SEC Chair Gensler Calls for More Funding
Commentary by Steven Lofchie
In a testimony before the House Appropriations Subcommittee on Financial Services and General Government, SEC Chair Gary Gensler called for additional resources to "help maintain [the 'gold standard' of] American capital markets as the best in the world."
Mr. Gensler compared the SEC's size today with its size in fiscal year 2016, noting that the agency actually "shrunk," despite the past several years being "a remarkable time [of growth] in our $100-trillion capital markets." He also asserted that because the SEC's responsibilities are constantly growing due to increases in legislation and regulations, it should receive more resources to be able to continue to fulfill its mission, which includes keeping up with technological advances that are increasingly being used in the markets.
Mr. Gensler called for an increased budget for the (i) Division of Enforcement and Division of Examinations, (ii) Divisions of Corporation Finance, Trading and Markets and Investment Management and (iii) Division of Economic Risk and Analysis. Further, he argued that the SEC will need additional resources to improve technology in order to "incorporate analytics and machine learning capabilities for our oversight and surveillance functions, protect agency and registrant information, [and] provide data to the investing public."
Commentary
The SEC is proposing new rules at an unprecedented rate. As to many of these rules, there is far from a consensus that they provide any material benefit, and certainly not a benefit proportionate to their costs. Before seeking more money from Congress, the SEC ought to (i) establish some priorities as to its own expenditures, (ii) establish some priority as to any new rule proposals, (iii) consider whether there are any existing rules that ought to be done away with or reduced in burden and (iv) give greater consideration to the costs of its new rule proposals. At this point, money to the SEC looks like coals to Newcastle.