SEC Self-Funding Authority Demanded

Members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs were sent a letter today from signatories representing a broad coalition of investors and market participants (including the publisher of urging them to provide self-funding authority to the SEC so that it has the resources necessary to fulfill its mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

The SEC monitors 30,000 entities, including more than 11,000 investment advisers, up 32% in the last four years. Yet, in the three years from 2005 to 2007, the SEC’s budgets were flat or declining. Self-funding could give them the resources they need and the ability to do long-term planning.

Like the letter earlier today to the same committee urging them to require proxy access and majority votes for director elections, this letter was also signed by several members of the SEC’s relatively new Investor Advisory Committee, in fact, the vast majority of Committee members signed.

The SEC collected $1.54 billion in fees in 2007 but received only $881.6 million through Congressional appropriations. The SEC’s budget could have increased by 75% that year if it had been self-funded. A 2002 GAO report concluded, the “increased funding flexibility (from self-funding) would likely allow SEC to more readily fund certain budget priorities, such as pay parity, and to more quickly respond to the ever- changing securities markets.” (SEC OPERATIONS: Implications of Alternative Funding Structures)

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