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Speech by SEC Chairman:Address to the Society of American Business Editors andWriters

Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

SABEW Annual Conference 2009Denver, Colo.April 27, 2009Thank you. And, thank you to Diana (Henriques) for that very kind introduction.It’s an honor to be here with you today because in so many ways we share the samegoal. We all strive to achieve an “informed citizenry.” Through your reporting and writing, you help to make Americans smarter and wiser– not just about business in general, but about the financial markets in particular.And, that actually makes our job at the Securities and Exchange Commission easier.For me – and for the SEC – it is all about investors. The more high-quality, honestinformation investors have, we believe the better off they are.Since becoming Chairman a few short months ago, my focus has been revitalizingthe one agency whose primary responsibility is to protect investors.

The Birth of the Investors’ Advocate:

As many of you know, the SEC grew out of a tumultuous time in our nation’sfinancial history. Following the Great Crash of 1929, Congress passed two significantpieces of legislation whose goals were clear – protect investors and restore investorconfidence.It was 75 years ago this very day that the House Committee reported out the billthat created our agency.That Committee report – from April 27, 1934 – references the words of PresidentRoosevelt himself.At the time, the President was concerned with what he called naked speculation – orinvestments with significant risk. He said such “speculation has been made far tooalluring and far too easy for those who could and for those who could not afford togamble.” And he talked about his concern that workers were risking their pay checks ormeager savings on transactions that they barely understood – or in his wordsinvestments “with whose true value they were wholly unfamiliar.”

That is why President Roosevelt urged passage of the legislation – legislation he saidwas “for the protection of investors, for the safeguarding of values, and, so far as itmay be possible, for the elimination of unnecessary, unwise, and destructivespeculation.” A few weeks later the Exchange Act of 1934 passed. And, the SEC was born.It wasn’t long before one of the early Chairmen, declared the agency the “investors’ advocate.” And, for 75 years, the agency has largely been known by that moniker.But not unfailingly, and that is part of what I want to talk to you about today.

Now, More than Ever:

It is perhaps stating the obvious to note that given the current state of our economy,the value of our pensions and 401k’s, our aging demographic and the complexity of financial transactions, that there has never been a time when investors have neededa strong advocate more than they do today. They understandably lack confidence inthe markets as vehicles to support their financial security.The SEC must play a central role in restoring that confidence for a simple reason:Until investors believe that they are not powerless pawns in the financial markets,until they believe in the basic integrity of financial markets, they will put their moneyin mattresses rather mutual funds – in bread boxes rather than bonds. And, thatonly serves to further undermine our economy.As all of you in this room understand, investments fuel our economic growth. Theyhelp the factory down the road hire more workers. They make it possible for arecent college graduate to start up a small business. They enable manufacturers toinnovate. And, they allow municipalities to build roads, bridges and hospitals.How we got to where we are today is a question that many will debate for years tocome. But, it is clear to me that the responsibility lies with many:

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from the institutions that cobbled together and aggressively sold riskyfinancial instruments

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to ratings agencies that allowed the integrity of ratings to take a back seat totheir business interests

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to mortgage originators who made complex loans to those who could notafford them

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to regulators that didn’t fully embrace the need for regulation or didn’tappreciate the significant risks building throughout the entire system

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or, in the case of the SEC, simply didn’t hew faithfully to the mission of investor protection – whether because of a lack of resources or because of philosophy

Reforming the Landscape:

As a result, there is significant debate about regulatory reform – not about whether itshould happen, but about what form it will take. You might say the train has left thestation, but no one quite knows for sure where it will come to stop.

Whatever form it takes, I support the view that there is a need for system-wideconsideration of risks to the financial system and to create mechanisms to reduceand avert such systemic risks.But, at the same time, I believe that any reform must not – and cannot –compromise the quality of our capital markets or the protection of investors.If we cannot show investors that we are looking out for their interests as much asthe interests of the financial institutions – then we will have little success in restoringconfidence.Investors need to see that we are going after those who engage in wrongdoing.They need to see that we are forcing companies to be truthful and transparent intheir reporting. They need to see that we are limiting risk in areas where substantialrisk is not what they’re buying. And, they need to see that we’re rooting out fraud.In short, they need an agency that’s there for them – and primarily them. Theyneed an independent agency that exists not just to protect Wall Street, but to protectMain Street.By offering that to investors, we can help to restore confidence.

The SEC – Independent and Experienced:

When Congress created the SEC they understood not only that this new agencywould be protecting investors, but that it would be advocating for individuals whowere disparate in their views and not cohesive in force.So, Congress ensured we were an independent regulator – one that could championthose who otherwise did not have a voice. A regulator that was not afraid to take onthe most powerful interests in the land.Our job is to promote efficiency, competition and fairness around each and everydollar invested.

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We do this by regulating the exchanges and clearing agencies that make ourmarkets work.

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We do this by helping to reduce transaction times to a nanosecond – and byreducing the costs of trades to just pennies.

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We do this by fostering information that is accurate, meaningful, and timelythrough thousands of disclosure reviews each year.

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We do this through rules that make mutual and money market funds – whichhold over $9 trillion of assets – operate for the benefit of investors and onlyinvestors.

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We do this by overseeing 5500 broker-dealers and over 11,000 investmentadvisers.

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And we do this through vigorous enforcement of the law.

Glancing Back, But Moving Forward: