WASHINGTON - Mary Schapiro, who announced this week she would step down as chairwoman of the U.S. Securities and Exchange Commission on Dec. 14, is credited by securities law experts for bringing new life to the SEC in the wake of the financial crisis.

But Schapiro also has been faulted for not acting more forcefully to repair an agency with a reputation that had been pummeled in the wake of allegations that it had ignored clear evidence of Bernard Madoff’s financial fraud. And she has been scolded for not doing more to hold top Wall Street executives accountable for the crisis, and was called to testify on Capitol Hill about the agency’s progress almost four dozen times.

Schapiro, 57, reshaped the SEC during her tenure, and according to some metrics, revitalized it. During the 2011 fiscal year, for example, the agency brought an all-time high 735 enforcement actions and collected $2.8 billion in penalties. It also created a whistleblower program, which in August paid out its first reward.

“She’s entitled to the gratitude of all who think the SEC plays an important role,” said John Coffee, a Columbia Law School professor who writes a column for the Law Journal.

Harvey Goldschmid, also a Columbia Law professor, praised Schapiro’s “heroic attempt both to reinvigorate the commission and to keep it together.”

“Her biggest legacy, I would suggest, is a reversal of the direction and the approach of the SEC toward its mission,” said Ronald Columbo, a professor at the Maurice A. Deane School of Law at Hofstra University. “Rightly or wrongly, the impression had become that the SEC was sort of asleep at the wheel.”

In a Nov. 26 statement, President Barack Obama said of the chair he appointed, “The SEC is stronger and our financial system is safer and better able to serve the American people—thanks in large part to Mary’s hard work.”

Under Schapiro, the SEC reached its largest settlement ever with a financial institution. Goldman Sachs agreed in July 2010 to pay $550 million to settle civil fraud charges that it misled investors about mortgage securities before the housing market collapsed in 2007. Similar settlements followed with Citigroup, JPMorgan Chase and others.

However, the Goldman case came to symbolize a lingering critique of Schapiro’s tenure: No senior executives were singled out. The penalty amounted to roughly two weeks of earnings at Goldman. And Goldman was allowed to settle the charges without admitting or denying any wrongdoing, as were other large banks that faced similar charges.

Among the leading critics of SEC settlements has been Southern District Judge Jed Rakoff, who recently threw out a $285 million deal with Citigroup because of that aspect of the deal.

Rakoff complained that the civil penalty was “pocket change” to the bank. He said it was hard to discern what the agency was getting from the deal “other than a quick headline” (NYLJ, Nov. 29, 2011).

The SEC has appealed Rakoff’s ruling to the U.S. Court of Appeals for the Second Circuit.

Roberta Karmel, a professor at Brooklyn Law School, defended the settlements.

“If the SEC was not able to negotiate settlements with the ‘neither admit nor deny’ language, I think it would be hamstrung in its enforcement efforts,” she said, adding that the practice “has been traditional for as long as I can remember.”

Lawmakers and experts say Schapiro made the SEC more efficient, and they note that she fought for increased funding needed to enforce new rules enacted after the crisis. She often clashed with Republican lawmakers who had opposed the 2010 financial overhaul law and wanted to cut the SEC’s budget.

“I think she saved the SEC from being extinguished by the Congress,” Karmel said, noting that Treasury Secretary Hank Paulson had recommended eliminating most of the agency during George W. Bush’s presidency. “When the financial meltdown came, and the Madoff scandal, a lot of people thought that Dodd-Frank might eliminate the SEC.”

Not only did Schapiro succeed in preserving the SEC, according to Coffee, she was able to secure more funding for it in the face of political opposition.

“She was able to get significant budget increases from what a Republican Congress wanted to give the SEC,” Coffee said.

Another criticism Schapiro faced involved a key decision she made in response to the Madoff scandal. Madoff had been arrested a month before Schapiro took over at the SEC in January 2009.

Schapiro allowed her general counsel at the time, David Becker, to help craft the SEC’s policy for compensating victims. It was later discovered that Becker had inherited money his mother had made as a Madoff investor. Schapiro acknowledged in 2011 that she was wrong to have allowed Becker to play a key role in setting the policy.

The SEC’s inspector general concluded in a report that Becker participated “personally and substantially” in an issue in which he had had a financial interest. Some lawmakers complained the affair further eroded the public’s trust in the SEC.

James Cox, a professor at Duke University School of Law, said that after a strong first two years, the SEC under Schapiro became less effective.

“The wind was really taken out of (Schapiro’s) sails” by the political fallout from the Becker episode, Cox said. “I don’t think she really got her legs back under her after that.”

For example, Cox said Schapiro should have fought harder against legislation enacted in March that makes it easier for small start-ups to raise capital without having to comply immediately with SEC reporting rules.

Critics say the law went too far in removing SEC oversight, and might open the door to corporate scandals or to the sorts of deceptions that contributed to the financial crisis.

Columbo said Schapiro failed to accomplish some of her goals because she “overcorrected and overextended” in some areas.

For example, he said, Schapiro supported giving significant minority shareholders the right to nominate their own board candidates. This policy, known as proxy access, was rejected by the D.C. Circuit.

Schapiro’s own commission also rejected new regulations on money market funds.

“She’s right, but she has no support from the rest of the commission,” Coffee said.

Still, Coffee attributed some of Schapiro’s shortfalls to political limitations.

“They are caught in an era when both Congress and the White House are comfortable with deregulation,” he said.

‘She Gave It Her All’

Law firm partners who handle SEC defense work largely praised Schapiro.

“I think she gave it her all,” McDermott Will & Emery partner Eugene Goldman said. “Under the most difficult circumstances, Congress imposed burdensome mandates on the agency to carry out Dodd-Frank.”

Goldman, formerly senior counsel in the SEC’s Division of Enforcement, said Schapiro hired top-notch staff to fill out the whistleblower office. He said that because of the time lag between tips and enforcement actions, 2013 will provide proof of the success of the initiative.

“The statistics indicate that there has been significant response to the program through a large number of tips and complaints filed with the agency,” he said.

Thomas Sporkin, a BuckleySandler partner in Washington and former head of the SEC’s office of market intelligence, said that when Schapiro took her post the SEC was on the verge of obsolescence.

“I think she did a fantastic job saving the agency,” he said.

Sporkin spoke highly of Schapiro’s reorganization efforts and renewed focus on enforcement. But despite her accomplishments, he said, Schapiro was bogged down by her proposal to reform the structure of money market funds.

“Mary Schapiro has demonstrated extraordinary leadership, dedication and fortitude in the most challenging economic and regulatory environment in modern history,” Gibson Dunn partner F. Joseph Warin said in a statement. “She is the uber-model of a public servant—visionary, selfless and always protective of investors’ interests and transparent markets.”

Obama announced that he would appoint current SEC Commissioner Elisse Walter as chairwoman upon Schapiro’s departure. Before joining the agency, Walter, a George W. Bush appointee, served as senior executive vice president for regulatory policy and programs with the Financial Industry Regulatory Authority, the agency that Schapiro headed before taking over the SEC.

If Walter is a temporary choice and Obama still needs to nominate a full-term replacement pick for Schapiro, several names have been floated.

According to a recent National Law Journal report, they include, in addition to Walter, a former SEC commissioner and general counsel; Mary John Miller, the undersecretary for domestic finance at the Treasury Department; FINRA chief executive officer Richard Ketchum; and, former Bank of America executive Sallie Krawcheck.

Schapiro was previously commissioner of the SEC from 1988 to 1994. She was appointed chair of the Commodity Futures Trading Commission by President Bill Clinton and served in that post until 1996. She has not said what she’ll be doing next.

Schapiro did not respond to a request for comment. In a written statement, she said, “It has been an incredibly rewarding experience to work with so many dedicated SEC staff who strive every day to protect investors and ensure our markets operate with integrity. Over the past four years we have brought a record number of enforcement actions, engaged in one of the busiest rulemaking periods, and gained greater authority from Congress to better fulfill our mission.”