Live blogging Mary Schapiro speech at SABEW

April 27, 2009

Mary Schapiro just started speaking to the Society of American Business Editors and Writers convention in Denver. I’ll be posting highlights here:

12:54: Final question on what SEC is doing to make sure that those thousands of complaints are winding up on the right desk and how that’s being coordinated with regional offices. Says she asked the staff to give her a catalog of where tips come in from. They come in about 40 different ways and no master database to track them (really????). No ability to mine the data and see that there’s a complaint in Boston, in Miami. Says she hired a contractor to build system. Last year SEC got 750,000 tips and will never be able to follow up on all. Need to be able to connect the dots to be more effective. Going to ask Congress for Whistle Blower authority. “If we can reward people who bring us well-thought through cases where we can prosecute the case and get a fine” like IRS and others, will help us separate the wheat from the chaff. Only available now for insider trading and hasn’t been very successful. “My goal is to ensure that we don’t miss the next Bernie Madoff.”

12:48: Jon Weil at Bloomberg asks a toughie on why no major enforcement on accounting fraud since Cardinal Health case several years ago. “Whether accounting fraud or other types of issues, we need to be able to back it up.” Says she has authorized a number of investigations over the past 3 months into accounting fraud. Where that will lead us, I’m not sure.” Weil continues to press her that comittments aside, how do people know that there will be a major accounting fraud case? Schapiro says she knows she has to prove this and that it is a high priority.

12:46: A question close to my heart: what will SEC do to make disclosures easier for investors so that they aren’t buried in footnotes? “We have great disclosure as a result of SOX for audit committee, but not on other committees. Need to have that for comp committee and other committees. Do a better job at linking executive comp to risk. “Take a complete look at risk disclosure and whether information is getting to investors in the best possible way. My guess is that we’ll have lots ot work on.”

12:44: Question on real losses of Madoff and how the SEC will make investors whole. Says that SIPA will have enough money, but subject to limits. Says she doesn’t have a number on Madoff losses.

12:40: Was asked a question on BofA and Merrill’s disclosure on executive bonuses. She declined to respond directly, but said that disclosure is the lifeblood of our financial markets. Won’t comment on any specific inquiries of investigations.

Lost my connection — thanks Westin Hotels — and two updates as a result. Q&A is continuing.

12:30: Does not believe in a super-regulator. “Regulatory arbitrage is a problem and we need to do something about that.” Not in favor of voluntary regulation either. “Our markets are not homogeneous like Britain.”

12:26: We would love to predict the next problem. But it’s an elusive goal. We need to build up our risk assessment in how the SEC is doing. “We’re all on same side of the table and need to be able to work together in a much more cohesive way than we have in the past 8 years.” SEC is responsible for 35,0000 regulated entities, including 12,000 public companies. “We as an agency have a lot of work to do to connect the dots more effectively.”

12:21: Q&A about to begin. I just asked question about today’s story in WSJ on CEOs using Twitter and other tools to communicate with investors. Schapiro says that SEC “favors greater and broader disclosure but that it hasn’t come to a resolution on the new technology.”

12:19: Talks about surprise investigations and proxy access. Says that proxy access “in no small measure is way to deliver better accountability”. Considering many proposals all in the interest of investors.

12:16: We get about 2,000 tips a day, so can’t pursue them all. Trying to keep pace with the fraudsters and the ever-changing concoctions. Says 150 active hedge fund investigations. More than 50 investigations involving CDS “and this is just a very small slice of the program.”

12:15: Says that things must change (at SEC). There’s a deep current of enthusiasm ready to be tapped. We’re a small agency but there’s no reason why we can’t be the toughest.

12:13: In real ways the SEC has not been where investors have needed them to be in a way that should epitomize a world class regulator. But we shouldn’t continue to be defined by what we didn’t do.

12:10: Schapiro says investors need to see that we are forcing companies to be truthful in financial reporting. They need to see an independent agency that’s not just there to protect Wall Street, but Main Street. A regulator that is not afraid to take on the most powerful interests in the land.

Noon: Says that House Committee created SEC 75 years ago today and quotes Roosevelt on the mission of the SEC. “Never been a time when investors have needed as strong of an advocate as they have today. Until investors believe in basic integrity of financial markets, they will put their money in mattresses instead of mutual funds which further undermines our economy.”

Here’s a link to Schapiro’s speech to the group. But as with any conference call, the Q&A is always much more interesting.

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