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Proposed Budget May Mean SEC Gets $1.258B, Adds Staff

Melissa Klein Aguilar | February 1, 2010

The President's budget request of $1.258 billion for the Securities and Exchange Commission for fiscal 2011 would increase the Commission's coffers by roughly $139 million, or 12 percent over its fiscal 2010 funding level, and would enable the agency to add about 380 staff positions.

That's according to the report, Congressional Justification FY 2011 in Brief, posted on the SEC's Website, which notes that the agency oversees more than 35,000 registrants, including more than 10,000 public companies, 12 securities exchanges, 10 nationally recognized statistical rating organizations, and self-regulatory organizations such as the Financial Industry Regulatory Authority, Municipal Securities Rulemaking Board, and the Public Company Accounting Oversight Board.

The SEC notes that $24 million of that amount is requested "contingent upon the enactment of financial reform legislation, to begin implementation of the SEC's new and enhanced authorities under the Administration's financial reform proposal."

If enacted, SEC Chairman Mary Schapiro said in a statement that the President's request "will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011."

As previously noted, the need for more and better resources at the SEC following the economic crisis and the Madoff fraud was flagged in reports from the Government Accountability Office and the SEC's Inspector General's office.

According to the budget request report, the SEC's top priority is to reinvigorate its enforcement program. The SEC plans to add 70 positions to its Enforcement Division, which it estimates will enable it to commence 75 additional inquiries, conduct 314 additional formal investigations, and file charges in 70 additional civil or administrative cases.

Most of the new positions will be committed to reinforcing the investigations process, including administrative, support, and paralegal staff—a particular need identified in the GAO report. Others will be to reinforce the proceedings function, including trial lawyers and support for bringing enforcement cases in federal court or in administrative proceedings, and to strengthen the intelligence analysis function, including the newly created Office of Market Intelligence.

A top priority within the agency's information technology budget will be funding for development of systems improvements as part of the planned redesign of the SEC's systems for collecting, reviewing, and acting on complaints, tips, and investigative leads. The report says staffing for that function will be integrated into the Office of Market Intelligence.

The report also notes that proposed increase in SEC spending would be fully offset by increased SEC collections of fees on securities transactions and registrations. In fiscal 2011, pursuant to the Investor and Capital Markets Fee Relief Act, the SEC will set fees at levels sufficient to raise $1.7 billion in collections, an increase of $220 million over fiscal 2010.

The budget request justification report says that, in recent years, SEC staffing and funding "simply have not kept pace with industry growth." Between fiscal years 2005 and 2007, the SEC experienced three years of flat or declining budgets, losing 10 percent of its employees and severely hampering key areas such as the agency's enforcement and examination programs. Even with the funding increases provided by Congress in the last two years, under the SEC's current funding level, the agency's workforce still falls about 1 percent, or 35 full-time-equivalents short of the fiscal 2005 level.