that was very nice. i'm not sure deserved but very, very appreciated. i join this every year to give a state of the state expo sositio reviewing how some of the changes will protect the investors. 29 years ago when i first served as national commissioner, the financial world was a very different place. the dow was inching toward the 3,000 mark, a portable mcintosh weighed 16 pounds, and all you can do on a cell phone was talk. for most of the sec staff, the biggest market disruption in living memory was the black monday crash of 1987. a near cat -- when obama asked me to return and serve as chairman, i knew the agency

would be challenged on a level in which no occ was challenged before. >> that could in sin rate each in turn, and challenge to prove that the agency could and would step up to play its role aggressively and effectively. given the scope of the financial crisis and the fallout from the madoff scandal, it was. ut investing public and policy mission, to protect investors and ensure the quality of our mrkt. . that was no surprise to me. from my kbrerl years with the

did the e, able and eager to rise to the occasion. i'm pleased with our progress and with how far weave come. would you please come to the stand and be recognized. [ applause ] >> thank you for your service. our commitment to evolve helped to driver a consensus, that a better situation was not to shut e. for us to embrace needed reforms and better jaup thaet what we

set out to do. we put a new clollaborative approach. and we began to start a journey that would better protect investors and complete more shopways. i knew when we found our footing and began implementing the strategy that every move wb and we knew that the challenges we face would lift us to height that we've starsly seen. but i sometimes to focus on.

what the agency has accomplished is. we have if you understand mejtly changed the carry out our mission more effectively than ever in the 21st century. it not. now that their better equipped to move, at a high plm. sf is and pulling management away has allowed us to make the most of our sfanz we saw they were being. although the agency experienced a brief, tdespite growing numbes

in the market, it actually failed, and with enforcement stretched to the limit, operations and i.t. need were put on the back burner. investments on new i.t. fell by half. >> during my team, we've been important, increases we were scare to expand capacity sfaser than the budget numbers were risin rising. we vowed for the high approach, searching for recruits in special backgrounds and experience. we now have traders, academics, giving us a correspondingly greatership of the. we increase the training budget to more than double what it was

in 2009, eepg staff keep pace with case pgt nanz. . we discovered a nationwide. >> because our. and an ongoing series of upgrades is allowing us to baff the data more effectively, routing new ships or to existing exyou berations. within the various divisions and

offices, we've created management executive positions to handle important support areas. free legal skpgs and. we're outsourcing responsibility like leasing and other financ l financial. and we're i am ple and opening up a lot of study operations. the sec is simply a sounder agency on a fundamental level, deploying people and technology more effectively and max mizing the impacts of our limd resources. it's all part of an effort to be more effective for years to come, but it should not suggest in any way that our. we want it to be more, heading

off threats within the market. without the need for top down guidance in every case. this approach has flourished, and while we don't have time to approach every office in the division, i'd like you to know what it's been like with our efforts. one place to look at eastern division pool, and which has been particularly aggressive in handling its structure and focus. on three senates. the largest financial institutions, skrurd these officers are making sure investors have clear information nakd, without any ma ligment

tre trend. they've prompted companies to provide critical information about the potential financial impact of repatrioting cash from overseas. they've raised taxes for us. they've tried to comebat problems by reducing surgers. court has also taken illegal and how disclosure rules of, emitting goggles to harm investors. how they should disclose their

exposure to european sovereign debt, helping to provide investors with adequate granular financial information even as that situation remains very fluid. and the staff's guidance regarding company's obligations, clearly an area of growing concern to investors. additionally, in reviewing the most recent wave of ipos, courts can quickly stop revenue recognition practices and they halted the use of misleading non-gap measures. before these practices, the tech bubble of the '90s could take root again. this started when the right of investors' day in court was threatened. it was included in the government's documents connected with the ipo. the result of these changes aren't always eye catching, but we are convinced that on system

waem. we know that our proactive efforts to pry guidance as they grapple with disclosure issues. and we believe that during our viewers that is more kpleent and morrell van than in the past. perhaps the areas which changes an organization and approach has been you. organization organizational, over the last two years osha has put in place a new examination program. it had changed way. >> examination materials are

standardized. and working with the division of risk, strategy and if i nabl gajz -- over the last few years, 42% of exams have identified significant findings, up by a thirty, since 2008:. it's risen by half, from 10 to 15%. one such referral has. during the resulting examination, they previously a failure that koz ep forcers more than $200 billion. >> thank you pho ron's invest s

investors, arch they made an enforcement division. they revamped their operations putting talented attorneys back on the front lines, kregt such int and spring wod. >> while i won't steel all. including some of the most complex cases we've ever worked on. we retained orders for 208 billion dollars in penalties and disengorgement. of course the most will be. if congress agrees with my request to raise the tap on what, we would have the appropriate cases return even larger sums to investors.

in the area of financial crisis related cases, we filed charges against nearly 100 divisions and entities. actions against goldman sachs, p and freddie mac, and more than one of of the. this division also realized significant gains from its aberrational performance inquiry, another collaborative effort that. this morning, we charged four hedge fund in razors meeting asset and materially misled and harmed investors.

oc risk and enforcement are now working together through different analytical issues, and that he see being again to detect fraud. with clearly call direct line in rur ruring took the time to survey a group of firms who were adequately communicating through essential media. in prot, getting a sense of those who were legitimate and those who mighten. in short order, the ensuing is he was in specific securities,

through jez he will. again, the agency asked before investors were harmed, we sued the adviser last month and effectively called it a fraud. rather than just enforcement tomorrow, the yes. management dwing. as our firm shuts down, we have some questions, one that will help consumer products keep it on a client. it's hard to know how many will save you won't be poor into fraudulent operations. but we think this is important and that this aggressive and coordinated approach is yielding superior results across the agency and will continue to do

so going forward. yet another priority in recent years has been rededicate to ourselves along our. >> oh. >> this happened, it before it's dog. . with the passage of dodd frank, our responsibilities have expanded practice datically. of the more than 90 rule-making provisions, the sec has proposed or adapted rules to three-quarters of them.

. and we have completed 12 studies. we can talk for hours about dodd frank, but let me touch on a few high lits. today we had sharing of rules of the new rules. that have offered new rules in wh what. and we've stebd a aaron. until if, prodding their companies to launch their own internal come plings. the fec is proposing rules that will protect investors in

increasing dramatically unvess tore's and what will too original denominators underwriting practices. and thing the practices of the wi wigt, and the agencies of $1 billion were cass lean and kindling. next stop will be plans to open, essentially from the ground up, the atc market has long. in. i at that time, i said, nothing will interrupt the progress of the derivatives market more abruptly than a deseed of ba

rate and currency watch innovation might present significant risk for various reasons, including the derivatives market, weak or nonexistent settlements and the transactions among a number of small institutions. while others share the concerns, in 2000, congress excluded most from regulation. by mid 2008, as the repercussions of the markets collapsed were echoing throughout the financial system, the notion of the market had increased from the extraordinary $4.7 trillion to more than $700

trillion. title seven of dodd-frank addresses the challenges the market that are under scored by the events of 2008 by bringing these markets into the daylight. the sec is working with the ftc to write rules that strengthen the system by increasing the clearing of swaps and ensuring that margin and capital requirements insure the risk. improving transparency to the regulators to shed light on the exposures and assist and developing more robust price discovery mechanisms and increase investment protection by enhancing the swap disclosure and mitigating conflicts of interest and improving our abilities to police these markets. it is my hope we complete the last remaining proposals regarding capital market and record keeping requirements.

we are beginning to transition into the adoption phase. as a first step, i expect the commission soon to finalize rules that define who will be covered by the new regulatory regime and next what will constitute a security based swap. we need to define the scope of the regime and letting the markets know whether their activities will subject them to the requirements we will adopt in the coming year. beyond this, the commission staff is continuing to develop a plan for exactly how the rules will be put in effect. the plan should establish and appropriate timeline and sequence for implementation and avoid a costly big bang approach. in all stages of implementation, those subject to the requirements will be given adequate time to comply. while some issues are stand alone concerns, certain issues in title seven cut across the

implementation. among the most important, given the global nature of the market is the international impact of our rules. we are working hard to coordinate with the market and there has been significant progress on the international level. our cross border approach must strike a balance between sufficient domestic regulatory oversight and the marketplace. a one size fits all is neither feasible nor desirable. in the short-term, we will address the most salient issues in the single proposal. this will give interested parties, including international regulators an opportunity to consider as an integrated whole our cross border translations engaged in transactions with such parties.

despite the breadth of dodd-frank, there are other issues we are working on. one high profile interest is money market funds. as you know when the prime fund broke the buck in 2008, it set off a run so serious that the federal government was forced to step in and guarantee a multitrillion dollar industry. it was a shock that reverberated across the market and compelled us to take action. so, two years ago, we adopted regulations making the mix to hold more liquid and less risky. at that time, i said we needed to do more. that is because money market funds remain susceptible. we need to move forward to address the risks. we spent lots of time and

outreach reviewing many possible approaches. there are two serious options we are considering for addressing this core structure weakness. first, float the net asset value and impose capital requirements combined with limitations or fees. it is hard to miss the cry being raised by the industry against these approaches. but the fact is investors have been given a false sense of security by sponsor support and the one-time treasury guarantee. funds remain vulnerable to the reality that the single money market fund breaking of the buck could trigger a broad and destabilizing run. should that happen, the government will not have the tools it had in 2008. then, treasury used exchange stabilization fund to stop the run. congress eliminated that option when it passed the tarp legislation. the money market fund industry and the short-term credit market

is working without a net. to the extent, there is a deadline. it is a pressure we should feel from living on borrowed time. we have been deliberate about this. the president's working group report was issued in october of 2010. we had extensive public comment. we held a round table with the oversight council on money market funds. it is time for us to take the next step. finally, we are working to improve the sec's capacity to regulate and investigate. so another major initiative is the consolidated audit trail. standardizing platforms would seem to be a very obvious move. serving investors on two moves. and allowing more rapid and accurate reconstruction of unusual market events. the complexity of the under taking, however, has necessitated a detailed and extended rule-making process.

including a thoughtful review of the comments received since we first proposed the system's creation. the contours of the regulation are being finalized and will be considered by the full commission. regardless of the details, the broader result must be a mechanism that gives the agency the ability to rapidly construct trading. something that doesn't exist today. in addition, while the initial proposal will be for an audit trail tracking for orders and trades in the equity markets, i believe the system should be expanded for fixed income and futures and other markets. it is important we get a structure in place sooner rather than later so the heavy lifting of working through the technical nuances of the system can begin. we expect to adopt a final rule in the months ahead and after that, i anticipate the exchange

will be required to submit a detailed blueprint which will be in turn subject to public comment and approval. i'm proud to have the opportunity to work at the sec during an exceedingly productive period in history. the agency has accomplished much and we are on the verge of rule makings that will strengthen the structure of the markets and enhance the sec's ability to oversee the markets and pursue investors interests. however, just as important as the cumulative affect in the market and attitude of the agency as an institution and the staff who make it work. improvements that all agencies should undergo and allow the sec to continue to function at a high level in the years ahead. no one can predict what challenges will arise, what new threats to market stability will

emerge, what fraudsters will try down the road. whatever happens, the sec is now materially better able to enforce the law and identify and manage threats. the burst of activity is not just a result of circumstances. a reaction to the financial crisis. it is an indication that the sec is evolving in step with rapidly changing markets. it has been a busy time, but there are a lot of proud people who even as we finish what is on our plates today, are looking ahead to an equally productive future. thank you. [ applause ] >> thank you very much, chairman schapiro. in economic news today, from the labor department, employers added 227,000