent the past four years as Securities and Exchange Commission Chairman Mary Schapiro’s closest confidant and behind-the-scenes adviser, will soon step into the spotlight that she has mostly shunned in trying to help her close friend succeed. Designated to become SEC chief by President Barack Obama when Schapiro leaves in December, Walter is little known outside of Washington where she has spent most of her career as a regulator. For the short term, at least, she’s likely to keep Schapiro’s priorities intact, securities lawyers and ex-agency officials said, citing her record of almost always voting alongside Schapiro on new rules and enforcement cases.
“She’s sincere and dedicated, and the administration knows where she stands,” said Paul Atkins, a former Republican commissioner who is now chief executive of Patomak Global Partners LLC, a consulting firm in Washington.
More on Bloomberg Businessweek [...]

MF Global customers to seek subpoenas for Corzine, others

NEW YORK (Reuters) – A group of former MF Global customers on Monday asked a court for permission to subpoena the commodities broker’s executives, including former CEO Jon Corzine, who was blamed in a congressional report this month for MF Global’s collapse. The Commodity Customer Coalition, an advocate for trader customers who lost money when MF Global went under, is seeking to subpoena Corzine, Chief Financial Officer Henri Steenkamp, Chief Operating Officer Bradley Abelow and others, according to court papers filed in the U.S. Bankruptcy Court in Manhattan. More in the Chicago Tribune [...]

Rebuilding Wall St.’s Watchdog

Mary L. Schapiro spent four years at the Securities and Exchange Commission trying to shake the regulator’s past. In one of the countless grillings she faced, Ms. Schapiro was slammed at a Congressional hearing in 2010 for missing the signs of Bernard Madoff’s Ponzi scheme, a fraud that took place under her predecessors. But the S.E.C. chairwoman was ready. As always, she came to Capitol Hill armed with three copies of her testimony and a stack of handwritten note cards, reminders that included details of the agency’s overhaul efforts and even responses to long-forgotten missteps, like when employees were caught watching pornography. Read New York Times report [...]

Regulatory Report Card: How Effective Was Mary Schapiro as SEC Chair?

SEC Chairman Mary Schapiro announced yesterday that she would be stepping down from her role in December, marking the end of one of the most eventful four-year periods in the SEC’s history. When she assumed the Chairmanship of the SEC in January of 2009, the reputation of America’s financial regulatory apparatus was at its nadir. For more than a decade, regulators had failed to react to a growing real estate bubble, the bursting of which precipitated the worst financial crisis the country had seen in generations. Then, in December 2008, Bernie Madoff was arrested and charged with criminal securities fraud related to a decades-old ponzi scheme that he had operated right under the noses of the SEC, the most powerful and prominent securities regulator in the country. Meanwhile, large financial institutions were being bailed out with taxpayer money because the regulatory system had failed to require those firms to hold enough rainy-day capital. More in Time Business & Money [...]

Hero or pariah? A whistleblower’s dilemma

Whistleblowing is not for the faint-hearted. Careers can be ruined, marriages strained, and pariah status is almost guaranteed. Nevertheless, a whistleblower from software company Autonomy decided to step forward and tell their new bosses at Hewlett Packard about alleged financial irregularities in the business. HP has since written off $8.8bn (£5.5bn) from the value of Autonomy which it bought for $10bn less than a year earlier, and informed the FBI and Securities and Exchange Commission. As for the whistleblower, rather than facing the sack, he or she could be entitled to a multimillion-dollar payout thanks to new US laws. Read more in The Guardian [...]

Protecting a Small Account

Small investors have been shaken by a recent spate of brokerage mishaps, leaving some people worrying if their own assets are safe. Brokerage firm Rochdale Securities, which is based in Stamford, Conn., has been struggling to stay afloat after an errant trade in October depleted the firm’s capital, while this month, Hudson Valley Capital Management, a New York firm, was expelled from the securities industry after its chief executive allegedly used customer assets to cover up losses he sustained while day trading.
Read Wall Street Journal report [...]

SAC Insider Case Rides Finra Referral to Cohen’s Backyard

The biggest insider case ever, an alleged $276 million fraud that has led prosecutors and securities regulators to the inner-circle of SAC Capital Advisors LP’s Steven Cohen, stemmed in part from a referral from the Financial Industry Regulatory Authority. The referral from Wall Street’s self-regulator came in 2008 from the New York Stock Exchange Division of Market Regulation, which later became part of Finra, according to three people familiar with the matter. Finra touted the resulting case, against ex-SAC portfolio manager Mathew Martoma, under its website headline, “Actions Resulting from Referrals to Federal and State Authorities.” More on Bloomberg Businessweek [...]