The annual battle over the funding of securities and derivatives regulators by Congress took a step forward today as a Senate panel heard from the chair of the SEC and the CFTC concerning their Fiscal Year 2017 budget request. Combined, the SEC and CFTC are seeking funding for the hiring of more than 400 additional staff members.
SEC Chair Mary Jo White said that the additional 250 staff requested for the SEC would be used to provide oversight of investment advisers, analyze risk in exchange traded funds (ETFs) and strengthen cyber security. 52 of the 250 requested would go in the enforcement division to support analysis, investigation and litigation efforts. The SEC is seeking an increase of $176 million from the FY 2016
The CFTC also pushed the Senate panel for more funding. Chairman Timothy Massad told the panel that the agency could no longer oversee trading by watching the floor traders. Instead, it needs the capability to store and analyze massive amounts of data moving through the markets.
The CFTC funding request of $330 million is an additional $80 million more than it received in funding for the current fiscal year. In order to justify the funding increase, Massad’s prepared remarks focused on the enormous cost of the 2008 financial crisis which was made worse by problems in the oversight of the swaps market.
As part of its request, the CFTC asked for funding to hire another 51 employees dedicated to enforcement activities. Massad pointed to the complexity of fraudulent schemes, the required forensic economic analysis, and the need to investigate years of misconduct.
Overall, increased funding for government regulators would be beneficial to whistleblowers and government enforcement as it would allow the United States to investigate more tips and put more resources into the pursuit of enforcement actions.