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Mary Schapiro: the latest official through the regulatory revolving door


Mary Schapiro has joined Promontory Financial, a Washington-based firm whose clients include some of the world's largest banks. Photograph: Gerald Herbert/AP


Former top financial watchdog Mary Schapiro has become the latest official to trade a government role for a private sector job advising the industry she was charged with regulating.

Schapiro, 57, who was chairman of the Securities and Exchange Commission (SEC) for nearly four years, is joining Promontory Financial, a Washington-based firm whose clients include some of the world's largest banks and other financial services companies.

The appointment is likely to anger critics of the so-called "revolving door" between US regulators and their former charges. Senator Elizabeth Warren, among others, has blamed "regulatory capture" for many of the problems experienced by the financial services industry in recent years.

Promontory was started in 2001 by Eugene Ludwig, another former regulator who headed the Office of the Comptroller of the Currency (OCC). Earlier this year, Promontory hired former OCC chief counsel Julie Williams.

The company is seen as a "shadow regulator" – advising firms on compliance issues. It received about $2bn advising clients during an OCC investigation into foreclosure abuses.

"Mary is an outstanding advocate for investors and was a strong and decisive regulator during one of the most volatile periods in our financial history," said Ludwig.

"Her profound understanding of the US and global financial markets, decades of regulatory leadership, and deeply relevant perspective and insight will add to our already significant involvement in capital markets, hedge fund and private equity advisory and compliance services. We are thrilled that Mary has chosen to join us at Promontory."

But Charles Elson, chair of corporate governance at the University of Delaware said: "Any time that a regulator goes into a regulated business, that's potentially a problem. It's an issue about what, if any, issues Promontory has before the SEC and what, if any, involvement she would have."

He said it was a "societal issue" more than a particular issue for Schapiro. "She's an ex-regulator, what are they supposed to do?" he said.

In an interview with The Wall Street Journal, Schapiro said she would not lobby on behalf of clients or appear before any federal agency on behalf of a clients. In my case, there's no revolving … I won't ever be going back to government," Schapiro said in an interview.

Susan Dudley, research professor of public policy and public administration at George Washington University, said: "You would not want her to back and lobby people she has relations with."

Dudley said: "I think it's understandable that someone who has developed expertise in an area wants to continue using that expertise."

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