(November 15, 2012) – It is too bad investors can’t buy shares of the US Securities and Exchange Commission (SEC).
The regulatory agency returned double its budget in fiscal year 2012, levying fines totaling more than $3 billion. Of course, those fines go to wronged parties, not the SEC itself, which has nevertheless had an active and successful year.
“The record of performance is a testament to the professionalism and perseverance of the staff and the innovative reforms put in place over the past few years,” said SEC Chairman Mary Schapiro in a statement. “We’ve now brought more enforcement actions in each of the last two years than ever before including some of the most complex cases we’ve ever seen.”
It filed 734 enforcement actions in the year ending September 30, 2012—just shy of 2011’s record-breaking 735. This year’s total included more major and highly complex cases than ever, such as the insider trading charges against former McKinsey & Co. global head Rajat Gupta for tipping off convicted hedge fund manager Raj Rajaratnam.
“It’s not simply numbers, but the increasing complexity and diversity of the cases we file that shows how successful we’ve been,” said Robert Khuzami, director of the SEC’s enforcement division. “The intelligence, dedication, and deep experience of our enforcement staff are, more than any other factors, responsible for the Division’s success.”
Judging by the SEC’s budget for fiscal year 2013, the numbers and scale of regulatory action are only set to grow. The House of Representatives is controlled by the Republican Party, which tends to advocate for small government and limited regulation–but Congress has approved a $245 million increase to the commission’s current $1.5 billion budget. This will support an additional 676 positions over the current staffing levels, according to government documents.
Still, legislators are seeing the financial regulator as money well spent—particularly because most of its budget comes from fees on securities transactions. Seven years ago, the SEC’s funding was sufficient to provide nineteen examiners for each trillion dollars in investment adviser assets under management, according to the SEC’s report to Congress justifying its 2013 budget. Now, there are ten examiners per trillion dollars.
“A number of financial firms spend many times more each year on their technology budgets alone than the SEC spends on all of its operations,” the report says. “Similarly, our enforcement teams bring cases against firms that spend more on lawyers’ fees than the agency’s annual operating budget.”