WASHINGTON, DC - The Senate Appropriations Committee today approved the fiscal year 2010 Financial Services and General Government Appropriations bill, providing the Securities and Exchange Commission (SEC) with $1.13 billion - an increase of $100 million -- which U.S. Senator Jack Reed (D-RI) requested to beef up the SEC's enforcement capabilities by allowing the agency to hire more than 200 new full-time employees, upgrade the SEC's technology infrastructure, and expand training programs. This funding level is 9.7% above the Obama Administration's request.

"For too many budget cycles, the SEC didn't receive the funding it needed to police an ever more complex financial marketplace. Today's action will start giving the SEC the manpower and resources it needs to aggressively pursue fraud, improve risk management capabilities, and fulfill its mission to protect investors. Strengthening the SEC will go a long way toward restoring investor confidence and integrity to our markets," said Reed, a member of the full committee who requested the $1.13 billion for the agency back in April.

In May 2008, Senator Reed spearheaded a letter requesting that the fiscal year 2009 spending bill include an additional $50 million above President Bush's budget request to provide adequate funding for vital SEC programs. In February 2009, Reed successfully led the effort to include an additional $37 million in the omnibus spending bill for the remaining seven months of the federal government's fiscal year, which expires September 30, 2009, and raised the SEC's budget for the one-year period that began last October to a total of $943 million.

Earlier this year, Senator Reed sent the following letter to the heads of the Appropriations Subcommittee on Financial Services calling for the $100 million increase in SEC funding:

April 29, 2009

Dear Chairman Durbin and Ranking Member Collins:

As you consider the fiscal year (FY) 2010 Financial Services and General Government Appropriations bill, we urge you to ensure the Securities and Exchange Commission (SEC) receives a total appropriation of $1.13 billion to improve enforcement, increase staffing levels, and provide needed improvements and advancements to SEC's technological capabilities.

Despite considerable increases in the number of firms it oversees and growth in the size and complexity of securities markets and products, the SEC has been significantly underfunded in recent years. For example, while the agency received flat or declining appropriations from 2005 to 2007, the number of SEC-registered investment advisers increased by 32 percent and their assets under management jumped by over 70 percent since 2005. The SEC today oversees more than 30,000 registrants including 12,000 public companies, 4,600 mutual funds, 11,300 investment advisers, 600 transfer agents, and 5,500 broker-dealers.

Today's staffing levels remain 5 percent below what the agency was provided in 2005, despite significant changes in securities markets in recent years. This appropriation level would allow the SEC to return to 2005 staffing levels, and fund an additional 5 percent staffing increase to allow the SEC to more aggressively police securities markets through examinations and enforcement actions.

SEC's examination responsibilities would be greatly strengthened with these additional resources. The SEC Office of Compliance Inspections and Examinations (OCIE) needs a boost in order to conduct more comprehensive examinations, reach a broader swath of the entities that it regulates, and be better equipped to detect fraud. This office administers the SEC's nationwide examination and inspection program for registered self-regulatory organizations, broker-dealers, transfer agents, clearing agencies, investment companies, and investment advisers. The recent Madoff scandal illustrates the importance of examining investment advisers, over which the SEC has primary oversight. While the number of registered investment advisers saw a dramatic increase since 2005, OCIE staff overseeing advisers fell by over 7 percent. Unfortunately, according to OCIE director Lori Richards, this dynamic has meant that "only a small percentage of investment advisers are examined on a routine frequency." These funds will allow the SEC to significantly increase OCIE staff.

It is also critical that we increase the staffing in the Division of Enforcement. This Division is tasked with executing the law enforcement function of the SEC, especially important in light of the frauds that have come to light in recent months. It is clear that resource challenges in recent years have affected the SEC's ability to bring enforcement actions effectively and efficiently, and current staffing levels prevent worthwhile leads from being pursued and cause some cases to be closed sooner than they otherwise should be. This appropriation would allow for needed increases in enforcement staff to allow the SEC to once again vigorously pursue its enforcement mission.

This request will also allow the SEC to make critical and urgent updates to its technology to allow it to more effectively oversee securities markets. The SEC needs significant additional investment in information technology in order to improve systems for handling tips, complaints, and referrals; better identify emerging risks using improved surveillance tools; and make needed improvements and upgrades to information systems used for examination and enforcement functions.

Fair and orderly securities markets are critical to restoring confidence and integrity in our capital markets and economy. We recognize that your Subcommittee has the difficult job of prioritizing among numerous needs. We appreciate your consideration of this request and look forward to working with you on this important matter.