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The Corporate Observer A Publication by Attorneys Devoted to Protecting Consumer Rights

Person of the Week: Mary Schapiro, Chair of the SEC and Former CEO of FINRA

Posted in Person of the Week

Nice work FINRA.  On the one hand you pay yourselves like captains of industry, but when the going gets tough you hide behind immunity reserved for lunch bucket civil servants making less than $80,000 per year.  And yes there is more.

If we could all be so lucky.

The Financial Industry Regulatory Authority released a report on its own internal investigation into excessive compensation for Mary Schapiro during her time as CEO of the Authority.  To be kind, the report was a joke and a self-serving cover up that demands further scrutiny.

As a threshold matter, let’s make something clear: FINRA is a government regulator.  It is the largest so-called “independent” securities regulator, overseeing almost 5,000 brokerage firms, and is designated overseer of the NYSE and the NASDAQ.  Yet as investors across the board were losing a nice chunk of their nest eggs in the financial markets (earned the hard way and put aside for college tuition and retirement), Mary Schapiro was raking in a base salary of $2.5 million and earning million-dollar-plus bonuses.  Try to challenge that salary.  You can’t.  FINRA will assert governmental immunities to thwart any challenges to its decision making or salary structure and they will win – trust me I tried.

Nice work FINRA.  On the one hand you pay yourselves like captains of industry, but when the going gets tough you hide behind immunity reserved for lunch bucket civil servants making less than $80,000 per year.  And yes there is more.  When Ms. Schapiro left FINRA, she received a parting payment of $9 million.  Yes $9 million.  As in, “Thanks Mary you did a great job.”  A great job?

During her tenure, the markets nearly imploded and investors lost trillions.  I don’t know Mary Schapiro.  When I was at the SEC, I would see her now and again in the hallways.  I have nothing against her personally, but the payments she received as President of FINRA are nothing short of an outrage.  A true public outrage.  But the internal report and investigation, paid for by FINRA after a feisty California securities broker-dealer called Amerivet demanded an explanation, was far from expressing outrage.  Indeed, it defended every aspect of Ms. Schapiro’s pay and her performance.  Relying on studies of executive salaries at leading investment firms, Ms. Schapiro was being—well if anything—underpaid.

And where did lucky Mary go?  To the chairmanship of the Securities and Exchange Commission, where else?  We commend Amerivet for its courage.  They are fighting an uphill battle to be sure.  But they are on to something and they should not let go.  These enormous salaries and benefits can only lead to abuse.

As to FINRA: are you fish or fowl?  If you are a private actor, accepting private sector dollars without any of the risks, don’t wrap yourselves around governmental immunity when the going gets tough.  And if you truly are a government regulator, stop taking enormous private sector salaries.  You can’t have it both ways.

 

Assisted by David Martin