SEC budget woes on full display at conference

At first, Eileen Rominger, director of the SEC's Division of Investment Management, looked as if she was in a “Saturday Night Live” spoof of poorly dubbed Godzilla movies. As Ms. Rominger addressed the Investment Company Institute Mutual Funds and Investment Management Conference via a video link today, her lips were moving faster than the words coming out of them. About halfway through the presentation, the technical difficulties were fixed and Ms. Rominger sounded as if she was in the meeting room in Palm Desert, Calif., giving her speech to hundreds of attendees — except that there was an image of the U.S. Capitol behind her. For the first time in the ICI conference's history, the Securities and Exchange Commission did not send representatives to appear in person. They were grounded in Washington due to budget constraints at the agency caused by the Capitol Hill battle over the federal budget. Since October, Congress has failed to pass a fiscal 2011 budget, forcing federal agencies to operate at fiscal 2010 levels under a continuing resolution. Under the temporary funding measure, the SEC has curtailed staff travel and made several other cuts. In her remarks, Ms. Rominger stressed the importance of the dialogue between the SEC and groups like ICI as the agency works to fulfill Dodd-Frank mandates such as promulgating more than 100 rules and producing 20 studies. She praised the ICI for its comment letters and other input. “Please continue to provide this reality check,” Ms. Rominger said. “It is an important source of ideas.” Imparting those ideas via satellite, however, can pose challenges. Mary Jo Reilly, a partner at Drinker Biddle & Reath LLP, said that piping in Ms. Rominger was effective after the glitches were overcome. “I thought it was fine, once they synced the voice with the video,” Ms. Reilly said. Still, it wasn't as rich an experience as having Ms. Rominger in the room. “Sometimes you see [SEC officials] at coffee breaks, and you can ask a question,” Ms. Reilly said. “It's a little more intimate when they're here in person.” Paul Schott Stevens, ICI president and chief executive, said that the SEC officials' appearances by video were a necessary accommodation but not an ideal situation. “We would prefer that they were able to attend,” Mr. Stevens said. “You gain [understanding] from informal conversation.” Although the SEC officials were three thousand miles away in Washington, they had less opportunity to hide from the spotlight than panel participants on stage in California. For instance, an inset of Jennifer McHugh, senior adviser to SEC Chairman Mary Schapiro, stayed on the video screen throughout an hour-and-fifteen-minute panel discussion this morning. It required that Ms. McHugh demonstrate stage presence while listening to the comments of other participants, rather than just being camera ready when a question was directed to her. Ms. McHugh's session went off without a technical hitch – a big improvement from the disjointed beginning of Ms. Rominger's remarks. “Some of the problems suggest why there's an in-person meeting requirement in the '40 Act,” Mr. Stevens joked to the conference audience.