New SEC chief Schapiro has large investments

WASHINGTON - The new head of the Securities and Exchange Commission, Mary Schapiro, has hundreds of thousands of dollars in money-market and mutual funds, large holdings in stocks, and is receiving $675,000 in deferred compensation from a company on whose board she sat for about 10 years.

Schapiro, a brokerage industry regulator, was chosen by President Barack Obama to lead and revitalize the embattled agency at a time of severe financial crisis and shaken investor confidence. She was sworn in Tuesday.

Since 2006, Schapiro had been chief executive of the Financial Industry Regulatory Authority, the brokerage industry's self-policing organization.

Her financial disclosure report, made available Wednesday, lists combined holdings of between $2,000 and $30,000 in stock of General Electric Corp. and Starbucks Corp., and between $250,000 and $500,000 in stock of Duke Energy Corp. — one of two companies of which she was a director.

Schapiro's report lists the $675,033 in deferred compensation from Kraft Foods Inc., the other company. It says she received the payout in cash before entering the government and that she is forfeiting her unvested stock grants from Kraft.

Her Kraft stock options are vested but underwater, the report says, and their value can't be reliably determined. If a stock price falls below the option's strike price — the employee's cost for cashing in the reward — the options are said to be underwater.

Schapiro was given an assessment by the SEC's ethics office and the federal Office of Government Ethics that her individual stock holdings do not require her to divest them, SEC spokesman John Nester said Wednesday. She isn't required to recuse herself from matters involving the industry sectors of the stocks she holds but under the ethics agreement she will remove herself from matters involving any of the specific companies.

The exact value of Schapiro's assets couldn't be determined from the financial forms because they only require values to be provided in ranges.

She will earn $162,900 a year as head of the market watchdog agency.

Schapiro, 53, who also was an SEC commissioner under three presidents and chairwoman of the Commodity Futures Trading Commission, earned $2.75 million annually as FINRA chief executive, according to the disclosure report.

She has been sued by a group of brokerage firms contending she made misleading statements in a bid to push through a merger of the industry's self-policing organizations in 2007. Schapiro and other senior executives of FINRA received pay increases after the merger, and the brokerages' lawsuits allege that she made misstatements — including that the Internal Revenue Service had barred the NASD from paying each member firm more than the $35,000 they received in the merger.

Schapiro and FINRA have denied the allegations. At her Senate confirmation hearing earlier this month, she said she believed the suits were "frivolous" and without merit.

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