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Markopolos, a private-securities fraud investigator, is the man the SEC ignored for nine years. The whistle-blower presented damning evidence against the SEC's handling of the Madoff case in a House Financial Services Committee hearing last week, where he detailed his unsuccessful quest to have the SEC stop Madoff's global Ponzi. Nevertheless, he said, he would deliver fresh evidence on two new cases to the SEC...
Meanwhile, Schapiro has been trying to get a word in edgewise about her plan to fix the SEC. The initial actions were heard Friday in a speech at the Practising Law Institute in Washington. In what Schapiro calls her first two significant moves as chief, she is abolishing the agency's two-year-old failed "penalty pilot" experiment and dismantling a burdensome full-commission "pre-approval" process, which often delayed enforcement efforts "for weeks," she said. The announcements brought applause from the lawyers in attendance...
Experts say it's a positive start but far from enough for an agency considered to be at the heart of restoring investor confidence in the U.S. financial system. "These are good first steps, but they aren't any silver bullet," said Bruce Carton, a former SEC enforcement officer and publisher of the securities-enforcement report the Securities Docket. "These are all bureaucratic obstacles that never should have been there in the first place. It will certainly expedite things, but it won't catch a Madoff." Real change, he said, "is all about putting more people in enforcement and training...
...commission's "penalty pilot" program, Schapiro said, has caused "significant delays" and forced staffers to negotiate penalties with SEC commissioners prior to negotiating with the actual company. This, according to Schapiro, discouraged staffers from arguing for penalties and "sometimes resulted in reductions in the size of penalties imposed" against public companies that harmed investors...
...program kicked in once a case was completed and entered the monetary penalty phase. Prior to the program, SEC prosecutors would negotiate directly with wrongdoers, say, asking for $1 million in penalties and then negotiating down to $500,000. But since the program started, prosecutors had to first plead their case for penalties to SEC commissioners, who would negotiate up or down for wrongdoers in advance of direct negotiations for penalties...