Sen. Charles Schumer, D-N.Y., will propose legislation that would allow the SEC to keep any fines it levies against wrongdoers and to pocket the $1.5 billion in transaction and other fees it is expected to collect for the fiscal year that begins Oct. 1.
Mr. Schumer hopes the proposal, which he expects to put forth any day now, will be included as part of the financial services reform legislation being debated by Congress. The proposal is intended to bolster the Securities and Exchange Commission’s ability to police the securities markets.
“We look forward to reviewing Senator Schumer’s legislative proposal and considering how it would build upon the many reforms we are already undertaking to revitalize the agency,” said SEC spokesman John Nester.
Still, many believe that allowing the SEC to keep the fines would represent a conflict of interest for the agency.
Even SEC Commissioner Luis Aguilar is leery of the idea.
“I would not want any [amount of the penalties] to be part of the self-funding,” said Mr. Aguilar, who supports instead the notion of allowing the SEC to keep the statutory fees it collects. “There’s too great a [potential for] conflict.”
For the fiscal year that ended Sept. 30, 2008, the SEC collected $774 million in ill-gotten gains were disgorged and another $256 million in penalties.
The administration has called for a budget for the SEC of just more than $1 billion for fiscal 2010.
Mr. Schumer plans to introduce his legislation “in the coming days,” his spokesman, Brian Fallon said.