With her husband and two daughters sitting behind her, Schapiro answered senators’ questions with an aura of confidence. “I have no illusion this will be an easy job,” she said after listing her top priorities. These entail efforts to “reinvigorate” the SEC enforcement division, which may include asking for more resources from Congress; getting more input from investors; and helping modernize the U.S. regulatory system. That last goal may involve merging the SEC with another agency, such as the Commodity Futures Trading Commission, which she once chaired. Or her approach could even involve doing away with the SEC, and spreading its responsibilities among several other regulators.
She also promised to consider ways to reform the credit-rating-agency industry, which lawmakers have attacked as rife with conflicts of interest, making its ratings hard to believe. She said she was open to the idea of creating an organization similar to the Public Company Accounting Oversight Board, which oversees audit firms, and letting the new agency monitor the rating agencies.
On other issues, she plans to back off on some of Cox’s plans, namely the proposed roadmap for converting companies to international financial reporting standards. She has concerns about the pace of the timeline, the independence of the overseas standard-setter, and the quality of the rules themselves. Considered more principles-based than U.S. GAAP, IFRS standards are not as detailed, and allow more room for interpretation, she said. She is also worried about what the conversation might cost companies, noting that the SEC estimates that the price tag could run as high as $32 million for the largest firms adopting IFRS. “I will not be bound by the existing roadmap that’s out for public comment,” she said.
She appeared less familiar with the debate over fair-value accounting. While she has read the recently released congressionally mandated report on the rules put out by the SEC, she said, she has yet to study it in detail, and plans to “immerse” herself in the topic soon after she takes office.
Moreover, Schapiro revealed that she is in favor of federal oversight of insurance companies, and requiring hedge funds to register with the SEC. And she may also grant investors proxy access, a topic that has divided commissioners in the past.