For the past four years, Elisse Walter stood out at the U.S. Securities and Exchange Commission for her deep loyalty to SEC Chairman Mary Schapiro.
Now the veteran regulator and SEC commissioner - one of two Democrats on the SEC - is moving to the fore at the powerful agency, taking over the chairmanship after Schapiro steps down next month. The promotion is prompting regulatory watchers to talk about whether Walter will blaze her own path.
"She has been very loyal to Mary Schapiro, and there are times when I thought she prioritized her loyalty to Mary over sometimes even her own positions on an issue," said Barbara Roper, the director of investor protection for the Consumer Federation of America.
"It will be interesting to see what she is like when she comes out of Mary's shadow. Will it be more of the same? Or ... will her own style and views become more apparent?"
Walter's and Schapiro's strong working relationship has carried through their closely intertwined career paths to their nearly uniform agreement on controversial regulations.
The two women first worked together at the SEC, when Schapiro started there as a commissioner in 1988 and Walter worked as a deputy director in the Corporation Finance Division.
They later worked together at the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority before returning to the SEC, where they served side by side.
With just one exception, Walter has publicly voted for all of the regulations championed by Schapiro - from the controversial "proxy access" rule later overturned by a U.S. appeals court to rules that force companies to disclose if their products contain certain African conflict minerals.
Walter's only public dissent was over a rule creating a central database that stores every trade order, execution and cancellation. Walter argued that the rule was too weak.
For the most part, the financial services sector and the legal community are not expecting many surprises when Walter takes over the agency's reins next month after Schapiro steps down from her post.
"She will pursue the agenda that Schapiro started," said Thomas Sporkin, a former top SEC enforcement attorney now with Buckley Sandler, a financial services law firm. "Essentially you are handing off the mantle to somebody who has the same agenda."
That would probably mean moving full steam ahead with finalizing Wall Street reforms required by the Dodd-Frank Act of 2010, including adding transparency to the derivatives market and revamping oversight of credit rating firms.
It could also mean trying to advance Schapiro's own initiatives, including reworking the structure of U.S. markets to ensure that high-frequency traders don't get an unfair edge over ordinary investors.
But Walter is facing a challenge that Schapiro did not for most of her tenure - trying to win support for reforms from an SEC split between two Democrats and two Republicans. Even if President Barack Obama moves quickly to nominate another commissioner, it is expected to take months to secure Senate confirmation.
"The SEC chairmanship is a difficult job any way you cut it, and at least as it stands right now, she is dealing with a four-person instead of a five-person commission," said David Tittsworth, the executive director of the Investment Adviser Association. "I don't think her job was made any easier by the fact that you lose Schapiro."
SMART AND TOUGH
Walter, 62, is a Brooklyn-born Democrat who has spent most of her career as a financial regulator.
With an undergraduate degree from Yale and a law degree from Harvard, Walter has a reputation as a smart and accomplished attorney with a deep knowledge of the industry.
She is well respected in SEC circles, including by those who tend not to agree with her liberal-leaning regulatory philosophy, and many say she's been accessible to interest groups.
Former Republican SEC Commissioner Paul Atkins, who has known Walter for 22 years, said her deep SEC background will be an asset.
"There is a lot of promise there," Atkins said. "If she draws on all of that, I think she can do a great job."
Walter joined the SEC as a commissioner in July 2008, a tumultuous time in both the agency's history and her personal life. About a month into her tenure, Walter was diagnosed with ovarian cancer. It was the second time in her life she had fought cancer. She had successfully beaten breast cancer during her career at the CFTC in the 1990s.
Walter underwent treatments at the same time as the SEC was dealing with the collapse of investment bank Lehman Brothers and acute criticism for not uncovering Bernard Madoff's decades-long $65 billion Ponzi scheme.
Today, Walter is in good health, with no signs of cancer.
Though her SEC term technically expired in June, she will be able to continue serving at least until the end of December 2013.
Walter has been coy about whether she wants a longer appointment as the head of the SEC, and the White House is said to be looking at other replacements with potentially more name recognition.
Among those names are Sallie Krawcheck, a former top executive at Bank of America and Citigroup, and Treasury official Mary Miller, who spent 26 years at T. Rowe Price.
FAVORS MORE MUNI DISCLOSURE
Although Walter's policy positions have mostly been in lockstep with Schapiro's, Walter found her niche at the SEC.
She is probably best known for championing potential reforms for the U.S. municipal market. Earlier this year, she played a leading role in the rollout of a new report by the SEC calling for new measures to bolster investor protection, such as forcing states and cities to disclose more financial information.
Scott Lilienthal, a partner in Hogan Lovells and president of the National Association of Bond Lawyers, said Walter has demonstrated a willingness to be flexible on new rules for the muni market. He described her as "pragmatic."
POSSIBLE FIDUCIARY FIGHT
Another area in which she's been vocal is the oversight of investment advisers.
Two years ago, Walter dissented on a key SEC study that laid out three potential ways to enhance the oversight of investment advisers because of a lack of resources at the SEC.
Walter said the study lacked balance and failed to address the many benefits of self-regulation - an option staunchly opposed by investment advisers, who believe it would add an onerous layer of regulation by a brokerage watchdog that doesn't intimately understand the advisory industry.
Her views on the issue have made "a lot of advisers nervous," said Knut Rostad, the president of the Institute for the Fiduciary Standard, a group designed to promote and protect the investment advisory fiduciary standard that already exists.
"Given what she has done on the SRO (self-regulatory organization) issue might lead one to believe she may be more aggressive."
(Reporting by Sarah N. Lynch; Additional reporting by Aruna Viswanatha; Editing by Karey Wutkowski and Jan Paschal)