The U.S. Securities and Exchange Commission (SEC) is seeking a 6% increase in Congressional funding for its upcoming year, citing a need to step up compliance exams, among a host of other regulatory priorities.
In its latest budget request, the SEC is seeking just under US$1.8 billion in funding for fiscal 2017, up from its US$1.7 billion budget for fiscal 2016.
SEC chairwoman Mary Jo White laid out the agency’s case for a budget hike in testimony before the U.S. Senate Committee on Appropriations on Tuesday.
The budget increase “… is necessary for the agency to continue to fulfill its critical responsibilities to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,” White says.
The requested funding would allow the SEC to hire an additional 250 staff, says White, pushing it to almost 5,200 employees, and allow it to invest in its technology. In particular, the SEC is looking to ramp up compliance exams of investment advisors, to bolster enforcement, hire more market experts, and strengthen its economic and risk analysis functions.
Just over half of the planned new hires would be compliance examiners, primarily to conduct additional exams of investment advisors, White says. The SEC is also looking to add 52 new staffers in the enforcement division, to enhance its analysis, investigation, and litigation functions.
“The SEC’s enforcement program expects the improved data analysis capabilities derived from the agency’s investments in IT will yield additional important case leads in [fiscal 2017],” White says. The SEC also needs more staff to help root out “complex frauds and other difficult-to-detect misconduct … address large-scale insider trading and stock manipulation; and keep pace with a rapidly evolving industry,” she adds.
The SEC’s division of economic and risk analysis is it’s fastest growing division, White says. It is also looking to add six new positions in that area to focus on exchange-traded funds (ETFs), microcap stocks, the derivatives markets, and asset-backed securities (ABS), among other things.
Among its numerous rulemaking initiatives, the SEC expects to devote additional staff time to various rule proposals in 2017, White says, including “work towards establishing a uniform fiduciary standard of conduct for all broker-dealers and investment advisors when providing personalized investment advice about securities to retail customers, and requiring third party compliance reviews for registered investment advisors.”