Budget fight would leave SEC with 'fewer cops'

By Hibah Yousuf, staff reporter


DALLAS (CNNMoney) -- Securities and Exchange Commission chairman Mary Schapiro warned Friday that the squabbling in Washington and the looming government shutdown could impede the agency's power to enforce securities laws.

"Tomorrow, unlike almost every other financial regulator, we may be shut down," leaving the agency with a thin staff and bringing many of the SEC's operations to a halt, she said, speaking at a business journalist conference in Dallas.

Currently the SEC's staff totals 3,969. The agency said Friday that more than 90% of that staff, or 3,637, would be furloughed in the case of a shutdown - 174 will remain to handle enforcement activity, while 158 will be retained to 'protect life or property.'

The bigger issue lies with funding, or rather, a lack thereof, Schapiro said.

Congress sets the SEC's budget, providing the government agency with the resources to regulate financial markets and protect investors, as well as the ability to implement pending financial reforms under the Dodd-Frank Act.

"Insufficient funding for the SEC means fewer cops on the beat, even though fraudsters show no sign of backing off," she said.

And a government shutdown will only exacerbate the problem.

"Insufficient funding for the SEC means an investor protection effort hobbled at a time when the events of the last decade have proved that effective enforcement of the securities laws is more important than ever," Schapiro said.

There was one semi-bright spot. Schapiro said that the SEC will be able to cover its budget starting next year with collected fees instead of tax dollars, making it deficit neutral.

But inadequate government funding will threaten the agency's necessary hiring plans and IT initiatives needed to analyze market data more efficiently.

The chairman added that it would also force the SEC to bring cases to trial without expert witnesses or information that the SEC's digital forensics lab could have discovered on laptops or iPhones.

"We cannot do our jobs as well as American investors need and deserve if we cannot hire the people, build the systems and make the changes necessary to protect our markets and support job creation," Schapiro said.

Schapiro also said the agency is in the early stages of looking into private stock rules that will affect some big tech companies, such as Facebook, Twitter and Groupon.

She said while she can't predict what changes, if any, will come out of the review, the rules in places are "decades old," so the agency is looking to see how they can be "modernized" with changing market dynamics and technology. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.96%3.98%
15 yr fixed3.07%3.09%
5/1 ARM3.20%3.23%
30 yr refi3.96%4.07%
15 yr refi3.08%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,814.94 -2.96 -0.02%
Nasdaq 4,758.25 3.36 0.07%
S&P 500 2,067.03 -2.38 -0.12%
Treasuries 2.26 -0.05 -2.16%
Data as of 2:49am ET
Company Price Change % Change
Apple Inc 117.60 -1.02 -0.86%
Bank of America Corp... 17.10 -0.08 -0.47%
Huntington Bancshare... 10.11 -0.07 -0.69%
Kinder Morgan Inc 40.75 -0.04 -0.10%
Ford Motor Co 15.68 0.01 0.06%
Data as of Nov 25

Sections

Jet fuel prices are down about 18% since August, but don't expect a break in your air fare any time soon. More

Retailers are repeating Black Friday deals from year to year, and offering the same discounts at other times. More

Sales of iPads and other tablets are slumping badly in 2014, and won't likely be a big hit during the holidays as they were last year. More

Ever since the Ebola epidemic erupted in her hometown of Foya, Liberia, Deboriah Foko has been working with Doctors Without Borders to inform others about this deadly virus. Here are journal entries from a day in her life. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.