SEC Chairwoman Mary Schapiro said today she will move to tighten oversight of money managers in the wake of the Bernard Madoff scandal and strengthen regulation of money market funds.
The Securities and Exchange Commission also will propose rules in May or June to increase shareholder opportunities to nominate corporate board members as part of an effort to increase investor democracy and rein in executive compensation, Ms. Schapiro told the Senate Banking Committee.
“We view regulatory reform as vital,” she said, noting that investor protection should be the SEC’s top priority. “Much more needs to be done.”
The commission also will address short selling by proposing early next month a restoration of the uptick rule, or something like it, Ms. Schapiro said.
Senate Banking Committee Chairman Chris Dodd, D-Conn., today endorsed that plan. In mid-2007, the SEC eliminated the uptick rule, which inhibited the ability of short sellers to trade on sharp market declines and possibly drive the market down further.
Ms. Schapiro also urged lawmakers today to require central clearing of credit-default swaps, the unregulated derivates involved in the downfalls of Lehman Brothers Inc. and American International Group Inc.
Separately, Treasury Secretary Timothy Geithner today called for a broad regulatory overhaul that would bring hedge funds, private equity firms and venture capital funds under federal supervision for the first time. (See full story here.)
Separately, the SEC will propose a tightening of rules for the $3.9 trillion money market mutual fund sector in the wake of the collapse last fall of the $62.5 billion Reserve Primary Fund, Ms. Schapiro said.
“These efforts will be aimed at shoring up money market fund investments and mitigating the risk of a fund experiencing a decline in its normally constant $1 net asset value,” she said.
To read Mary Schapiro’s prepared testimony, click here.
Neil Roland is a reporter for the Crain Financial Group.
