SEC Head Pushes for Self-Funding Plan

The chief U.S. securities regulator is now advocating that the U.S Securities and Exchange Commission (SEC) should be funded directly from industry fees.

The Financial Times reported that SEC Chair Mary Schapiro asserted such a system would let the agency tackle more complex investigations and put more resources into technology and attracting skilled financial investigators.

“Self-funding has been discussed over the years but I think it may now well be the moment,” Schapiro said in an interview with the newspaper. “Some stability in funding would be an enormous benefit because it would help us with long-term planning in such areas as technology and staffing.”

The SEC brings in more than $1 billion annually in registration and transaction fees but can’t spend it without Congressional budget approval, according to the FT. The SEC has seen its budget decline or stay flat in recent years.

The SEC expects to collect $1.3 billion in 2009 but may spend only the $960 million authorized by Congress. For 2010, the administration has asked for a budget of just over $1 billion, though the SEC expects to collect $1.5 billion in fees, according to the news report.

Advocates of funding reform say that makes it too hard to plan for long-term projects allowing the agency to properly regulate an increasingly complex U.S. financial system. The discussion comes at a time when the SEC has been under fire for not catching the Bernard Madoff scandal and other similar financial wrongdoing (see “What’s Happening at the SEC”).

“Self-funding will help us to avoid periods of drought,” Schapiro said, according to the newspaper. “Think about what the markets were doing in terms of growth and innovation at the same time the SEC was in a hiring freeze.”

U.S. banking regulators, including the Federal Deposit Insurance Corporation and the ­Federal Reserve, can use what they collect in fees, deposit insurance premiums, and interest income.