Outgoing SEC Chairman Delayed Helping Small Businesses to Protect Legacy

The outgoing chairman of the Securities and Exchange Commission decided as one of her last acts to delay a rule that could affect hundreds of billions of dollars of private offerings by companies, partly because of concerns about her personal legacy.

Mary Schapiro, who was appointed by Barack Obama, delayed eliminating a ban on companies advertising unregistered securities. If the ban had been lifted, those securities might have been advertised to the general public and not just wealthy investors, thus helping small businesses. 

Republicans were angry that the lifting of the ban had been delayed; Patrick McHenry, chairman of the House oversight committee that obtained the SEC emails delineating Schapiro’s sudden change, wrote her a letter saying that the change was “critical to capital formation and the growth of small enterprise.” 

Daniel Gallagher, on of two Republicans on the SEC’s five-person commission, sent Schapiro an e-mail that read simply, “I am furious.”

Schapiro changed her mind after the JOBS Act went into effect in April, and the ban was given the green light to be lifted in August. However, on August 7th, a senior official at the Consumer Federation of America, Barbara Roper, sent Schapiro an e-mail saying the organization had strong objections to lifting the ban without a comment period; she added that investor groups were “prepared to be quite aggressive in voicing our concerns.”

Within an hour, Schapiro sent the head of the SEC division charged with writing the rule an e-mail titled, “Please don’t forward.” The text of the e-mail said that if the investor groups felt that strongly, “it seems like we should give them a comment period… I don’t want to be tagged with an Anti-Investor legacy.”


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