SEC Nominee White Promises 'Unrelenting' Enforcement

Monday, 11 Mar 2013 03:21 PM

 

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Mary Jo White, the nominee to head the U.S. Securities and Exchange Commission, plans to tell lawmakers on Tuesday that she will bring a "bold and unrelenting" enforcement program to the agency if she is confirmed by the U.S. Senate.

"Investors and all market participants need to know that the playing field of our markets is level and that all wrongdoers -individual and institutional ... will be aggressively pursued by the SEC," said White in prepared testimony released ahead of her confirmation hearing before the Senate Banking Committee.

"Proceeding aggressively against wrongdoers is not only the right thing to do, but it also will serve to deter the sharp and unlawful practices of others," White added.

White built a reputation as a hard-nosed Manhattan federal prosecutor before moving into private practice for the past 10 years, defending major Wall Street figures, including JPMorgan and former Bank of America Chief Executive Kenneth Lewis.

In pledging to aggressively go after individuals who violate the law, White appeared to be getting out in front of critical questions she will likely face on Tuesday, both on the SEC's record and her recent defense work.

Although the SEC has filed numerous cases in connection with the 2007-2009 financial crisis, the agency has faced criticism from the public and some lawmakers who say it has failed to hold high-level executives accountable and settles too frequently instead of taking banks to trial.

One liberal non-profit, Better Markets, announced Monday it has launched a new webpage called "SEC Watch" that will direct a spotlight on how the SEC handles enforcement cases.

"Unfortunately, the SEC failed miserably in the years before the financial crisis," said Better Markets CEO Dennis Kelleher. "While doing better, it has regrettably too often failed since then as well."

White's prepared testimony marks the first time the public has gotten a glimpse into her priorities for the SEC.

Little is known about her views on regulatory policy and how she may vote on crucial areas facing the SEC, such as rules for over-the-counter derivatives, credit-ratings and money market funds.

White's five pages of prepared testimony give little insight into how she might vote on these matters.

She did, however, highlight market-structure issues such as high-frequency trading, algorithms, order types and dark pools as areas the SEC should continue exploring.

Market structure became a big policy area under former SEC Chairman Mary Schapiro, who presided as head of the agency during the May 6, 2010 "flash crash" incident.

While White did not take a position on whether high-speed trading and certain order types may be harming retail investors, she said it is critical for the SEC to better understand its impact.

"There must be a sense of urgency brought to addressing these issues to understand their impact on investors and the quality of our markets so that the appropriate regulatory responses can be made," she said.

Separately, White also stressed the need for the SEC to complete rules required by the 2010 Dodd-Frank Wall Street reform law and the 2012 Jumpstart our Business Startups (JOBS) Act.

She also pointed to the importance of vigorously studying the economic impact of any new regulations. Problems with proper cost-benefit analysis have plagued the SEC in the past, leading industry and business groups to successfully wage legal challenges that overturned several key rules.

© 2014 Thomson/Reuters. All rights reserved.

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