10/12/2010 02:32 pm ET Updated May 25, 2011

Hail Mary, Full of Hubris!

If you're curious about how Wall Street works its fixed game of "heads I win, tails you lose," Mary Schapiro can fill you in.

A peek at the rules of the game are spelled out in a 100-page internal report documenting Ms. Schapiro's tenure as head of the Financial Industry Regulatory Authority (FINRA), the industry's self-regulatory group she headed before President Obama appointed her in 2009 to the top spot at the Securities and Exchange Commission. The report is so damning even stockbrokers are crying foul.

Despite the loss of $567 million from the FINRA portfolio in 2008, Ms. Schapiro walked away from the non-profit industry association in 2009 with nearly $9 million. Nice payout for someone who missed the $65 billion Bernard Madoff Ponzi scheme, R. Alan Stanford's $7 billion alleged Ponzi racket, and was involved in alleged insider trading of $600 million worth of auction-rate securities before that market froze in February 2008. Ms. Shapiro also failed to anticipate the collapse of Bear Sterns and Lehman Brothers, among other calamities. In Ms. Sharpiro's FINRA it was, "Meltdown? We don't see any meltdown!"

These are only the most obvious failures for which Ms. Schapiro is being held responsible. There are more than a few lingering questions in the FINRA board of director's report, which was issued under pressure late last week. Legal action is pending to root out the full menu of missteps and missed cues.

According to one of the financial industry's leading publications, Investment News, Ms. Schapiro's take-away pay day has outraged FINRA's broker members, among them John Busacca, owner of the Broker Dealer Exchange LLC, and a founder of the Securities Industry Professional Association, which represents brokerages and registered representatives.

"Nine million dollars? For a non-profit? That defies logic," Mr. Busacca complained.

A number of highly placed industry officials have joined the chorus. Dan Roberts, of Roberts & Ryan Investments, Inc., calls Ms. Schapiro's take-away "obscene."

Larry Doyle, president and CEO of Greenwich Investment Management, was among the first to question Ms. Schapiro's management style. A year ago, Doyle's online blog, "Sense on Cents," called attention to the FINRA's quiet sell-off of auction-rate securities before that market failed in February 2008. Doyle's investigation brought early pressure to bear on Ms. Shapiro's apparently opaque trading practices.

Be aware that Ms. Schapiro isn't the only FINRA employee to make out like a bandit. During the meltdown of 2008, executive salaries and bonuses totaled $35 million, according to the report.

FINRA's board took seven months to complete its findings, and then only at the vocal insistence of Amerivet Securities, Inc., a FINRA member. The company is calling for legal action and claw backs aimed at Ms. Schapiro, board members and other top officers.

According to FINRA's November 2009 tax filing, Ms. Schapiro took home $3.26 million in 2008. She apparently received $937,961 in salary, bonus and "incentive" payouts of $1.75 million. There was additional compensation, which one member-broker bitterly called "walking around money" worth $565,995. A portion of Ms. Schapiro's total of $9 million came from retirement benefits amounting to $800,000 a year earned during her 13-year term.

It wasn't easy forcing FINRA to perform the internal audit -- harder still to make it public. Secrecy is apparently high on Ms. Schapiro's list of virtues. She recently attempted to gain an exemption from Freedom of Information Act inquiries at the SEC. Blow-back from Congress and the public quashed this ill-advised attempt to hide SEC decisions from public view.

"We had to make a lot of noise to crack the opaque curtain," said one industry official who chose to remain anonymous because of her sensitive position within the brokerage industry. "We had to speculate how much Mary was drawing down. Some of us figured she was in the stratosphere. Turns out she wasn't, but $9 million is a great deal of money for someone her position as head of a non-profit."

The report has not quieted Amerivet. There is a pending suit demanding the release of internal FINRA documents focusing on investment decisions as far back as 2003.

"Why President Obama placed Mary Schapiro at the head of SEC is a mystery," said one industry member. "People wonder why Wall Street is down on the president. Well, for starters, you don't have to look any further than this disturbing report."

Will Ms. Schapiro survive the growing scandal and keep her seat as head of the SEC? So far, the White House has remained silent.