The Securities and Exchange Commission is a federal government agency. Created by Congress in 1934 as the first federal regulator of U.S. securities markets, the mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public's trust. It also monitors corporate merger and acquisition activity in the U.S.
Adequate funding is critical to enhancing investor trust in the investment markets by facilitating sufficient resources to enable the SEC to effectively perform its regulatory and oversight duties. The agency has long argued that its funding levels are inadequate to fulfill its investor protection mandate. As currently structured, the SEC must go through the federal appropriations process for its annual operating budget, even though it annually collects registration fees that exceed its appropriations.
The Dodd-Frank Wall Street Reform and Consumer Protection Act added to the SEC’s budgetary burdens by mandating new responsibilities for the oversight of advisers to private equity funds (including registration of hedge fund advisers), the creation of a new Bureau of Credit Ratings, oversight of security-based swaps, the creation of a whistleblower program, and registration of municipal securities advisers.
Self-funding was proposed for, but ultimately stricken from, the Dodd-Frank Act. And significant problems in the overall budget of the United States have reduced even further the willingness of Congress to fund the SEC’s funding request to the level requested.
CFA Institute Viewpoint
CFA Institute believes that the lack of adequate resources available to the SEC contributed to its inability to more aggressively police the financial markets in recent years. We support full funding for the SEC to help alleviate market integrity problems, continue a robust enforcement program, and significantly increase the number of investment adviser examinations conducted.