The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act granted
the Securities and Exchange Commission new authority over various financial
activities, including: hedge funds, credit-rating agencies, and the
derivatives market. (For more info on the law, see ourJune 28, 2010 blog post). According to SEC Chairman Mary Schapiro, however, the agency won't
have enough money to implement the law's financial reforms next year
unless Congress increases the SEC's budget by more than $200 million ("SEC Requests More Money To Fight Fraud," NPR, May 14, 2011).
As reported by NPR, the SEC hopes to hire 500 new employees to help handle
the increased workload generated by the Dodd-Frank Act. In addition to
expanding the SEC's authority, the Act requires the SEC to draft 100
new rules and to conduct 20 studies. (One such study, which will examine
the effectiveness of existing investor education programs, is currently
pending. For more info, clickhere.) According to Schapiro, the SEC's current budget simply doesn't
provide enough resources to implement the reforms and adequately monitor
Despite the tips and complaints that are going unaddressed, Schapiro's
fight to gain increased funding may be difficult. Some congressional leaders
don't support the effort, including U.S. Representative Jo Ann Emerson.
Still, the agency does have its supporters, including
U.S. Representative Barney Frank and President Obama, who are both advocating
for more money for the commission. Which side will win remains to be seen, but it is likely that a continued
lack of funding will hamper the SEC's efforts to protect investors.