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 Mary Schapiro, President-elect Barack Obama's choice to head the
Securities and Exchange Commission, is going to face some tough
questions from the Senate Banking Committee this week in connection
with the Bernie Madoff scandal.
And, as if that's not enough, an old lawsuit has been resurrected just in time for Schapiro's confirmation hearing.
Schapiro is being accused of making misleading statements in order to
fast-track a merger of regulatory organizations, after which she
received a 57% raise in her pay.
The merger involved the regulatory units of the New York Stock Exchange and the NASD two years ago, which resulted in the formation of Finra. The suit filed Dec. 23 in the Southern District of New York alleges that Schapiro misstated that the Internal Revenue Service had prohibited the NASD from paying each member more than $35,000 as part of the merger deal. Although an NASD proxy statement issued while the deal was pending said that the agency would not permit the organization to give more compensation to members, the IRS did not actually issue a ruling on the matter until March 2007, long after the deal closed and three months after the members voted to approve it. According to The New York Times, "Schapiro's lawyer has denied the lawsuits' allegations and, in a recent interview said that the second suit, filed shortly after her selection, is an opportunistic effort to pressure the defendants to settle. The first, dismissed by a federal district judge in New York, is on appeal." Benchmark Financial Services Inc. of Ocean Ridge, Fla., filed the suits claiming Finra and its top officers deceived members of NASD -- formerly the National Association of Securities Dealers -- about terms of the merger of NASD's regulatory unit with that of the New York Stock Exchange in July 2007. Benchmark is run by Edward Siedle, a former SEC lawyer who today investigates pension fraud and other financial abuses. The firm, a Finra member, has been a plaintiff against other companies over the years and sued the NASD in 2002 after it blocked him from publishing a book about disciplinary proceedings against member firms. The NYT also reported that the Obama transition team examined the lawsuit during the vetting process and that Schapiro would not have been selected if it were seen as a problem. - Donna Block . Categories Deal Video
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