From Clueless Cox to Something Else Schapiro: Meet the Future SEC Chairman

Christopher Cox may in retrospect look like an Aristotelian fountain of wisdom, compared to Obama's choice of Mary Schapiro as the new SEC chairman. Word is out that President-elect Obama will name her tomorrow as his choice to become the next SEC chairman.

Schapiro serves as CEO of the Financial Industry Regulatory Authority, created in 2007 through the consolidation of the National Association of Securities Dealers ("NASD") and the member regulation, enforcement and arbitration functions of the NYSE. She previously served as Chairman and CEO of the NASD, as Chairman of the Commodity Futures Trading Commission and as a Commissioner on the Securities and Exchange Commission. She is currently a director of Kraft Foods Inc.

Her stint at the CFTC during the Clinton administration began while the glaring lights were still on Hillary Clinton over her amazing first time futures trading success of turning $1,000 into $100,000.

Schapiro's philosophy on regulation appears to be that the big boys have different rules that they must play by then up and comers. In a speech in October 2007 while CEO of FINRA, she said:

FINRA regulates Goldman Sachs, which had revenues last year of $29 billion, right along side the over 2,400 firms that brought in less than a million dollars...We simply can't ignore the diverse nature of these firms.

It's important that, without compromising investor protection, FINRA distinguish between the different capacities and capabilities of these firms through its rulemaking and examination processes.

Hmmm. I wonder if that is why FINRA didn't catch Bernie Madoff either, since FINRA was also a watchdog of Madoff operations? He must have come under the diverse examination process.

But, things get more amazing. She posed for the cover of Equities magazine. To say Equities reports on some of the edgier parts of Wall Street is to put things mildly. There can not be a better example of clueless, than to pose and be interviewed by Equities, when you are a regulator. I'll let Gary Weiss take it from here since he wrote up this numskull event as it occurred last year:

I practically fainted when I opened up my mail today. No, not a bill or a threatening letter, but a copy of something called "Equities" magazine with the smiling face on the cover of Mary Schapiro, head of the Financial Industry Regulatory Authority (the merged regulatory branches of NASD and the New York Stock Exchange).

What amazed me was not just that Schapiro would give credence to a magazine with a history of featuring shameless penny stock hucksters, but that she gave a ringing endorsement to the magazine.

A lengthy Q&A with Schapiro begins as follows:

Equities: Mary, thank you for taking the time to speak to the readers of EQUITIES. Do you read the magazine?

Schapiro: Absolutely. It's fantastic! You can quote me.

I wonder what Schapiro finds so fantastic about the magazine. It regularly pushes some of the cruddiest stocks known the mankind, and is noted for giving publicity to stock promoters like Ray Dirks.

In fact, right next to Mary Schapiro on the cover is a promo of a softball article on Dian Griesel of Investor Relations Group, which specializes in promoting OTC Bulletin Board and other flyspeck companies. In Wall Street Versus America I describe how Griesel issued a press release proclaiming a lawsuit against citizen activist Floyd Schneider, without actually filing the suit.

Perhaps Schapiro thought the article on Griesel was "fantastic"? Or the microcap promotion articles peppered through the rest of the magazine?

I'd say that Mary Schapiro needs to think a bit more carefully before she gives a ringing endorsement to an investment tome.

Somewhere in Manhattan, the insiders are celebrating tonight.