On the same day that Schapiro spelled out her legislative wish-list to Congress, a federal judge in New York threw out the agency's proposed $285 million settlement with Citigroup Inc over the sale of toxic mortgage debt during the financial crisis.

U.S. District Judge Jed Rakoff called the monetary fine component of the settlement "pocket change" and said investors were being "short-changed."

The SEC had alleged investors lost $700 million from the bad bets, while Citigroup had planned to give up $160 million in ill-gotten profit.

In her letter to Senators Jack Reed and Mike Crapo, Schapiro expressed frustration the law limits the agency to calculating fines based on two methods.

The first method limits the SEC's financial penalty to an amount equal to the defendant's ill-gotten profits.
Schapiro requested two changes to that method. She said the SEC should have the ability to impose a penalty that is three times the amount of ill-gotten gains.