SEC chief fronts up over new rules

WASHINGTON - The head of the Securities and Exchange Commission is appearing before Congress days after the passage of a sweeping financial regulation bill that gives the agency new powers and a landmark settlement of civil fraud charges with Goldman Sachs.

SEC chairman Mary Schapiro is telling House lawmakers at a hearing today that the agency has been revamping itself, strengthening enforcement efforts and taking measures to protect investors following the financial crisis and past agency failures.

"We have taken significant steps to make the SEC more vigilant, sharp and responsive, and to focus the agency squarely on its core mission of protecting investors, maintaining fair and orderly markets, and facilitating capital formation," Schapiro says in testimony prepared for the hearing by a House Financial Services subcommittee.

It is her first public appearance since the $550 million ($773 million) settlement announced last week with finance powerhouse Goldman Sachs, the largest against a Wall Street firm in SEC history, over allegations that the firm misled buyers of mortgage-related investments. Lawmakers may question whether the settlement is a serious show of enforcement muscle by the SEC or just a blip for a firm that earned that much in about two weeks last year.

The overhaul package approved by Congress last week, which slaps the stiffest new curbs on US banks and financial institutions since the Great Depression of the 1930s, adds new powers and responsibilities to the SEC's plate. Among other things, the agency gains oversight of hedge funds and bolstered technological capacity.

Schapiro says in her written testimony that the coming months for the SEC will be dominated by rule-writing for the new legislation.

She also is discussing the agency's response to the May 6 "flash crash", a panicked disruption that saw the Dow Jones industrials lose nearly 1000 points in less than half an hour. Under a new system of "circuit breakers" for individual stocks put in last month by the SEC, US stock exchanges must briefly halt trading of major stocks that mark big swings.

- AP