Skip to main content


November 28, 2012

Post-Schapiro, SEC enmeshed in gridlock


“Securities and Exchange Commission Chairman Mary Schapiro’s departure next month will leave a divided agency enmeshed in gridlock, observers say.

Schapiro, who plans to step down Dec. 14, is being replaced at least temporarily by Democratic commissioner Elisse Walter while the Obama administration considers who to nominate next. Read about Schapiro’s legacy.

That leaves the SEC, already under pressure by lawmakers on Capitol Hill, divided with two Republicans and two Democrats instead of the commission’s normal contingent of five members.

“There is a reason the regulatory agencies have an odd number of appointments and why whichever party occupies the White House gets the majority,” said Dennis Kelleher, president of advocacy group Better Markets. “Anytime you have four commissioners, two of each party, the risk for gridlock is highest.”

The split is likely to delay not just implementation of key post-crisis bank reform rules required by the Dodd-Frank Act but also regulations mandated by the JOBS Act to help small companies raise capital.


Another victim of gridlock will be reforms for high-speed trading firms, in the wake of the “flash crash” in May 2010 and several technology errors and glitches since then, including a software malfunction at Knight Capital Group  that led the firm to lose $440 million and almost file for bankruptcy.

Schapiro has suggested that officials at the SEC have talked about an effort that would require high-frequency traders to keep an order to buy or sell a stock at a certain price, known as an order, for at least ½ a second before cancelling it if it isn’t met. She also has raised the possibility that the SEC could consider creation of a computerized “kill switch” to provide a systematic shut-off if a firm exceeded a prescribed trading limit.

However, Kelleher said that any reforms in the high-speed area are likely to be delayed or not addressed, largely because industry lobbying and attacks on many different fronts have the agency pinned down or busy in other areas.

“The sad fact is that without a computer driven market meltdown the likelihood of seriously addressing market structure issues and the current abusive practices by high-speed traders is low,” he said.


Better Market’s Kelleher notes that efforts to drive reform of money-market funds was largely driven by Schapiro and will be delayed by her absence.

However, Stephen Crimmins, a former SEC enforcement attorney, said that the split agency will have little or no impact on the number of challenges and settlements it undertakes. Read about how expert networks are key to the SEC’s insider-trading cases

“There is truly bipartisan support for the enforcement division’s activities,” he said. “It is easy for everyone to get behind strong enforcement.” actions.

Read Ronald Orol’s full article here

In the News


For media inquiries, please contact us at or 202-618-6433.

Contact Us

For media inquiries, please contact or 202-618-6433.

To sign up for our email newsletter, please visit this page.

This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

"* (Required)" indicates required fields

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact or 202-618-6433.


Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today