Radar’s team was lucky to get time with Susan Schroeder, Executive Vice President of Enforcement at FINRA, as the first in its series of Women in Finance. The interview focused on Susan’s journey; from her education and training, to her time at FINRA, and finally her views on entering, surviving, succeeding and being heard as a woman in a sector historically and numerically dominated by men.
In terms of when you were growing up, did people in your family or people you knew have a very strong influence on your career and where you’ve got to now?
They certainly had a strong influence on me, but I can’t say that they encouraged me to go into financial services or that I ever had any role models in financial services. My dad worked in construction, my mom was a secretary, so I don’t think I even knew anybody in financial services as I was growing up. But what my family did do was give me a lot of confidence and support, so that definitely pointed me in the direction of law school and my career now.
You studied law and it feels like you started to specialise in the markets and regulatory side quite early. Did you always see yourself doing that, or was it just something that happened organically?
It was just something that happened. I did not see myself doing that, in fact I never even took any securities regulation classes in law school. When I got to my first law firm, the first case I was handed involved securities and it was fascinating. I really liked it and that it engaged both sides of my brain. I did try other kinds of cases in those early years, but always came back to securities work because I found it to be the most interesting.
When people start out in a new profession and they’re effectively the office junior, they sometimes get asked to do quite tedious tasks. Can you remember when you were starting out as a litigation associate, or even more junior than that, any really dull or weird tasks that you got asked to do?
There were a lot of them. I mean the one that really stands out I can’t characterize as “dull”, but in the early years I reviewed a lot of emails. I remember being about three months pregnant, with a fair amount of morning sickness, and reading a broker’s email who really liked pornography. Maybe every tenth email would pop up as an explicit photo, which did not help my morning sickness, but actually made it worse.
Do you have or believe in mentors?
Yes, very much so. Whenever I’m asked about a mentor, I have to sort of warn that a mentor is not going to be like Yoda. A mentor is not going to be someone who is completely devoted to your personal development and lays out all the steps you need to take to get from A to B. I think of mentors as people whose judgment I trust and that I can learn from. And often they help me because I can help them. It’s a two-way street in a mentoring relationship, but I think I’ve been lucky enough to have a lot of mentors like that.
You headed to FINRA in 2011, what was the inspiration behind your decision to go out onto the self-regulatory side?
Well we were still kind of crawling out of the financial crisis and that had been a really scary time. Especially for my working class family – a decent percentage of their savings had suddenly disappeared. It was a very frightening time for them and for a lot of America. Coming out of that and thinking about the importance of regulation and the importance of what organizations like FINRA and the SEC do to safeguard people’s life savings – I was really struck by what an important mission that was. The head of enforcement at FINRA at the time, Brad Bennett, had come on board and clearly was bent on making changes and enhancing the enforcement program, and I thought that was really exciting and interesting.
So when Brad left, you effectively took over his position. How did that promotion come about? Were you expecting it or was it literally you seizing an opportunity that had to be grabbed?
When Brad left I became the acting head of the department for about seven months. That was not unexpected, I had been his direct report and his deputy and we had talked about that. When it came to becoming the permanent head of enforcement, I like to think that I seized some opportunity there by showing what I can do. There were a lot of great candidates who were looking at the job so, at the end of the day, it was something I was really proud to have accomplished.
What do you find the most rewarding part of your role at the moment?
Overall, I think the most rewarding thing we do is to effect change. Some of that is probably gender-related; I don’t think you would find many women in the financial services who would say “nothing to change here, everything is perfect”. What we do in enforcement is effect change every day; whether it’s getting a firm to fix something that they’re doing wrong, or getting money back to an investor who has been harmed, those are different ways that we are seeking to change the imbalance created by misconduct – and that’s very rewarding.
How about the most challenging?
Getting things to change. That’s not easy. Exercising your judgement to understand where to use enforcement’s significant authority and how to exercise your discretion every day, those are difficult tasks that require thoughtfulness and input from colleagues.
When you came in, you oversaw quite significant reform in terms of the enforcement process and the structure at FINRA. If you were to assess the impact of that change what would be the insights that you’ve seen?
Change is definitely a process and we continue to be in the process of changing. One early impact that we’ve seen relates to a change we made to the way we review certain actions before bringing a formal disciplinary action. We instituted a centralized review for certain kinds of cases and the idea was that we’d have a group of experienced attorneys who had not worked on the case look at it from an outside perspective to ask “is this case sufficiently transparent?”. The idea is that somebody who doesn’t know what happened here should understand why FINRA did what it did. What activity violated the rules. Why the sanction is what it is. I think you need to provide that sort of transparency in order to be as effective a regulator as possible. That centralized review that we instituted has helped us to achieve greater transparency in our cases, and has helped to create the right conversation around all of our cases, which is: how we can be very clear about why we’re doing what we’re doing.
In terms of the relationship between the self-regulator and its members and the tensions that enforcement can bring, how do you get that balance right to make sure they feel that you’re being fair and that enforcement is a tool that is being used correctly?
Going back to my previous response, a lot of what we try to achieve is transparency. If people don’t understand the reason we’re bringing an enforcement action, or the reason that we’ve ordered a specific kind of fine or sanction, then we’ve missed a real opportunity to help provide them with the guidance they need in order to comply. When I approach the way we do enforcement I really approach it as an exercise in explaining why we’re doing what we’re doing. That’s incredibly important. That includes, for example, an action against a firm that really isn’t in the business of getting it right, trying to explain the risks associated with that sort of firm.
With a backdrop of a trend towards the use of the word “culture” in a firm, is that something that your team considers when you’re evaluating whether to proceed with an enforcement, or do you just look at the binary facts of one case? Do you take into account the personnel and their approach to compliance and their history?
We very much consider history and previous conduct. I would say it’s less about assessing culture in terms of how people treat each other. But we very much think about the disciplinary history of the firm and the individuals involved and whether or not the firm made a good faith effort to comply and/or supervise. Those are all factors we consider in deciding both whether to bring an enforcement action and what the appropriate sanction would be.
In terms of the future of capital markets and securities, personally what do you think is the biggest risk that needs concerted commitment from lawmakers, regulators, firms and managers to overcome? When you sit there with your knowledge and understanding of the industry, what keeps you awake at night thinking “we’ve got to fix this otherwise it’s going to be a problem”?
I can’t say that what comes to mind is one specific thing that needs to be fixed. It’s more the rapid pace at which technology and innovation have outpaced regulation at times. Some of the biggest issues that we talk about and think about today are things like cryptocurrency and cyber security. And those are words that I don’t think any of us even knew seven or eight years ago. When I think about the multiple ways in which, for example, fraud can be effected through different kinds of media and different kinds of approaches that we hadn’t even heard of ten years ago, think the important role for lawmakers, regulators and firms together is really to keep pace with all of those changes and the new and inventive ways that things can go wrong.
When you think about social media can you see any benefit from the emergence of this type of communication? Does it help the securities industry? Or is it just a potential conduit to facilitate fraud, deception and undue influence in the markets?
I’m loathe to say that there’s no benefit to innovative technology, but I think there is a great deal of risk that can occur with the misuse of social media. It is really a challenge for firms to supervise what statements individuals are making to their customers over social media. The ways in which people communicate with each other are just multiplying daily. WhatsApp is a new way to communicate with customers and firms aren’t equipped to necessarily capture all that information. There’s a great deal of risk there and at its worst it does create the possibility of deception. It is a real challenge. We’ve done investigations where we have to actually take someone’s phone and read all their messages and capture them in screenshots because that’s the only place where communication is happening.
Forbes in 2019 said 46% of people working in the financial industry in 2019 are women, but only 15% of those are at an executive level. Why do you think that is?
The New York Times just had an article about the “greedy professions” and that really resonated with me, in that both finance and law are professions that demand 24/7 engagement if you want to succeed at a high level. I think that’s very difficult for women, particularly women who have partners with the same kind of ambitions and expectations. When that’s the case, one person has to take a step back and often that’s the woman.
In terms of diversity, what advice or tips would you give to women and minorities who are looking to succeed in finance or law. Or would you say actually they’re better off going to a different industry because there’s just too much to overcome?
I would never recommend avoiding the industry. I do think that the best advice I could give is to keep in mind that although you likely feel like an imposter, or you might feel like nobody is paying attention to you, it’s not you. It’s them. They’re the problem. Don’t let that sense of “Jeez I don’t belong here” get in the way of your ambition. Give yourself permission to feel a little bit uncomfortable, but then say what you need to say.
Considering career and family, is there an ideal time to start a family for someone in finance and what considerations need to be made when you’re making that decision? Can you nurture them both at the same time?
I certainly think it’s possible to have a family and a successful career at the same time. I would hate to think that . women are forced to time their families and make decisions about children based on their career because I think family is much more important than career. I do think that it takes a lot of ingenuity and a fair amount of determination to make it work at times. I have one child and I remember very clearly being on a summer vacation once with my husband and my daughter when she was two or three. I was working on a case with Stephanie Avakian, who was the partner at the time at my law firm, and is now the co-director of SEC enforcement, and she has three little kids and was on vacation too. Every night around 9pm, when all the kids were in bed, Stephanie and I would get online and we’d be emailing back and forth, writing something together for the next four or five hours. Then we’d be up again at 6.30am when the kids were up. So, those kind of moments happen and they’re not easy, but that’s how you get to have both.
In terms of the industry and its approach to diversity, is there any thing that you would like to see change or that you think would really improve the current image that is presented?
I can see that the demands of clients make a real difference. If there was ever an industry that responds to market demand, it’s finance. For example, a firm that demands that its law firm provides it with a diverse group of people to work on a case can have a real impact on who law firms seek to hire and develop, and how they think about succession. Clients that care about this should make that clearly known and be vocal about it.
In terms of tech and financial technology, do you think that offers a potential shift in attitude that can benefit women or do you think that’s just more of the same?
Technology has been a huge asset for working parents in general. Not just women. When I was a young associate I would sometimes stay in my office until 10 or 11 at night because I had to wait for an email. The Blackberry changed my life because I could go home. Things like being able to work from home, which was really unheard of 10 years ago, are just seamless now. These developments help people to balance work and family in ways that they couldn’t in the past.
In an environment where it’s 24/7 and everyone is potentially “on” and accountable, what do you think is a sensible approach to work/life balance and how do you manage it yourself? Do you have any techniques that you use to keep the divide?
I don’t know anybody who manages it perfectly all the time. I think part of being able to get through every day is accepting that you do get the balance wrong. I have ways in which I try to protect my home life. For example, I’ll read my emails at night, but if it’s not urgent I won’t answer. I’m just triaging at night. But sometimes you’re doing something like getting online from 9pm until 2am, and being ok with that is a big part of achieving a balance you can live with.
Is vacation sacred or do you check in at mornings and evenings? Or are you sitting on the beach checking in constantly?
Vacation is important – like I said, family is more important than work, and we should all be able to spend time with loved ones. That said, there’s no such thing as a “sacred” vacation where I never check in. Because of the job I have, I had to learn to be ok with that, and not be angry with the fact that I will have to spend a bit of vacation on work. That’s just a reality and my family understands that it’s going to happen – they also understand I’ll do everything I can to protect my time with them.
If you had to look back at yourself throughout your career, was there ever a moment when you sort of thought “this is too hard…I’m a woman and it’s not fair” and you felt overwhelmed?
Certainly I’ve been overwhelmed. Certainly there have been moments where I’ve thought “this isn’t fair” and part of the reason it’s not fair, or part of the reason I’m not being heard, is my gender. I’ve definitely had those moments. But never to the extent where I’d want to walk away. I love what I do and I’m good at what I do and I deserve to be here. •
Susan Schroeder, Executive Vice President and Head of Enforcement, oversees disciplinary matters related to infractions found through FINRA’s market surveillance and regulatory oversight programs. Susan’s tenure at FINRA began in 2011, when she was named Senior Vice President and Deputy Chief of Enforcement.
Before joining FINRA, Susan was a partner in WilmerHale’s Securities Litigation and Enforcement practice, where she represented financial institutions in SEC, FINRA and state enforcement matters. Prior to that, she was a litigation associate at Kirkland & Ellis. Early in her career, she was a consultant at Andersen Consulting with responsibility for designing business processes for new business units. Susan holds a Juris Doctorate from New York University School of Law, an M.A. from the University of California at Davis, and a B.A. from Georgetown University.