The Woman behind the SEC
If you have 45 minutes to spare, you can read this highly entertaining New Yorker profile on the Securities and Exchange Commission (SEC) Chairwoman Mary Jo White. Ever since White took office, the SEC is on the front pages almost every day with news on drastic policy changes and harsh enforcement actions.
On November 4, 2013 hedge fund SAC agreed to plead guilty to all five counts of insider trading violations and pay a record $1.2 billion penalty, becoming the first large Wall Street firm in a generation to confess to criminal conduct. While the biggest Wall Street firms are being prosecuted, the major financial regulations such as the Dodd Frank Act has not been implemented, has the SEC become a tougher prosecutor and a more lax regulator at the same time?
Here are some of the highlights in the article:
- She is 65 years old and a marathon runner.
- Friends and colleagues characterize White as the most competitive and driven person they have ever encountered.
- She worked at both sides of the revolving doors: she was a US attorney prosecuting the white-collar criminals and money launderers and she was also a corporate lawyer defending the biggest Wall Street firms.
- She was born in Kansas City, Missouri.
- Her father, grandfather, husband and son are all lawyers.
- The SEC didn’t even have a formal enforcement division until the 1970s’.
- The SEC hired a physicist to assess and measure the financial risks because some Wall Street firms have become “too complex to depict.”
- The trading market has evolved so much in the Digital Age. Direct Edge, a company opened as a full electronic exchange in 2010 and now represents more than 10% of the trading volume on the American equities market. It has announced plans to merge with a Kansas City-area firm called BATS, which became an electronic exchange in 2006. If the merger goes through, the combined exchange may do more trading volume than the New York Stock Exchange and more dollar volume than the Nasdaq.
You should read this article if you are interested in finding out answers for these questions:
- After the 2008 financial crisis, why didn’t the major financial institutes get punished for their misdeeds, while the public got emotionally satisfied watching Bernard Madoff, a medium-sized player who had nothing to do with causing the crisis went to prison?
- What polici(es) will facilitate capital formation and insure the fairness and integrity of the marketplace, in other words, what would the SEC do to protect and tame Wall Street simultaneously?
- Which US Attorney’s Office is the most prestigious in the country?
- Which US government agency is the (only) one that directly connected to Union Station (train station) in Washington, DC?
- Why does SEC change policies about having the target admitting wrongdoings? Before Mary Jo White chaired the SEC, has almost always ended investigations with a settlement, in which the target pays a fine but does not admit wrongdoing, now the SEC is trying to force the target to admit to having broken the law, and going to court if the target refused. Why the drastic changes?
- How did the S.E.C. charge the heads of Wall Street firms in connection with misdeeds they did not personally commit?
Courtesy to Mr. Nicholas Lemann’s article Street Cop on the New Yorker