Schapiro vows to rebuild SEC
Senate committee holds confirmation hearing on Schapiro as SEC head; testimony touches on Madoff scandal.
NEW YORK (CNNMoney.com) -- Mary Schapiro, the president-elect's pick to head the Securities and Exchange Commission, vowed on Thursday to rebuild the battered agency if her nomination is approved.
"I will move aggressively to re-invigorate enforcement at the SEC," she told the Senate Committee on Banking, Housing and Urban Affairs at her confirmation hearing.
Schapiro said she intended to "re-engage the SEC" with investors and to "update the regulatory system that has failed them."
"I am under no illusion that this will be an easy job," she added.
After her testimony, Schapiro faced questions from committee members amid claims that she failed to uncover Bernard Madoff's alleged Ponzi scheme.
The Senate's vote on whether to confirm Schapiro as the new SEC chair has not yet been scheduled.
Schapiro heads the Financial Industry Regulatory Authority, which has scrutinized Madoff's investment firm over the decades. But this didn't stop Madoff, who allegedly perpetrated a multi-billion dollar scam that continued for generations.
Sen. Michael Enzi, a Republican committee member from Wyoming, asked Schapiro how Madoff's "expansive scheme" managed to "slip past the radar."
Schapiro replied that she "can't speak as to the SEC's handling of this matter," adding that FINRA was not provided with information from the SEC regarding Madoff.
For the future, she promised to emphasize "community policing" in the form of communication and cooperation across all branches of financial regulation, to better weed out wrongdoing.
"Some misconduct can be hidden from some of the regulators some of the time," she said. "Financial regulators frankly need to cooperate a lot more closely than we have historically."
Schapiro also defended herself against news reports that portrayed her as too soft to be an effective enforcer. She said those critiques are "an unfair picture of my record."
"I have never been afraid to go after people I thought have violated the public trust," Schapiro said. "I believe there are absolutely no sacred cows."
Schapiro has been a regulator for at least 25 years, including a stint in the 1990s as president of the National Association of Securities Dealers Regulation, which eventually transformed into FINRA, where she is chief executive officer.
"The trick is for [Schapiro] to turn that experience into a regulatory toolbox that you can use to rein in the excesses of the industry" without hampering innovation, said Sen. Charles Schumer, D-N.Y., who spoke in support of the nominee.
FINRA fined Madoff's firm five times since 1963. FINRA spokesman Herb Perone told CNN that the fines were for "minor trading violations," and that the fraud allegations are under the jurisdiction of the SEC.