An Emerging Paradox in Investment Finance: Ratcheting Up Fees/Taxes and Regulations, in Conjunction with Talking Down Proprietary Trading, then Hoping Banks Make Loans, Ay Karamba ...

WASHINGTON (Dow Jones)--The U.S. Securities and Exchange Commission would be able to anew investigators, examiners, and other staffers if President Barack Obama's budget request for close to $1.3 billion for the regulator is granted by Congress, SEC officials said Monday.

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The boost for fiscal year 2011, which begins Oct. 1, would represent about a 10% increase in the SEC staff, from about 3,800 currently to just under 4,200.
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But the White House has requested that $24 million of the proposed $147 million SEC budget increase be held back until Congress passes a broad financial overhaul bill. That would put on hold about 38 new full-time jobs, most of them for the Enforcement Division and Office of Compliance Inspections and Examinations.
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"If enacted, the President's request will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011," SEC Chairman Mary Schapiro said in a statement
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If Congress succeeds in passing a financial overhaul measure, the SEC will see its responsibilities increase. Advisers to hedge funds and other private pools of capital would be required to register with the SEC under a bill passed by the House late last year and a measure now being mulled in the Senate.
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SEC officials said the hedge-fund provision would add about 2,000 registered entities to the SEC's watch. Right now, the agency examines about 11,500 registered firms.
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The president's budget would enable the agency to add 131 new full-time investigators to the Enforcement Division and 72 new inspectors in the Office of Compliance Inspections and Examinations, or OCIE.
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In the Enforcement Division, the SEC estimates it will be able to open 75 additional inquiries, conduct 314 additional formal investigations, and file charges in 70 additional civil or administrative cases with the staffing levels requested by the White House.
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In the OCIE, the SEC said the budget will allow it to conduct 50 additional exams of investment advisers, 25 additional mutual fund exams, and 75 examinations of newly registered fund advisers, assuming the legislation is enacted.
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The SEC's new division of risk, strategy, and financial innovation would get 19 new full-time staffers under the president's budget request. Fourteen full-time staffers would be added to the Investment Management Division.
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The White House is asking for 33 new full-time staffers in the Division of Trading and Markets and 26 additional workers in the Corporate Finance division.
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The SEC budget is fully offset by fees it collects from the institutions it regulates. Next year, the SEC said it will set fees at levels sufficient to raise $1.7 billion in collections, an increase of $220 million over the previous year.
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A copy of the full SEC budget request is available at http://www.sec.gov/about/secfy11congbudgjust.pdf.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com
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(END) Dow Jones Newswires
February 01, 2010 15:55 ET (20:55 GMT)



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