The SEC: still toothless

March 4, 2010

Does Mary Schapiro’s SEC have teeth? There was hope that it might, when she was confirmed — but the tale of her treatment of Salvatore Sodano, the former CEO of the American Stock Exchange, indicates otherwise.

Gary Weiss has the full story, but suffice to say that after finding him guilty of failing to enforce securities laws, the SEC tried to censure Sodano, but he appealed, and, last week, the final decision came down: Sodano was indeed guilty. “Respondent Sodano, without reasonable justification or excuse, failed to enforce compliance with the Exchange Act”, the SEC said. And… that was it. Writes Weiss:

There wasn’t even a censure, much less a more appropriate gesture—such as forcing him to cough up some of the handsome pay that he had accrued at the Amex, where he was CEO from 1999 to 2004. Sodano, who served as chief financial officer of the National Association of Securities Dealers before coming to the exchange, enjoyed $4.4 million in salary and bonuses in 2002 alone.

The symbolism here is important: the SEC needs to show that it has turned over a new leaf when it comes to enforcement actions. This case is hardly encouraging in that respect.

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