Institute Testifies in Support of SEC FY 2001 Budget

Washington, DC, April 1, 2000 - The Senate Subcommittee on Commerce, Justice, State, and the Judiciary Committee on Appropriations held a hearing on March 21 regarding the Administration's fiscal-year 2001 budget request for the Securities and Exchange Commission.

The Institute supported an increased level of SEC funding of $422.8 million for FY 2001, as requested by the Administration. The Institute's statement expressed concern, however, that SEC fees will generate revenues significantly in excess of that required to fund SEC operations, despite the steady decline in SEC 6(b) registration fees as mandated under the National Securities Markets Improvement Act of 1966. The statement added that adequate financial resources are essential for the SEC to continue its effective regulatory oversight of the securities markets and to carry out important investor protection and awareness initiatives.

The Institute's statement explained that the funding increase is necessary to support the SEC's many initiatives, including finalizing significant rule proposals on fund governance issues, developing new rules for mutual fund advertising, and addressing disclosure of after-tax returns. In addition, sufficient resources are needed to address significant equity market issues, such as decimalization, concerns over market fragmentation and after-hours trading, and to respond to the many challenges new developments in technology will bring.

The Institute's statement also addressed the SEC's "staffing crisis" and supported the SEC's retention initiative, which would raise staff compensation to levels comparable with the banking regulatory agencies, thus raising employee morale and enhancing the SEC's recruitment and retention efforts. The statement added that adequate staffing resources are essential for the SEC to fulfill its mandate.

In its budget request for FY 2001, the SEC asks for $422.8 million, $62.0 million over the FY 2000 budget. In his testimony, Chairman Levitt focused on two specific areas that are dominating the Commission's agenda: the Internet and the Commission's inability to retain qualified staff.