Obama to name SEC chief

'Toothless' SEC overlooked fraud

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NEW YORK (CNNMoney.com) -- President-elect Barack Obama is set to name a veteran financial regulator to head the Securities and Exchange Commission, two Democratic officials told CNN on Wednesday.

Mary Schapiro is currently chief executive of the Financial Industry Regulatory Authority, the largest non-government regulator for securities firms that do business with the U.S. public.

As SEC head, she would replace Christopher Cox as chair of the nation's main watchdog over publicly traded companies when the new administration takes office in January.

The appointment is subject to approval by the Senate.

Schapiro is a former SEC commissioner who briefly served as the agency's acting chair in 1993. She served as chair of the Commodity Futures Trading Commission in 1994 during the Clinton administration.

The announcement comes amid criticism of the current SEC chairman for the agency's apparent failure to act on information that could have prevented one of the largest investment fraud cases in Wall Street history.

Cox said Wednesday that "credible information" had been brought to the SEC's attention over a period of nearly 10 years about the activities of Bernard Madoff, who has been charged by federal prosecutors with leading a $50 billion Ponzi scheme. However, no formal investigation was made.

Also on Wednesday, Cox reaffirmed his intention to retire when the Bush Administration leaves office at the end of this year.

Sen. John McCain, R-Arizona, lashed out at Cox during his presidential campaign, saying he "betrayed the public's trust" for not doing more to prevent the financial crisis.

Earlier this year, Treasury Secretary Henry Paulson put forward a plan that would have combined the nation's various financial regulatory offices, including the SEC. However, it remains to be seen if such steps will be implemented in the next administration.

CNN's Jessica Yellin contributed to this report.