The SEC is seeking a 26% increase in its budget for the next fiscal year, to $1.674 billion. The increase will permit the agency to add 676 new staff positions and pay for significant technology additions and upgrades. In making the request new SEC Chair Mary Jo White stressed to the House subcommittee that the FY 2014 request and increase is budget neutral because it “would be fully offset by matching collections of fees . . . “ Testimony, Mary Jo White, Before the Subcommittee on Financial Services and General Government, House Committee on Appropriations (May 7, 2013).
After reiterating her commitment to rapidly completing rule making under Dodd-Frank and the JOBS Act, Ms. White specified the main categories of the budget request:
Investment advisers and oversight: An additional 250 staff members would be hired to conduct examinations of investment advisers. This is a “top priority” according to Ms. White. Over 40% of the advisers have never been examined. Although the Commission currently uses a risk based analysis to select examination candidates, the growth and additional complexity in this area requires a significant increase in the examination staff. In addition, NEP would add 60 positions to improve oversight related to broker-dealers, clearing, transfer agents, SROs and municipal advisors while 15 new positions would go to other program initiatives.
Enforcement: The Division would add 131 staff positions under the proposed budget. Those positions would be used to increase “expertise in the securities industry and new product areas [and for additional] trial attorneys, and forensic accountants, as well as staff for the Office of Market Intelligence, the Office of the Whistleblower, and the SEC’s collections and distribution functions.”
Economic and risk analysis: The Division of Risk, Strategy and Financial Innovation would be increased by about 45%, adding 45 new positions. These positions would “be used primarily for additional financial economists to perform economic analysis and research . . . “
Oversight of derivatives and clearing agencies: An additional 25 positions would be added to the Division of Trading and Markets and the NEP. These positions would focus on oversight of the derivatives and clearing agencies.
Corporation Finance: This Division would add 25 new positions under the proposed budget. The new positions would permit the Commission “to hire additional attorneys and accountants to continue to enhance the Division’s reviews of large companies, review draft registration statements . . . prepare and finalize the remaining rules and projects to implement the Dodd-Frank Act and the JOBS Act . . . “
Technology: The Commission is requesting an additional $56 million for its key Information Technology initiatives. Those include enhancing its TCR system by building an interface to the exam and case management systems; making significant investments in its information security systems; and adding resources to implement infrastructure upgrades.
Training: The budget also includes what Ms. White called a “significant increase” in the training budget. This will place the SEC’s level of “training investment more on par with other Federal financial regulatory agencies.”
Finally, the Commission plans to supplement its budget request with $50 million from its reserve fund. That fund is for long term, mission-critical projects. The funds will be used for projects which include overhauling EDGAR, constructing and enhancement of the Enterprise Data Warehouse and analyzing data from the Consolidated Audit Trail.
ABA Seminar: Fifth Annual FCPA Update: Protecting Your Business in the Future: Lessons from the New DOJ-SEC FCPA Guide, June 19, 2013 from 1:00 -2:30 p.m. EST. The discussion will focus on building effective compliance systems and conducting M&A due diligence. Co-moderators: Thomas Gorman and Frank Razzano. Panel: John Buretta, Principal Deputy to the Assistant AG, DOJ; Charles Cain, Assistant Director, FCPA Unit, SEC Division of Enforcement; Catherine Razzano, Assistant General Counsel, General Dynamics Corporation; Steve Siegal, Senior Counsel, Northrop Grumman Corporation; Ryan Ong, President, U.S. China Business Counsel. Live in Washington, D.C at 600 14th St. N.W., Penthouse (no charge for ASECA members attending live in Washington who pre-register by sending an e-mail to firstname.lastname@example.org). Webcast nationally by the ABA. For further information click here.