Wall Street Needs New Era Of Responsibility: SEC Chief

The top U.S. securities regulator called Tuesday for a new era of responsibility on Wall Street, which she said must play a role in cleaning up the financial mess.

"Financial services firms need to lead the charge in fixing the problems that exist," Mary Schapiro, the new chairwoman of the Securities and Exchange Commission, told a forum for broker-dealer compliance executives.

AP Mary Schapiro

"There will better disclosure to investors," Schapiro said, adding that there must also be "more careful risk assessment of complex products before they go to market."

Compliance officers should be "empowered" to tell other employees that compliance was just as integral to the firm's success as its sales and trading desks, Schapiro said.

Financial services firms created complex products such as credit default swaps and asset-backed securities that are now blamed for contributing to Wall Street's meltdown and the global economic crisis. The same kind of aggressive efforts to create new financial products should be spent to ensure the products are understood by their customers, she said.

Fellow SEC Commissioner Elisse Walter told the forum that investors paid a heavy price for the failure of securities firms to ensure investors understood a product's risks.

"As you bring out new products, you should definitely have your compliance personnel involved in the process because they bring a valuable and different perspective to the issue," she said.

Schapiro said the SEC will impose reforms to try to repair some of the damage done to investor confidence.

Under her direction, the agency has already taken steps to improve its enforcement division and give shareholders an easier way to influence the composition of the corporate board.

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