SEC Says: More Money Needed to Fight Investment Fraud
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 the industry.
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.