Chance of sizable SEC budget boost gets dimmer

House budget proposal doesn't come close to meeting figure requested by Mary Jo White

Jul 9, 2013 @ 6:10 pm

By Mark Schoeff Jr.

+ Zoom

House lawmakers are poised to deny the Securities and Exchange Commission the budget increase the agency says is required to strengthen oversight of investment advisers.

The House Appropriations Committee released on Tuesday its financial services budget proposal, which authorizes $1.371 billion in SEC spending. That's $303 million less than the $1.674 billion SEC budget request but $50 million more than the SEC's current $1.321 billion budget.

In congressional testimony during her first three months in office, SEC Chairman Mary Jo White asserted that a substantial budget boost would allow the agency to put more muscle into adviser regulation. She said the agency currently examines annually about 8% of the nearly 10,000 registered advisers -- and 40% of them have never been examined.

In congressional testimony during her first three months in office, SEC Chairman Mary Jo White asserted that a substantial budget boost would allow the agency to put more muscle into adviser regulation. She said the agency currently examines annually about 8% of the nearly 10,000 registered advisers -- and 40% of them have never been examined.

“Therefore, under the [fiscal year] 2014 request, one of the SEC's top priorities is to hire 250 additional examiners to increase the proportion of advisers examined each year, the rate of first-time examinations, and the examination coverage of investment advisers and newly registered private fund advisers,” Ms. White told the House Appropriations Subcommittee on Financial Services and General Government at a May 7 hearing.

So far, it looks as if Ms. White's request has fallen on deaf ears. The House Appropriations subcommittee is scheduled to vote on the SEC's budget – and those of other agencies under its jurisdiction – on Wednesday. Passage by the panel and the full appropriations committee is certain. The bill would then move to the House floor for likely approval by the chamber, which is controlled by Republicans.

The Senate Appropriations Committee, led by Democrats, is consistently more generous with the SEC budget.

Over the last couple years, the House and Senate could not agree on a final federal budget and instead passed so-called continuing resolutions that kept agency funding flat – a scenario that could be repeated at the end of the federal fiscal year in late September.

The House financial services appropriations bill totals $17 billion, or $4.3 billion below fiscal year 2013 levels and $3 billion less than current funding after sequestration cuts.

The House's SEC allocation, although $50 million above current funding levels, effectively denies the agency more spending authority because it also prevents the SEC from utilizing money from its so-called reserve fund. The Dodd-Frank financial reform law allowed the agency to spend up to $50 million annually from that pot of money.

The House budget bill also compels the SEC to spend at least $50 million on technology upgrades and to allocate at least $44.4 million to the Division of Economic and Risk Analysis.

The SEC's total spending has no impact on the federal budget deficit because it is offset by fees the agency collects on securities transactions.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

INTV

Ed Slott: The conversation advisers need to have with spousal IRA beneficiaries

Clients who inherit IRAs from their spouses need to decide whether to remain beneficiaries or do spousal rollovers. One important factor in that decision is their age, according to Ed Slott, founder of Ed Slott's Elite IRA Advisor Group.

Latest news & opinion

Odds are, the $700M Powerball winner will need lots of advice

A good financial adviser — or, better yet, a team of them — would provide a sense of perspective and calm that would hopefully prevent this winner from following in the footsteps of so many past winners who wound up broke in just a few years.

Emerging issues affecting financial advice

The profession will need to adjust to enormous shifts in the socioeconomic environment in the coming decade.

Cetera broker-dealers to pay back $3.3 million to clients overcharged for mutual funds

Over an eight-year period, the B-Ds failed to properly supervise sales charge waivers to clients in retirement plans and charitable organizations.

Fiduciary advocates press CFP Board for specifics on standards changes

Meanwhile, few brokerages and their trade associations, which blasted the DOL's fiduciary rule in comment letters, are responding to the CFP Board's proposal.

Big gains attract new money to emerging markets, but should investors stay?

An estimated $6.7 billion has flowed into emerging-market stock funds and ETFs so far this year, according to Morningstar.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print