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For sale by the Superintendent of Documents, U.S. Government Printing Office

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50–323 2009

S. HRG. 110–924 

NOMINATIONS OF: BIJAN RAFIEKIAN, 

DIANE FARRELL, WILLIAM S. JASIEN, 

MARK S. SHELTON, AND WILLIAM H. HEYMAN 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

ON 

NOMINATIONS OF: 

BIJAN RAFIEKIAN, OF CALIFORNIA, TO BE A MEMBER OF THE BOARD OF

DIRECTORS, EXPORT-IMPORT BANK

DIANE FARRELL, OF CONNECTICUT, TO BE A MEMBER OF THE BOARD OF

DIRECTORS, EXPORT-IMPORT BANK

WILLIAM S. JASIEN, OF VIRGINIA, TO BE A DIRECTOR, SECURITIES INVESTOR

PROTECTION CORPORATION

MARK S. SHELTON, OF NEW JERSEY, TO BE A DIRECTOR, SECURITIES INVESTOR

PROTECTION CORPORATION

WILLIAM H. HEYMAN, OF NEW YORK, TO BE A DIRECTOR, SECURITIES

INVESTOR PROTECTION CORPORATION

WEDNESDAY, JULY 11, 2007 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 


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(II) 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Pennsylvania 

JON TESTER, Montana 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

JOHN E. SUNUNU, New Hampshire 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

SHAWN MAHER, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

DEAN V. SHAHINIAN, Counsel 

JOSEPH L. HEPP, Professional Staff Member 

JUSTIN DALY, Republican Counsel 

ANDREW OLMEM, Republican Counsel 

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator 

GEORGE WHITTLE, Editor 


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C O N T E N T S 

WEDNESDAY, JULY 11, 2007 

Page 

Opening statement of Chairman Dodd .................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Allard ................................................................................................... 4 

WITNESSES 

Bijan Rafiekian, of California, to be a Member of the Board of Directors, 

Export-Import Bank ............................................................................................. 6 

Prepared statement .......................................................................................... 20 

Biographical sketch of nominee ....................................................................... 21 

Response to written questions of: 

Senator Brown ........................................................................................... 66 

Diane Farrell, of Connecticut, to be a Member of the Board of Directors, 

Export-Import Bank ............................................................................................. 7 

Prepared statement .......................................................................................... 33 

Biographical sketch of nominee ....................................................................... 35 

William S. Jasien, of Virginia, to be a Director, Securities Investor Protection 

Corporation ........................................................................................................... 9 

Prepared statement .......................................................................................... 43 

Biographical sketch of nominee ....................................................................... 45 

Mark S. Shelton, of New Jersey, to be a Director, Securities Investor Protection Corporation ................................................................................................... 10 

Prepared statement .......................................................................................... 49 

Biographical sketch of nominee ....................................................................... 51 

William H. Heyman, of New York, to be a Director, Securities Investor Protection Corporation ................................................................................................... 11 

Prepared statement .......................................................................................... 55 

Biographical sketch of nominee ....................................................................... 58 

Response to written questions of: 

Senator Dodd ............................................................................................. 67 


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(1) 

NOMINATIONS OF: 

BIJAN RAFIEKIAN, OF CALIFORNIA, TO BE A MEMBER 

OF THE BOARD OF DIRECTORS, 

EXPORT-IMPORT BANK OF THE UNITED STATES; 

DIANE FARRELL, OF CONNECTICUT, 

TO BE A MEMBER OF THE BOARD OF DIRECTORS, 

EXPORT-IMPORT BANK OF THE UNITED STATES; 

WILLIAM S. JASIEN, OF VIRGINIA, 

TO BE A DIRECTOR, 

SECURITIES INVESTOR PROTECTION CORPORATION; 

MARK S. SHELTON, OF NEW JERSEY, 

TO BE A DIRECTOR, 

SECURITIES INVESTOR PROTECTION CORPORATION; 

WILLIAM H. HEYMAN, OF NEW YORK, 

TO BE A DIRECTOR, 

SECURITIES INVESTOR PROTECTION CORPORATION 

WEDNESDAY, JULY 11, 2007 

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Committee met at 9:05 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Christopher J. Dodd (Chairman of the 

Committee) presiding. 

OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD 

Chairman DODD. The Committee will come to order. 

Good morning everyone and welcome to the Banking Committee. 

I am going to ask the hearing will come to order. 

I expect to maybe have one or two other members show up here 

but I want to welcome you all here this morning and offer my congratulations to you on your nominations. 

We are meeting in open session to conduct a nomination hearing 

that is a crucial part of this Committee’s oversight responsibilities 

and I would like to thank our witnesses for their willingness to appear before the Committee, for their service, and again congratulations on your nomination. 

On our panel we have two nominees for the Board of Directors 

at the Export-Import Bank of the United States and three nomiVerDate Nov 24 2008 01:13 Dec 18, 2009 Jkt 050323 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A323.XXX A323

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nees for the Board of Securities Investor Protection Corporation, 

SIPC. 

The Eximbank is the official export credit agency of the United 

States. Eximbank’s mission is to assist U.S. companies large and 

small and financing the export of U.S. goods and services to international markets. 

Our first witness is Bijan Rafiekian. Did I pronounce that correctly? 

Mr. RAFIEKIAN. Yes, sir. 

Chairman DODD. Mr. Rafiekian has been serving on the Board 

of Directors at the Eximbank since October of last year. He has testified previously before this Committee and has been renominated 

for a new 4-year term expiring in the year 2011. 

Mr. Rafiekian was formerly the Director of the State of California Office of Foreign Investment, which was that State’s leading 

office for attraction, retention, and expansion of foreign direct investment. He also previously served on the Board of the California 

Housing Finance Authority and as President of Globetel, an international telecommunications company based in San Diego. In addition, he was the principal in Global Capital Markets, Inc. 

Our next nominee for a 4-year term as Director of the Eximbank 

is Diane Farrell. I have known Diane for many years and I have 

been impressed, obviously, with her intelligence, her tenacity and 

her overriding commitment on behalf of the people that she has 

represented in Connecticut and the work she has done. 

As a former First Selectwoman of Westport, Connecticut, Diane 

Farrell displayed her leadership skills by working with business, 

government, and community leaders to solve a variety of problems. 

After being elected with over 70 percent of the vote—a stunning 

number, I might add, an enviable number for all of us in public 

life—Diane began finding more solutions to local issues by actively 

reaching out and working cooperatively with business leaders and 

through organizations like the Business Council and local Chamber 

of Commerce. Additionally, she was able to hone her business and 

managerial skills by serving on Westport’s Board of Finance. 

Her financial experience and desire to work in partnership with 

businesses both large and small led her to work as Chair of the 

Fairfield County Metropolitan Organization, as well as a leadership 

role in the Connecticut Conference of Municipalities. 

Like Mr. Rafiekian, her experience and desire to work on a national level with U.S. exporters as they pursue export opportunities 

is commendable and exactly what we need on the Board of Directors for the Export-Import Bank. I look forward to hearing from her 

testimony this morning, as well. 

Next we have the three nominees to serve as Directors of the 

Board of the Securities Investor Protection Corporation, better 

known as SIPC. SIPC was created by Congress in 1970 to give investors certain protections against losses resulting from the failure 

of their stock brokerage firms. SIPC requires broker-dealers to contribute to the SIPC fund and helps investors whose securities and 

cash are held by failed brokers to recover those assets. 

In order to maintain investor confidence in the securities markets and their brokerage firms, SIPC must operate in a manner 

that is effective, efficient and fair. This involves maintaining fund 


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balances that are adequate and liquid so that SIPC can pay out investor claims equitably and quickly. This requires appropriate corporate governance practices so that SIPC has adequate internal financial controls, transparent contracting protocols and appropriate 

executive compensation practices, and its board members avoid 

conflicts of interest. 

It also requires educating investors broadly about the role of 

SIPC and the extent of SIPC’s coverage so they will know what it 

will and will not cover. In addition, it entails working cooperatively 

with the Securities and Exchange Commission and with the selfregulatory organizations. 

The first of the nominees is Mark Shelton, who has been nominated for a term expiring December 31, 2008. Mr. Shelton is General Counsel for UBS Financial Services, a securities firm where he 

had worked since 2003. Previously he was a partner in the firm of 

Wilmer, Cutler and Pickering where he worked from 1997 to 2003 

and taught as an adjunct professor of law at Georgetown University Law Center. 

From 1995 to 1996 he served as Deputy Counsel, General Counsel, for the Dole-Kemp 1996 Presidential campaign. Prior to this 

position he served at the Securities and Exchange Commission and 

clerked for the U.S. Court of Appeals for the Eighth Circuit. 

Next on our panel we have William Stephen Jasien, who has 

been nominated for the term expiring December 31, 2009. Mr. 

Jasien is a Senior Vice President for the Distribution and Administration of Public Pension Plans at ING Financial Advisors, a 

broker-dealer where he has worked since 1993. 

Previously, from 1991 to 1993, he served in the United States 

Department of Treasury as Deputy Assistant Secretary, Budget 

Procurement and Human Resource Administration. From 1989 to 

1991 Mr. Jasien served at the Resolution Trust Corporation Oversight Board as a Director of Public and Industry Affairs. He also 

worked as Deputy Campaign Controller for the George Bush for 

President Campaign from 1987 to 1989 and for the United States 

Senator Paula Hawkins from 1985 to 1987. 

Our final nominee for the Board is William Heyman who has 

been nominated for two terms, the first expiring at the end of this 

year and the second expiring on December 31, 2010. 

Mr. Heyman is currently serving as Vice Chairman and Chief Investment Officer for the Travelers Companies, Inc. From 1995 to 

2002 he worked for Citigroup and its predecessor, Travelers Group, 

Inc., in various positions including Chairman of Citigroup Investments. Prior to that position he worked from 1993 to 1995 for 

Salomon Brothers, Inc. as Managing Director and head of the Private Investment Department. From 1991 to 1993 at the Securities 

and Exchange Commission, as Director of the Division of Market 

Regulation. 

He has also worked for brokerage firms and private law firms. 

He’s a member of the Board of Governors for the National Association of Securities Dealers. Mr. Heyman, I thank you for being here. 

I look forward to the testimony of all of our witnesses here this 

morning. 

Let me, first of all, do what we normally do here. Let me ask 

each of you if you have family here in the room, and I know some 


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of you do. And why don’t you recognize them and introduce them 

for the purposes of the record so they can actually say they were 

here. So some day when they say you did not show up for my confirmation, you can say in the record I was here. Mr. Rafiekian. 

Mr. RAFIEKIAN. Thank you, Mr. Chairman. 

I have my wife of 25 years, Gissou, who is a banker. Also here 

with me, my daughter Christine, who is a sophomore at American 

University studying international studies and law and society, and 

my daughter Alexandria, who will be a freshman at Winston 

Churchill High School. 

Chairman DODD. Terrific. That is very good. Thank you. Thanks 

for joining us this morning. 

Diane. 

Ms. FARRELL. Mr. Chairman, I am most honored to introduce to 

you my husband, some would say long-suffering, of 29 years, Win 

Farrell, who has really and truly made all of this possible for me. 

And I am going to publicly say thank you, for the record. 

Chairman DODD. Thank you very much. Win, nice to see you. 

Good to have you with us this morning. 

Mr. Jasien. 

Mr. JASIEN. Mr. Chairman, I am pleased to introduce my family: 

my wife Kathy, our daughter Ally, our son Hunter, and other son 

Chapman. Our oldest son could not be here. He is off at wrestling 

camp. 

Chairman DODD. Very good. We will note where he is in the 

record. 

Mr. JASIEN. And they are thrilled to be here. 

Chairman DODD. Thanks for coming here this morning. 

Mr. Shelton. 

Mr. SHELTON. Mr. Chairman, my family could not be here today 

but I still would like to recognize my wife April and my sons, Spencer and Hewitt. 

Chairman DODD. Absolutely, very good. 

Mr. Heyman. 

Mr. HEYMAN. My family could not be here either, but I would 

like to recognize my wife Wendy and my stepson Jack. 

Chairman DODD. Terrific, very, very good. 

Since we are recognizing family, I should recognize my wife is 

here, Jackie. For the record, for truth in advertising here, Jackie 

was a member of the Board and Vice Chairman of the Board at the 

Eximbank for a number of years and Chief of Staff down there, as 

well. She has a strong interest and knows Diane well, obviously. 

But in addition to that, she has some pretty good knowledge about 

Eximbank and wanted to come by this morning and hear the testimony. 

Let me turn to my colleague, Senator Allard. 

STATEMENT OF SENATOR WAYNE ALLARD 

Senator ALLARD. Mr. Chairman, I would like to thank you for 

convening the Banking Committee this morning to consider the 

pending nominations. I appreciate the opportunity to learn more 

about the nominees’ background as well as their intentions for 

their agencies. 


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First, I would like to welcome Mr. Rafiekian, who is nominated 

to the Board of the Export-Import Bank. It is important to have 

strong leadership in place and his prior leadership on the board, 

I think, will be very, very helpful. 

I would also like to welcome Diane Farrell. I am sure her background, especially in advertising, will be helpful to the Export-Import Bank. 

Next, I would like to welcome William Herbert Heyman, William 

Jasien, and Mark Shelton, all of whom are nominated to the Board 

of Directors of the Securities Investor Protection Corporation. 

The Securities Investor Protection Corporation has recovered $15.7 billion in assets for 626,000 investors when brokerage firms 

closed to bankruptcy or other financial problems. SIPC estimates 

that no fewer than 99 percent of persons who are eligible have 

been made whole in the failed brokerage firm cases it has handled 

to date. 

Our nominees bring outstanding private sector credentials to 

their positions and I appreciate their willingness to enter or remain 

in public service. I encouraged them to remain focused on results 

and outcomes rather than processes. One of the best ways to do 

this is through familiarity and compliance with the Government 

Performance and Results Act and the Administration’s PART analysis. 

Thank you for being here today and I look forward to your testimony. 

Thank you, Mr. Chairman. 

Chairman DODD. With that let me, if I can, ask our witnesses to 

please stand and raise your right hand, if you would. 

Do you swear or affirm that the testimony that you are about to 

give is the truth, the whole truth, and nothing but the truth, so 

help you God? 

Mr. RAFIEKIAN. I do. 

Ms. FARRELL. I do. 

Mr. HEYMAN. I do. 

Mr. JASIEN. I do. 

Mr. SHELTON. I do. 

Chairman DODD. And do you agree to appear and testify before 

any duly constituted Committee of the United States? 

Mr. RAFIEKIAN. I do. 

Ms. FARRELL. I do. 

Mr. HEYMAN. I do. 

Mr. JASIEN. I do. 

Mr. SHELTON. I do. 

Chairman DODD. I thank you very much. Please be seated. 

Before you begin, let me assure all of you here that your written 

testimony will be included in the record in full, and any other supporting documents you may want the Committee to have for purposes of the nomination. 

I say that and also, as my colleague knows, we will leave the 

record open here for any statements other members of the Committee want to make regarding the nominees or any questions they 

may have for you, which I will ask that they produce promptly so 

that you can respond promptly so that we can try and get this confirmation done, barring any other unforeseen circumstance, before 


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the August break. That is my attention anyway, to try and get you 

out of here. We have got some markups for this Committee planned 

for this month here and I would like to be able to include your 

nominations as part of that. 

So again, as custom would have it, members are not all here. 

They may want some questions to be raised with you and I want 

to give them the opportunity to do that. But I will insist that they 

do it promptly and that you respond promptly, as well. Any delay 

in that obviously runs the risk of delaying your nomination going 

forward. So we will try and make that as quick as we can. 

With that, let me begin with you, Mr. Rafiekian, and any opening statement you have. I will just work down the line here with 

you and then I have some questions for you. 

STATEMENT OF BIJAN RAFIEKIAN, MEMBER OF THE BOARD 

OF DIRECTORS-DESIGNATE, EXPORT-IMPORT BANK OF THE 

UNITED STATES 

Mr. RAFIEKIAN. Thank you, Chairman Dodd, Senator Allard. 

I am most grateful to President Bush for renominating me and 

granting me the greatest honor of my life, with the opportunity to 

serve my country, the United States of America, as a member of 

the Board of Directors of the Export-Import Bank of the United 

States. 

With 9 months of service in this capacity, I have developed an 

understanding of the Bank’s operations and mission. I have been 

fortunate to work closely with the most talented dedicated professional staff at the Eximbank. I would like to express my appreciation for their hard work in support of American exporters and their 

contribution to maintaining and expanding U.S. jobs through exports. 

Serving together with my distinguished colleagues on the Board 

of Directors in carrying out the policies articulated in by the Congress of the United States has been a privilege and a point of personal pride for me. 

Mr. Chairman, when I came before this honorable committee in 

September of 2006, I testified that if confirmed I would do my very 

best to carry out the prudential and fiduciary responsibilities of the 

office I was nominated to serve. It is with humility and a great 

sense of appreciation for the trust and confidence you placed in me, 

and it is with personal pride that I am here today to present to you 

that I have kept my promise in my capacity as a member of the 

Board of Directors of Eximbank. I applied my experience with diligence to make certain that as we eagerly and aggressively fulfill 

our mission to support American exporters and U.S. jobs, the interest of U.S. taxpayers are protected. 

In addition to carrying out the duties of the office I serve on the 

Board of Directors, I have also served as the Chairman of the Audit 

Committee of the Board, together with my colleagues, members of 

the Audit Committee, overseeing the work of independent internal 

and external auditors. I have made certain that we provide continuous examination and scrutiny of the adequacy of safeguards and 

systems of internal control to ensure the continuity of safety and 

soundness of the operation of the Bank in an independent fashion. 


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In addition to my work on the Board of Directors and my responsibility as Chairman of the Audit Committee, I also serve as an exofficio member of the Credit Committee of the Bank, representing 

the Board. My work on this Committee has afforded me the opportunity to observe the competence and dedication of professional 

staff members and the opportunity to apply my experience and contribute to work of this Committee. 

I have worked closely with our Small Business Division to expand our reach and support for small businesses and have actively 

participated in expanding our city state partnerships in support of 

small business. I have also worked with my colleagues at the Department of Commerce and Trade Development Agency to do more 

for the services sector within the frame of our charter and authorizations. 

Mr. Chairman, Senator Allard, I am here today to testify that if 

confirmed I shall continue my work in carrying out the responsibilities of the office I am designated to serve with the same degree 

of diligence, care, and dedication and with the same vigor as I have 

in the past 9 months. 

I am here to testify that if confirmed I shall uphold the highest 

standards of integrity and prudence consistent with the honor and 

responsibility of the office I am designated to serve. I am grateful 

to you, sir, for giving me this great honor to come before you today. 

In respect for your time, I keep my remarks brief and I welcome 

the opportunity to answer your questions. Thank you. 

Chairman DODD. Thank you very much, Mr. Rafiekian. 

Ms. Farrell. 

STATEMENT OF DIANE G. FARRELL, MEMBER OF THE BOARD 

OF DIRECTORS-DESIGNATE, EXPORT-IMPORT BANK OF THE 

UNITED STATES 

Ms. FARRELL. Mr. Chairman, Mr. Allard, and individuals here to 

witness the hearing this morning, it is a great honor to appear before you as a nominee to the Board of the Export-Import Bank of 

the United States. 

I am grateful to President Bush for this nomination, to Senator 

Harry Reid for his support, and most especially to my great friend, 

Chairman Dodd, for convening this hearing. Chris, you have represented our State and led the Nation on so many issues vital to 

our citizenry. 

It is equally an honor to have my friend, Jackie Clegg Dodd, here 

in attendance. As former Vice Chair of the Export-Import Bank, 

her knowledge of international trade and export finance has been 

an invaluable resource. 

As important as all who are in this room are important, the most 

to me is my husband of 25 years whom I have introduced. I should 

also say, since everyone has mentioned their children and I do not 

want to catch grief at home, we do miss our two daughters, Hillary 

and Margaret. I have to tell you that without my family’s support 

this would never have happened and I cannot say thank you 

enough. 

When the opportunity to serve as Director of the Export-Import 

Bank was first raised, I was instantly excited. The principle of 

partnership and a personal philosophy that government should act 


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in an assisting role to the marketplace whenever possible helped to 

guide my years as the chief elected official of my community. In 8 

years in office, I worked closely in a supportive role with commercial interests of all sizes. 

Fairfield County, Connecticut is home to numerous Fortune 500 

companies as well as small business. The Business Council of Fairfield County and the Chambers of Commerce in the cities and 

towns in our area are proactive organizations that eagerly reached 

out to area elected officials as a means to multidimensionally 

strengthen the region. Cooperative efforts including transportation, 

housing, homeland security, and infrastructure improvement are 

some of the more prominent initiatives that I was involved in during my tenure in office. 

Should I be confirmed to the Board of Directors at the Eximbank, 

I would intend to carry forward the public-private partnership philosophy as part of the Eximbank’s leadership. 

I had the opportunity to attend the Eximbank’s annual meeting 

this past April and was very impressed to see the cooperative spirit 

between government and the private sector. Having come from the 

account management side of advertising prior to my years in public 

service, I was pleased to see such strong efforts on behalf of the 

Bank to actively market its products to lending institutions and 

their clients. 

I would expect to employ the skills I honed in the advertising industry as a Director of the Bank on behalf of the Eximbank where 

I can be helpful. Acknowledging the emphasis that Congress has 

asked the Eximbank to place on small business support, I would 

hope to play a leadership role in that effort. 

Having managed a municipality for 8 years well suits me to understand the complexities and unique nature of government institutions. Prior to becoming the First Selectwoman, I served on the 

Board of Finance. These two experiences in combination give me 

both the perspectives of management and oversight. 

As one of the non-managing members of the Board, I will be 

serving as part of the Audit Committee. This is a very familiar role 

for me, as it was a function of our Board of Finance. I take special 

note the Bank will, for the first time—thank you, Senator—have an 

inspector general. Independent internal audit functions can be extremely helpful to management and I would lend my support to assist and support the additional oversight sought by Congress. 

What perhaps attracts me most to the Eximbank is its mission 

to promote U.S. commercial interests in the global marketplace 

with the priority of retaining jobs here at home. The issue of losing 

jobs overseas is ever present in the minds of our country’s citizens 

and leadership. To be able to actively help companies compete to 

retain jobs and promote new industries will be a most rewarding 

and satisfying endeavor. 

There is a wonderful motto that I learned in Girl Scouts many 

years ago: ‘‘A Girl Scout leaves a place better than she found it.’’ 

It may sound a bit too folksy here in such August surroundings but 

it speaks volumes to the kind of person I have always tried to be— 

to make a difference. 

Should I be confirmed, I look forward to putting my experience, 

training, and energy to work on behalf of the Export-Import Bank. 


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I am eager to make a positive contribution. It would be a great 

honor to serve my country in this capacity. 

Mr. Chairman, Mr. Allard, thank you again for the opportunity 

to seek your support of my nomination. I look forward to any questions you may have for me. 

Thank you. 

Chairman DODD. Thank you very much. Mr. Jasien. 

STATEMENT OF WILLIAM S. JASIEN, DIRECTOR-DESIGNATE, 

SECURITIES INVESTOR PROTECTION CORPORATION 

Mr. JASIEN. Good morning, Mr. Chairman, Senator Allard, my 

name is Bill Jasien and I am honored to be nominated by President 

Bush to serve on the SIPC Board of Directors. 

I want to re-emphasize how pleased I am to have my family here 

with me today supporting me for this great honor. 

I believe I am well-qualified to serve on the SIPC Board based 

on my financial expertise and background in the securities and 

wealth management industries. I am a Certified Retirement Plan 

Administrator and currently head of Business Development for 

ING Financial Advisors. This division of ING is focused on the defined contribution retirement planning marketplace. 

I take great pride in my affiliation with ING and its global focus 

on serving the needs of savers and investors through our banking, 

investments, insurance and asset management business lines. 

Beyond ING, I am active in various charitable organizations, including INFRE, the International Foundation for Investor Education, the Washington Chapter of the American Red Cross, and 

the United States State Department Overseas Scholastic Advisory 

Council. 

I am the former Vice Rector of the Board for my alma mater, 

James Madison University, and have participated in a variety of 

private sector boards and commissions throughout my career. 

I am honored to have served in various capacities in the Government. Here as a staffer on Capitol Hill, as Director of Public Affairs 

for the Oversight Board of the Resolution Trust Corporation, and 

as Deputy Assistant Secretary at the U.S. Department of Treasury. 

As a registered NASD principal with a SIPC member brokerdealer, I very much appreciate the important role SIPC plays in 

the securities industry. Although the securities industry is quite 

complex, it can be distilled down to a few key principles: education, 

risk, and confidence. Throughout its history, SIPC has had a meaningful influence on each of these components, Components which 

ensure market transparency, investor protection, and ultimately a 

thriving capital markets industry. 

SIPC’s efforts in educating and protecting the rights of investors 

have resulted in an unparalleled record of success. The work of 

SIPC alongside of that of the SEC, self-regulatory organizations, 

and State regulators is critical in maintaining investor confidence. 

As you know, SIPC was established back in 1970 to help restore 

public confidence in the securities markets. This was a turbulent 

time in our financial history with hundreds of broker-dealers merging or going out of business. Since its formation it has effectively 

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age firms. Over this period, they have protected no fewer than 99 

percent of eligible persons and have advanced $505 million in order 

to recover $15.7 billion for an estimated 626,000 investors. 

In conclusion, the brokerage business is a highly competitive environment with increasingly tough regulatory requirements. These 

dynamics will require firms to invest in their infrastructure in 

order to realize required efficiencies and a sound operating model. 

Should I be fortunate enough to be confirmed by the Senate, I 

am committed to diligently working with this Committee, the 

Board, and the professional staff at SIPC to closely monitor and 

anticipate the challenges in the securities industry and secure sufficient but responsible funding to perpetuate the important mission 

of the corporation. There should be no question in investors’ minds 

that SIPC is well run, operating with a stable financial structure, 

and prepared to execute on its legislative mandates. 

Mr. Chairman and Senator Allard, that concludes my remarks 

and I look forward to answering any questions you may have. 

Thank you for your attention and your consideration. 

Chairman DODD. Thank you very much. Mr. Shelton. 

STATEMENT OF MARK S. SHELTON, DIRECTOR-DESIGNATE, 

SECURITIES INVESTOR PROTECTION CORPORATION 

Mr. SHELTON. Good morning, Mr. Chairman, Senator Allard. 

I am honored to come before you today to seek your consent as 

the President’s nominee to serve as a Director of the Securities Investor Protection Corporation. In private practice at Wilmer, Cutler 

and Pickering, I provided legal advice to broker-dealers regarding 

compliance with financial responsible rules designed to prevent 

customer securities and cash balances from being put at risk if a 

broker-dealer were to fail. 

I presently serve as General Counsel of the U.S. Wealth Management Business for UBS. UBS is a leading global wealth manager, 

top tier investment bank, and one of the largest global asset managers. Wealth Management U.S. provides brokerage, advisory, 

banking, and trust services to its clients. 

At UBS, I have had the opportunity to help investors understand 

how our securities markets work and to prepare employees to 

speak about the rights and protections available to investors when 

they advise clients. I believe my background and the relevant legal 

framework and focus on investor education and protection will be 

helpful if I am confirmed. 

SIPC plays an important role for investors. Every investor should 

understand that rewards from investing in securities are only possible with market risk. But investors should be able to expect that 

their funds and securities will be there if their brokerage firm fails. 

SIPC gives investors confidence that if a firm were to fail and securities were stolen, misplaced, or put at risk for other reasons, help 

is available to them. 

If confirmed as a Director of SIPC, I promise the President, this 

Committee, and the investing public that I will use my knowledge, 

experience, and skills combined with commitment and enthusiasm 

to maintain and strengthen SIPC’s effectiveness for investors. 

Thank you for your time and consideration and I will be happy 

to answer any questions you may have. 


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Chairman DODD. Thanks, Mr. Shelton. Mr. Heyman. 

STATEMENT OF WILLIAM HERBERT HEYMAN, DIRECTOR-DESIGNATE, SECURITIES INVESTOR PROTECTION CORPORATION 

Mr. HEYMAN. Good morning, Mr. Chairman, Senator Allard. My 

name is William Heyman and I am Vice Chairman and Chief Investment Officer of the Travelers Companies, a major U.S. property 

and casualty insurer. I am also a member of the Board of Governors and of the Executive Committee of the NASD. 

I am honored to have been nominated by President Bush to be 

a Director of the Securities Investor Protection Corporation. 

From 1991 to 1993, when I served as Director of the Division of 

Market Regulation of the Securities and Exchange Commission, I 

was the SEC’s observer on the SIPC Board. So I am especially 

pleased at the prospect of renewing that association. 

Since the creation of SIPC in 1970, industry consolidation and 

the advancement of back-office technology have largely eliminated 

the paperwork problems from which SIPC was born, with the result that some very large brokerage firms have failed without requiring SIPC involvement. The incidence of broker-dealer failures 

has been further limited by vigorous enforcement of two SEC rules. 

The Net Capital Rule provides early warnings of broker-dealers’ financial distress. The Customer Protection Rule requires firms to 

reduce the possession and control fully paid or excess margin customer securities and to segregate cash in a reserve account roughly 

equal to net amount owed customers. 

The number of ongoing SEC liquidation proceedings is now at a 

record low of 21 firms and the customers in those proceedings have, 

with very few exceptions, been satisfied. Most of the work in open 

cases relates to recovery of residual assets of failed firms. 

Still, small numbers of broker-dealers regularly fail under conditions requiring SIPC involvement. These failures generally result 

not from adverse market conditions but rather from failure to operate competently or honestly. About half are so-called introducing 

firms, which should not have been handling customer assets in the 

first place. 

So SIPC still has an important role as a limited safety net for 

the individual investor whose protection is at the heart of our securities laws. If confirmed as a Director, I pledged to use my experience in both the securities and insurance industries to ensure that 

SIPC continues to meet its responsibilities as expeditiously, professionally, and fairly as possible and without recourse to the taxpayers. 

I thank you for your consideration and I will be pleased to answer any questions. 

Chairman DODD. Thank you very much. Thank all of you for 

that. Congratulations to all of you, again, for your nomination. I 

will just take a couple of minutes and then I will turn to my colleague for any questions he may have as well here. 

Some of these are just pretty straightforward questions. 

Ms. Farrell, let me just begin with you, and I thank you for your 

opening comments and your focus of attention here. 


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One of the key things over the years in my experience here, beginning when I first arrived in the Senate, is that the Export-Import Bank was almost the exclusive domain of several large corporations that used the Export-Import Bank to expand their opportunities overseas. 

Over the years, under various administrations and various directors, the Export-Import Bank has expanded that to include a lot of 

smaller businesses, as well. And I think we have all benefited from 

that. 

In fact, I think it has become the backbone of our economy. Obviously, in many ways, small businesses is most important, 80 percent I think is the number of their jobs are small businesses. I 

wonder if you might just share with us some thoughts you have on 

what role you can play in maintaining this focus on smaller businesses and any ideas you might have to share with us about how 

you expand those? 

Ms. FARRELL. I think that is a wonderful question and I actually 

look at my qualifications as being particularly strong in that area, 

simply because having worked at the local level these have been 

the individuals that I have been worrying about, caring for, and advocating on behalf of at every level, whether it is locally, whether 

it has been regionally, or statewide or federally. 

As I mentioned in my opening remarks, I was very pleased to see 

the marketing efforts that were taking place, as evidenced by the 

Bank’s annual meeting back in April. 

I was also very pleased to read in the annual report this year 

that there has been a greater effort at improving the Bank’s online 

capabilities, because there is no question in this world of Internet 

immediacy, the more the Bank can do to streamline the process 

and make it available online, it is going to be that much easier for 

smaller groups who just do not have staff resources or have the 

ability to have a direct contact with the Bank to access. 

One of the other things that I like about the whole notion of focusing on small business, and I do think it was appropriate that 

in the reauthorization there were certain specific levels set by the 

Congress in order to assure that it remains a focus of the Bank, 

including requiring that there be a separate division that reports 

directly to the Chairman, is to make sure that we are providing the 

kinds of tools that are easy to understand and that we are reaching 

out. 

So toward that end, I certainly intend to provide the kind of 

oversight but also the kind of advice that I can give in terms of 

how I think we can best communicate and reach out. 

So I am very excited about that. And you are 100 percent correct, 

when you look a growth factors in terms of U.S. business, small 

business is extremely important, especially as it relates to womenowned businesses and minority business, as well. 

Chairman DODD. Good. I look forward to working with you on 

that. 

Mr. Rafiekian let me ask you, you have been at the Bank obviously and an ongoing issue is always how we compete more effectively in these emerging markets. And it is a challenge all the time. 

Let me raise, if I can, a couple of questions with you in the context 

of that and ask you to comment on how you think we can more agVerDate Nov 24 2008 01:13 Dec 18, 2009 Jkt 050323 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\A323.XXX A323

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gressively level the playing field that we have to compete in in 

these emerging markets. 

I particularly want to raise the issue of China, if I can, with you 

here. The Bank focuses obviously on doing business in emerging 

markets, including China. The Banking Committee has conducted, 

this Committee, several hearings on our trade policy with China. 

Senator Shelby and I have introduced some legislation on the 

issue pertaining to China’s currency manipulation and denial of access to its markets by U.S. financial service firms. I am sure you 

are aware of all of this. What do you think the Eximbank can do 

to expand opportunities for U.S. exporters in China? 

Mr. RAFIEKIAN. Thank you, Mr. Chairman. That is a very important question, sir, and I certainly understand the interest and the 

focus on emerging markets and the significance of emerging markets. 

When it comes to the particular market of China there are realities that we must consider in providing financing for exporters to 

China. We had the Chairman of China Eximbank as a speaker at 

our annual conference to directly learn the views and he had an 

opportunity, Chairman Li, to express his views. 

As we look at China, we see the opportunities for American exporters there. We also see the challenges that we might consider 

in making these difficult decisions. At all times the portion of the 

responsibility that deals with the financing part, which is really 

our mission, is going to remain our focus. 

I would like to borrow a few words from my good colleague, who 

is the Chairman of the Bank, that said we do whatever we can in 

what makes the most sense to help the exporters in all markets. 

We are active in 91 markets and our portfolio reflects 150 countries, and we continue that support for the exporters with an eye 

of caution on what is also taxpayers’ interest. 

Chairman DODD. Let me, in a related matter, you are familiar 

with the tied aid issue. I know my colleague from Colorado does as 

well here, the question. We have a war chest, I want to call it that, 

I guess, at the Bank here to provide an opportunity for the United 

States to compete. A number of nations who compete with us in 

these markets, of course, provide grant assistance for various 

projects. And we have allowed, at least when that occurs, for us to 

be able to compete on a level playing field. 

I gather it has been some time since that war chest has been 

used at all, the tied aid program. I wonder if you might share with 

us what is your knowledge about that? Is there any reason why 

there is a reluctance and hesitancy? 

Obviously, we would all like—we would like the playing field to 

be leveled to the point where you did not have to have grant aid 

coming in. But as you and I both know, there are nations out there 

who play by a different set of rules when it comes to competing in 

these emerging markets. 

So the tied aid idea was to give us the opportunity to respond 

when those nations used grant aid as a way of winning some of 

these contracts over our businesses who had a vested interest obviously in winning those contracts. 


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Why has there been such a reluctance to use the war chest? I 

gather it has been some time since we used the tied aid package 

to assist U.S. businesses. 

Mr. RAFIEKIAN. Thank you, Mr. Chairman. That is a very important question. When it comes to tied aid among the difficult situations that we face, the decisions that we have to make as members 

of the Board of Directors, tied aid questions are amongst those 

questions. 

I must express to you, sir, that my first sensitivity is to the exporter. I see my role as being assigned the duty of supporting the 

exporter in any way we can in what makes the most sense. And 

when it comes to tied aid, my sympathies are with the exporter. 

I would like to do whatever we can and I would like to see whatever Eximbank can to make that export possible so American jobs 

are protected and American jobs are maintained. 

Having said that, we work very close with the Department of 

Treasury on this issue to make sure that within all the rules within OECD, which we do have a membership, and there are product 

rules, there are country rules, there are concessionality rules that 

have to be followed. This is a very important issue when it comes 

to tied aid, as you said, in leveling the playing field not all players 

in this marketplace of global market play by the rules. We realize 

that outside of the sandbox that we operate in there is a world and 

there are those who have other systems that do not always play by 

the rules. 

Chairman DODD. Do you know when the last time was we used 

the war chest? Do you have any idea when the last time was? 

Mr. RAFIEKIAN. I do not have that information, Mr. Chairman, 

right now but I am aware that the tied aid is not used regularly. 

Chairman DODD. Would you let the Committee know? For my 

purpose, I would like to know when the last time it was used. It 

would be helpful to us to get some idea. 

And if there is some reluctance beyond the hesitancy that we all 

have, but beyond that, I would like to know whether or not there 

is something broader going on in terms of the use of that fund, if 

you could do that for me. 

Mr. RAFIEKIAN. Mr. Chairman, if I may, I will return to your office with that information. I will be happy to get that detail. 

Chairman DODD. I appreciate that. 

Let me turn to my colleague and then I will have a few questions 

for our SIPC nominees. 

Senator ALLARD. Thank you, Mr. Chairman. I just have a few 

questions myself that I want to follow up with. 

Both Mr. Rafiekian and Ms. Farrell, I want to thank you for 

wanting to serve on the Export-Import Bank. We have worked hard 

to try and get an inspector general in place and I would like to 

hear both your comments as to how you feel you may be able to 

work with the new inspector general. I know that Ms. Farrell made 

some comments in that regard in her opening statement. But particularly I would like to hear what you have to say, Mr. Rafiekian. 

Mr. RAFIEKIAN. Thank you, Senator Allard. 

Senator, when I came before you in September 2006, I particularly appreciated the emphasis that was placed on the presence of 

an inspector general at the agency I serve. I am very pleased, sir, 


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and I would like to thank you for your efforts and now we have 

an inspector general. And I look forward to the arrival of the inspector general. I look forward to working closely with the inspector general. 

I have had a brief conversation with him and as it turns out, 

Senator Allard, upon arrival I was asked to take on the responsibility to work on the Audit Committee as the Chairman of the 

Audit Committee. We have been, together with my colleagues on 

this Committee, very diligent on the issues that I know are very 

important to you, sir, and to the members of this Committee. 

I value very much the presence of the inspector general at the 

agency and I can speak on behalf of my colleagues on the Audit 

Committee and my colleagues on the Board of Directors. They are 

all welcoming this opportunity, sir, and thank you for your efforts 

in helping to get the inspector general to our agency. 

Senator ALLARD. Ms. Farrell. 

Ms. FARRELL. I am a big believer in internal audits. When I was 

the First Selectwoman of Westport we were constantly auditing because we were doing major construction projects that required certain audits, et cetera. But there is no question that I think there 

is a benefit to management, even if they initially resist the idea 

that there is someone else looking over the shoulder. 

There is an assurance to the taxpayer that things are being properly monitored. I think there are benefits, as I mentioned, to management, because I think there are opportunities to point out, 

anomalies, difficulties, challenges, whatever they happen to be. 

And I think that the autonomy of the individual is very, very important. 

So I certainly supported, as I was reading through the legislation 

that was proposed and ultimately passed by the Congress, the notion of doing this. 

And as I mentioned, having been on both sides, having served on 

the Board of Finance and having to have the auditors directly report to me, but having that distance or independence from management. And then going over to management, I felt it was extremely 

important to have understood both sides. 

So I think in my role as a non-management member of the 

Board, I will have that sensitivity and empathy for both sides and 

certainly will be supportive of both. But in the name of the taxpayer, I think it was a very important step for the Congress to initiate and for the Bank to adopt. 

Senator ALLARD. The next question I just pose to the entire 

panel. The Congress, in the early 1994–1995 passed what we call 

the Government Performance and Results Act. The Clinton administration would begin to put that in place. The current administration, Bush, has continued to work it. He has called it the PART 

program. You can access the PART program on the Internet if you 

go to ExpectMore.gov. 

I will look at that from time to time to see how the various agencies are performing. They will rate the agencies according to 

whether they are effective, somewhat effective, ineffective or are 

not trying to measure—there is no result available. 

The Export-Import Bank is rated as moderately effective, so 

there is room for improvement. I suspect that the shortfall or most 


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of that moderately effective comes because they are looking at the 

small business goals. The Chairman mentioned the importance of 

small business, you have looked at that. 

So I just hope that you look at that very closely. And I just wonder if you have any ideas on what we can do on the small business 

side to make those goals achievable? 

Mr. RAFIEKIAN. Senator Allard, I recognize how important small 

businesses are. As a former small business owner, I know the challenges of a small business first-hand. I lived that life and tried to 

create jobs and tried to maintain them and explore new markets. 

It is very difficult for a small businessperson because the small 

businessperson is always faced with challenges of scarcity of resources in a different scale than I mentioned that would be comprehended by those with bigger resources. 

When it comes to small business authorizations, I am very 

pleased to report, as it has been reported before, that last year 26 

percent of our total authorizations were comprised of support for 

exporters and small businesses. When it came to numbers, 84 percent of our authorizations were dedicated to small business. 

Today the small business portfolio, under the direction of my colleague Director Conlin, who is also the Vice Chair of the Bank, is 

placing ever greater focus on this issue with reaching out to small 

businesses, conferences, seminars, working with other agencies to 

reach out. 

I am very pleased to say, Senator, that I got a chance to participate in support of the portfolio for small business and traveled to 

other States to meet with the small businesses to understand their 

needs and do what we can to expand our city-state partnerships, 

which plays an important role as a conduit to small businesses for 

us. And that emphasis and focus is continuing in importance. 

I would like to thank you and members of the Committee for focusing our attention on this issue. 

Senator ALLARD. Thank you. 

On the SIPC Corporation, your efforts and what you are doing 

is obviously very, very important. And when we looked at your listing on the PART, they do not list you. I think it will be just a matter of time before you will be reviewed by OMB. That is the independent agency that will review all these as to whether you are 

compliant. 

I assume that you are setting goals and objectives that are measurable and, if not, perhaps maybe encourage you to, as being responsible for the oversight on that, to encourage the Corporation to 

go ahead and set up measurable goals and objectives so you can determine how your outcomes are coming and everything else. 

You seem to have a very good record right now. I think that is 

good. That is perhaps maybe why somebody has not taken a closer 

look at you at this particular point. 

But I do think that, again, an important part of that is the relationship between the Securities Investors Protection Corporation 

and the State regulators. The States play a key role in regulation 

of the security brokers. 

I would like to have you talk a little bit about how you see that 

relationship and how you might build that into measurable goals 

and objectives. 


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Mr. HEYMAN. If you look at the menu of SIPC liquidations, many 

of the firms in recent years have been small firms with highly localized businesses. And the result is that, in many cases, they are 

repeat offenders with whom State regulators are much more familiar than SIPC could be. And SIPC has cooperated vigorously with 

State regulators in sorting out the firms, recovering customer assets and, in several cases, in State enforcement actions. 

My guess is going forward firms in liquidation will continue to 

be mostly firms of that character. 

Senator ALLARD. Any other comments? 

Mr. SHELTON. I think the State regulators play a very important 

role in prosecuting fraud. I think the Federal regulation is also 

very important for the books and records. And the cooperation with 

the SEC and with the SROs, to be able to have the books and 

records available to prove that customer funds and securities, 

where they are, and that they have not been used improperly in 

the business has been a very important part of SIPC’s protections. 

Senator ALLARD. Mr. Jasien. 

Mr. JASIEN. Senator, in your opening comments you talked about 

results over process and that is done through familiarity and compliance. I could not agree more. Also with your comments around 

setting milestones. 

As a board, I eagerly look forward to engaging with the issues 

of the Board, looking at some of the milestones that we could set 

for the Board. One of the things I am most impressed with in talking to staff at the SIPC is their focus on education. I think that 

is a gap right now in the general public’s understanding of SIPC 

and brokerage firms’ understanding the role of SIPC. So I look forward to working with the Board and this Committee in setting 

those milestones, particularly around education. 

Senator ALLARD. Mr. Chairman, my time has run over a little bit 

here by 3 minutes. I have one more question. 

Chairman DODD. Go ahead. 

Senator ALLARD. This has to do with the financial markets moving more to global issues and how they are faced. More and more 

of our national trade and everything is becoming more global. So 

I see that this is going to create some perhaps problems as the 

SIPC protection is concerned. 

Do you see SIPC protection—obviously, it does not apply in all 

cases—but do you believe that their mission and coverage should 

be re-examined in light of the expanded global nature of our financial markets? Or do you believe it is appropriate as they are currently structured? 

Mr. HEYMAN. I think that the mission of SIPC as it is currently 

defined is capable of being carried out in an environment in which 

the investments of U.S. individuals are increasingly global in nature. SIPC applies to identifiable customer assets in certificated 

form which can be U.S. or non-U.S. issuers. 

And I think the statute and the function of the organization are 

pretty robust. 

Senator ALLARD. Anyone want to add to that? Mr. Shelton or Mr. 

Jasien. 

Mr. SHELTON. I agree that so long as SIPC’s protections are limited to the assets that are readily identifiable that are with a U.S. 


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broker-dealer, I think that it is perfectly adequate and that it is not 

significant that some of those assets may be foreign assets. 

Mr. JASIEN. I agree that we certainly have the proper infrastructure today. But as I stated in my opening comments, I think it is 

important for us to make sure we monitor the outlook of the securities industry. There is certainly an exciting global evolution going 

on that we need to keep a very close eye on to see if that does impact funding needs for SIPC and other matters that are just not 

on the radar screen at this time. 

Senator ALLARD. Mr. Chairman, that concludes my questions. 

Thank you. 

Chairman DODD. Thank you very much, Senator. Let me thank 

you for the questions. 

I want to just raise a couple of issues if I can for you, and these 

are pretty fundamental but I would like to have you on record for 

them. 

This is a part-time appointment and I understand that all of you 

will probably be continuing in your day jobs here as you fulfill this 

obligation and responsibility. What I am asking is whether or not 

you have had discussions with SIPC on how to handle possible conflicts of interest in this regard that might arise because of your current employment or board memberships, including circumstances 

which may require your recusal because of those conflicts? 

Previous SIPC directors have signed conflict of interest agreements with SIPC. Is it your intention, I would ask all three of you, 

to do so as well? 

Mr. HEYMAN. Yes. 

Mr. JASIEN. Yes. 

Mr. SHELTON. Yes. 

Chairman DODD. You are all nodding affirmatively. 

A key issue to the effectiveness of SIPC is maintaining the adequacy of the SIPC fund reserve. As of December 31st, the reserves 

were almost $1.4 billion for securities firms that hold some $3 trillion in investor securities. Now that is a wide gap obviously here. 

But there have been very few failures in recent years. And even 

in those cases most of the securities and cash have been recovered. 

So while the gap seems large, I think many assume that that number has actually been fairly adequate given recent past history. But 

I think it is important to monitor the adequacy of SIPC fund reserves in light of the contemporary market conditions. 

From time to time SIPC has commissioned studies analyze the 

adequacy of the fund reserves. Let me ask all three of you whether 

or not you would undertake to have SIPC continue to review the 

adequacy of the fund periodically? I presume you would. 

Mr. HEYMAN. Yes. 

Mr. JASIEN. Yes. 

Mr. SHELTON. Yes. 

Chairman DODD. You are nodding affirmatively on that, as well. 

We have also—these internal financial controls at SIPC, there 

were some issues that GAO reported on. I do not know if you 

brought this up or not. But the GAO in 2004 raised some issues 

concerning SIPC and stated that the SEC found that SIPC had inadequate internal controls over the fees and expenses awarded to 

trustees and their counsel. 


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Now since then SIPC has done a good job of cleaning that up. 

I just point that out. That was the report back in 2004. four. 

As directors here, I am going to ask you whether or not you 

would seek to maintain strong internal financial controls at SIPC? 

Many organizations have voluntarily taken additional steps and I 

am asking you, if confirmed, would you consider whether it would 

be beneficial to have SIPC management annually prepare a report 

assessing the effectiveness of SIPC’s internal control procedures 

and to have the auditor attest to the adequacy of internal controls 

and to publish those in SIPC’s annual report? Would you be willing 

to do that? 

Mr. HEYMAN. Yes. 

Mr. JASIEN. Yes. 

Mr. SHELTON. Yes. 

Chairman DODD. Thanks very much for that. 

We have raised the education issue here, as well. And again, I 

would just take it from your answers that you support the importance to inform investors about the scope of SIPC coverage and enforcement efforts to protect investors from misleading advertisements. There have been several here. 

I think I have a pretty good idea in here what qualifies as the 

kind of thing you want to avoid and things that do not fall under 

your jurisdiction. Making a bad bet is making a bad bet. That is 

not what we are talking about here. We are talking about the kind 

of activities that can draw people in under false pretenses. 

So I presume you will continue to work at that and look at that, 

as well? 

Mr. HEYMAN. Yes. 

Mr. JASIEN. Certainly. 

Mr. SHELTON. Yes. 

Chairman DODD. Thank you very much. 

And again, I will heave the record open for a few days here so 

our colleagues may have some additional questions. But again, I 

congratulate all of you on your nominations. It is very nice to have 

your families here with us on a day like this, as well. 

These are high honors to receive a Presidential nomination and 

confirmation by the Senate. And again, we will try and get this 

done as quickly as we can for you. My hope is to have you confirmed by—I think in your case, Mr. Rafiekian, you have got an 

August 1—— 

Mr. RAFIEKIAN. Mr. Chairman, my commission expires on July 

20th. 

Chairman DODD. July 20. We have got to get moving here so we 

do not have to have you show up as a volunteer down there at the 

Bank. So we will try and move quickly on this to get it done. 

But again, I thank you for being here. I thank you for your comments. We will leave the record open for, I think, a couple of days 

anyway, two or 3 days here for any additional questions that will 

come in. 

The Committee stands adjourned. 

[Whereupon, at 10:01 a.m., the hearing was adjourned.] 

[Prepared statements, biographical sketches of the nominee, and 

responses to written questions supplied for the record follow:] 


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RESPONSE TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM BIJAN RAFIEKIAN 

Q.1. Could you please explain the rationale for why the Bank 

would agree to put forward an application to finance a project that 

would export machines to China which would be used to manufacture products that would directly compete with a U.S. industry already under pressure from Chinese import competition? 

A.1. Ex-Im Bank is a demand driven institution, In this case, the 

Bank is simply responding to an application for financing submitted by a U.S. exporter seeking help in making a sale of metalstamping machines into China. 

As part of the Bank’s legislative mandate, whenever the Bank re- ceives a case over $10 million involving potential economic impact, 

the Bank is required to notify Congress and the public of the existence of such an application and to request any comments. That notification is part of an inclusive search for information which could 

contribute to the most knowledgeable decision possible. 

Ex-Im Bank staff has not yet completed its evaluation of this application. This transaction is subject to a detailed economic impact 

analysis which will assess the likely net impact of this transaction 

on the U.S. economy, 

Q.2. What factors does the Bank take into consideration in its economic impact assessments for proposed projects? 

A.2. The economic impact procedures put transactions through a 

series of screens to determine the extent of analysis required. The 

relevant factors that Bank takes into consideration include: 

• Trade Measures—All transactions are screened to determine 

the applicability of trade measures. 

• Substantial Injury—For transactions valued greater than $10 

million, Ex-Im Bank determines if the new foreign production 

meets the Congressionally-defined threshold for substantial injury. The substantial injury threshold is met if the new foreign 

production capacity is 1% or more of current U.S. production 

of the same, similar, or competing good. Transactions that 

meet the substantial injury threshold are subject to a detailed 

economic impact analysis. This analysis considers: 

• A. Global oversupply—an evaluation of the current global 

supply/demand balance of the new foreign production. 

• B. Trade flow impact—a determination as to whether the 

new foreign production would compete in the same markets 

where U.S. producers sell their production. 

• C. Public comments in response to a Federal Register notice 

which is posted to inform the public of a proposed transaction under consideration by the Bank. 

• D. Comments from other U.S. government agencies. 

Q.3. Does the Bank consider potential job loss as a result of the 

project? 

A.3. I consider potential job loss in all decisions brought to the 

Board and, moreover, I believe it would be irresponsible not to have 

said consideration for U.S. jobs. The economic impact process of the 

Bank is built around the issue of identifying whether a transaction 


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involves a net job loss to the country. As case information available 

to the Bank is all in monetary or output terms, the Bank uses 

analysis of such variables as proxy measurements for the net employment impact of the transaction. 

Q.4. Does the Bank consider the effect that the goods produced as 

a result of the financing may have on sensitive U.S. industries? 

A.4. Yes. Pursuant to its Charter, Ex-Im Bank developed procedures to recognize industries that have particular trade sensitivities. Specifically: 

(1) The Bank established in April 2007 a ‘‘Sensitive Commercial 

Sectors and Product List’’ which consists of a combination of sectors/products and transaction characteristics that reflect recent ExIm Bank experience with economic impact analyses where economic impact considerations were relevant and Ex-Im Bank financing did not materialize. Transactions that will establish or expand 

production of items included on this list are subject to significant 

scrutiny. While Ex-Im Bank support is not prohibited, applicable 

transactions have a lower likelihood of receiving Ex-Im Bank support and the case processing time is likely to be prolonged. 

(2) As referenced above, the Bank takes trade measures into account For example, transactions that support the production of a 

product subject to an anti-dumping and/or countervailing duty orders are likely to be denied Ex-Im Bank financing. 

Q.5. When do you expect to make a final ruling on this proposed 

project? 

A.5. As Ex-Im Bank staff is still involved in gathering and evaluating information on this case, no date has been set for when the 

transaction will be put before the Ex-Im Bank Board of Directors 

for a decision. Board action is not imminent. 

You have every assurance that I am most sensitive to the issues 

you have raised and that the mission of the Bank is to help sustain 

and grow U.S. jobs. Moreover, I am aware that not all countries in 

the global economy strictly observe the rules, making leveling the 

playing field all the more difficult. This along with the mission of 

the Bank focuses my attention to make certain that the process is 

conducted based on transparency, consistency and fairness at all 

times. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR DODD 

FROM WILLIAM HEYMAN 

As part of your testimony under oath, please respond in writing 

to each of the following numbered questions: 

In 2003, the SEC brought major enforcement actions against 

Citigroup and against Citigroup stock analyst Jack Grubman for 

violating Federal securities laws. The SEC’s complaints recounted 

misconduct that involved, in part, the issuance of misleading stock 

recommendations, including a very positive recommendation of 

AT&T stock. The Complaint recounted that AT&T objected to the 

CEO of Citigroup, Mr. Weill, about Mr. Grubman’s ratings of 

AT&T and that Mr. Weill some time thereafter asked Mr. 

Grubman to take a ‘‘fresh look’’ at the rating. Mr. Grubman told 

Mr. Weill that he wanted his children admitted to a prestigious 


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preschool. According to the Complaint, after further communications between the two, Mr. Grubman upgraded his recommendation 

on AT&T stock from a 3 (Neutral) to a 1 (Buy) rating, Mr. Weill 

made contact with the preschool and approved a charitable donation by Citigroup for $1,000,000 to the preschool, and Mr. 

Grubman’s children were admitted. The Complaint stated ‘‘After 

issuing the report, Grubman told an analyst who reported to him 

and an institutional investor, in separate conversations, that he upgraded AT&T to help get his children into the 92nd St. Y preschool.’’ The Complaint added that Mr. Grubman sent an e-mail 

saying that Mr. Weill ‘‘needed [the AT&T CEO’s] vote on our board 

to nuke [John] Reed in showdown.’’ 

The SEC Complaint cited part of an e-mail entitled ‘‘AT&T and 

the 92nd Street Y’’ dated November 5, 1999 from Mr. Grubman to 

Mr. Weill in which he ‘‘outlined the future steps he would take to 

reexamine the company . . . [and] sought Weill’s assistance in getting his children admitted to the 92nd Street Y preschool.’’ The 

original e-mail included the following statements: 

‘‘Attached is the list of the Board of Directors from the 92nd 

Street Y . . . if you feel comfortable and know some of these board 

members well enough, I would greatly appreciate it if you could ask 

them to use any influence they feel comfortable in using to help us 

as well. I noticed Bill Heyman is on the board and I think he works 

somewhere in the Citigroup corporate structure but I don’t really 

know Bill. 

‘‘Anyway, anything you could do Sandy would be greatly appreciated. As I mentioned, I will keep you posted on the progress with 

AT&T which I think is going well.’’ 

Q.1. During this period, did you serve on the Board of Directors of 

the 92nd Street Y? 

A.1. Technically, no. I was at that time and am currently listed on 

the 92nd Street Y’s letterhead, to which I assume Mr. Grubman’s 

memorandum referred, as an ‘‘Honorary Director’’, a designation 

given to a handful of former directors who had served as directors 

for long periods of time (decades). Honorary directors may attend 

board meetings (I did not), but do not vote. 

Q.2. Did anyone contact you regarding Mr. Grubman’s desire to 

have his children admitted to the 92nd Street Y? If so, please describe the people involved, the nature of the contact, your response, 

and any subsequent actions. 

A.2. I was never contacted by anyone regarding this matter. 

Q.3. Please describe any efforts you made with respect to the admission of Mr. Grubman’s children to the 92nd Street Y. 

A.3. I made no efforts on the behalf of Mr. Grubman’s children regarding their admission to the 92nd Street Y. 

Q.4. Were you aware or informed that Mr. Grubman might raise 

his rating on AT&T if his children were admitted to the 92nd 

Street Y? 

A.4. No. 

Q.5. A letter dated September 14, 2000 on the letterhead of the 

Citigroup Foundation, under the signature of Stephanie Hochman, 


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to Mr. Sol Adler, Executive Director of the 92nd Street Y, states 

that it is transmitting the first installment of a $1,000,000 pledge 

to the 92nd Street Y. The letter notes that a copy was sent to ‘‘William Heyman.’’ 

Did you receive a copy of this letter? 

A.5. I was recently shown a copy of this letter. While, almost 7 

years later, I do not specifically recall it, I certainly cannot say that 

I did not see it. 

Q.6. At what time did you become aware of the contribution? 

A.6. Assuming that in fact I did receive the letter, I would have 

become aware upon seeing it. I received no other communication, 

from anyone at Citigroup, on this subject, either before or later. 

(For that matter, I recall no communication from the 92nd Street 

Y, either.) 

I believe it was customary for the Citigroup Foundation, in transmitting any grant (large or small) to any organization, to copy, as 

a courtesy, any Citigroup employee known to be involved with the 

organization. 

Q.7. In what ways, if any, did you participate in the solicitation or 

transmission of the $1,000,000 Citigroup contribution to the 92nd 

Street Y or of its use by the 92nd Street Y? 

A.7. I did not participate in any way whatsoever in this matter. 

Q.8. If you participated in soliciting or transmitting this contribution, were you aware or under the impression that the donation 

was being given in return for admitting Mr. Grubman’s children for 

which he might publish or had published a research report that 

raised the rating on AT&T stock or would violate the Federal securities? 

A.8. As I did not participate in either the solicitation or the transmission of the contribution, I was not under any such impression. 


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