White House Eyes Doubling SEC Budget by 2021

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By Rob Tricchinelli

Feb. 9 — The Securities and Exchange Commission's budget would increase to $1.78 billion for fiscal year 2017 under the White House's Feb. 9 budget request, in a step toward the administration's stated goal of doubling the agency's funding by 2021.

The biggest slice of the increase would fund the agency's examination program, which agency officials and Democratic lawmakers have said is understaffed and unable to examine as many investment advisers as it should.

The SEC only is able to examine approximately 10 percent of investment advisers annually. By comparison, between the SEC and Financial Industry Regulatory Authority, roughly half of all registered broker-dealers are examined annually.


Congressional Republicans balked at the increase, as many have for previous White House requests to boost SEC funding.

“Throughout his time in office, all we have gotten from President Obama are irrelevant budgets full of more spending fueled by higher taxes—all seemingly written to appease the Bernie Sanders-Elizabeth Warren-Hillary Clinton liberal wing of the Democrat party,” House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said in a news release.

Despite the opposition, the SEC has still seen increases in its budget in recent years. The agency was funded at $1.5 billion in 2015 and $1.6 billion in 2016.

The White House's goal is to ramp the agency's budget up to $3 billion by 2021, long after President Obama will have left office.

“Grossly underfunding [the SEC] has allowed some on Wall Street to return to their high-risk pre-crash ways of doing business, endangering our financial stability and undermining the mission of financial reform,” Dennis Kelleher, president of nonprofit Better Markets, said in a news release.

New Staff

If the funding level is enacted as requested, the SEC said it plans to hire approximately 250 new full-time staff, about half of which would be for exams.

Even if enacted, however, the SEC estimates it would only be able to examine 12 percent of all investment advisers annually.

The SEC is considering shifting approximately 100 examiners to the investment adviser and investment company realm, separately from the potential new hires, but no agency estimates are available regarding how much that would increase industry coverage.

Other Initiatives

The SEC said it would also use additional funding to bolster its data analytics, cybersecurity and surveillance capabilities.

The agency is also working on a redesign of EDGAR, its Electronic Data Gathering, Analysis and Retrieval system.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

For More Information

For SEC analysis of the budget request, visit https://www.sec.gov/about/reports/secfy17congbudgjust.pdf

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