The U.S. Securities and Exchange Commission could lose $30 million from its proposed fiscal 2004 budget because it was unable to hire new staff fast enough in 2003.
Congress boosted the SEC’s fiscal 2003 budget so it could hire more people to fight corporate crime. The SEC, which had a staff of about 3,500, was heavily criticized for not catching companies, such as Enron, WorldCom and Tyco, that hoodwinked investors with improper accounting and lawmakers wanted to ensure the SEC had the staff to handle the workload.
The SEC’s burden has only grown more heavy. Since September, there has been a raft of scandals in the $7 trillion mutual fund industry, which the SEC regulates. The agency is now under fire for not catching mutual fund management companies and brokerages that condoned or encouraged improper trading and sales practices and has since launched investigations of scores of companies.
Laura Cox, SEC spokeswoman, said the agency was working quickly to make new hires and that as of on Monday the agency had hired 70 per cent of the 850 people it planned to hire in fiscal 2003, which ended in September. The rest would be hired in coming months, she said, adding the SEC was unable to meet its goal because Congress approved the fiscal 2003 budget and waived certain hiring rules late in the year and because of the difficulty of bringing new staff on board and training them.
According to reports on the web site of the US House Appropriations Committee, the proposed cut would leave the SEC with an $811.5 million budget for fiscal 2004. That is $66 million more than fiscal 2003 and $120 million will come from money the SEC was unable to spend in 2003 and had to return to the Treasury.
According to Bloomberg News, Senator Paul Sarbanes of Maryland, the Senate Banking Committee’s ranking Democrat, said he was distressed at hearing about the proposed cutbacks in the SEC budget.