Citing Goldman Sachs suit, Schapiro seeks 12% budget hike for SEC
Wednesday, April 28, 2010; 8:16 PM
Invoking her agency's fraud suit against Goldman Sachs, Securities and Exchange Commission Chairman Mary Schapiro on Wednesday called on Congress to provide a 12 percent boost to the regulator's budget next year.
The SEC lawsuit and the stinging accusations made this week by a Senate investigative panel about the bank's conduct in the financial crisis have put Goldman on the defensive.
Schapiro's testimony before a Senate appropriations committee made clear that the agency's case against Goldman is also a big test for the SEC's credibility as it seeks $1.26 billion for next year.
In her prepared testimony, Schapiro cited the Goldman case as evidence that the agency's "enforcement activity increased significantly" during her tenure.
But she immediately faced a question from Sen. Susan Collins (R-Maine) about whether politics played a role in the decision to file a suit.
Several Republicans have raised the possibility that the agency, which is seeking more powers under regulatory overhaul legislation before Congress, filed the suit at the time it did to support Democratic efforts to pass reforms.
Schapiro said that was "absolutely not" the case. "We bring our cases when we have the law and the facts that we believe support bringing our cases," she said.
Schapiro also called for a change in the law to make sure that investment advisers and brokers, such as Goldman, have the same responsibility to ensure that what they're selling clients is in their clients' best interest. That responsibility now applies only to investment advisers. The financial overhaul legislation before Congress currently would not impose such a fiduciary duty on brokers.
Schapiro said the budget request would allow the agency to hire 374 officials, bringing the regulator's staff to 4,200, and expand investments in surveillance and other technology.
The budget includes $24 million for the SEC if Congress gives the SEC and a sister agency, the Commodity Futures Trading Commission, the power to police derivatives.
Schapiro said the money would allow the agency to open more than 100 additional investigations and file charges in 70 more cases. The enforcement division could also hire more trial lawyers and build a technologically advanced financial forensics lab.
"While we will never match the technology available to the financial institutions we regulate and the big law firms we face, the ability to search and use the vast mountains of data they collect will make our team much more competitive," Schapiro said "New technology will be accompanied by comprehensive training, allowing staff to navigate the constantly evolving financial environment they monitor."