Bush pledges $100 million to beef up SEC
President Bush pledged $100 million to beef up enforcement at the Securities and Exchange Commission on Tuesday as part of a new initiative to root out fraudulent business practices in the private sector.
The funds, which will be added to the administration's fiscal 2003 budget request, would allow the SEC to hire more accountants and lawyers and launch information technology programs to protect investors. Initially, the White House proposed a "zero-growth" budget for the SEC in fiscal 2003. In April, the administration added $20 million to its fiscal 2002 supplemental request so the SEC could hire 100 employees to undertake several new fraud investigations.
"I asked Congress four months ago for funding to place 100 new enforcement personnel in the SEC," said Bush during a speech on corporate responsibility in New York. "Today, I announced my administration is asking Congress for an additional $100 million in the coming year to give the SEC officers and the technology it needs to enforce the law."
The SEC has been strapped to deal with a surge of fraud investigations in the wake of corporate scandals at Enron, Global Crossing, WorldCom and other firms. The agency's enforcement division initiated 64 fraud investigations between January and March, twice the number of cases opened during the same period in 2001. In April, SEC Executive Director James McConnell told Congress that the agency needed the $20 million supplemental funding to keep pace with these investigations.
"These 100 positions are the absolute minimum staffing levels we believe we require to deal with our immediate post-Enron needs," McConnell said before the Senate Governmental Affairs Subcommittee on Oversight of Government Management Restructuring and the District of Columbia.
But the Bush proposal will not solve the SEC's retention problems because it does not fully fund the agency's new pay parity system, according to Colleen Kelley, president of the National Treasury Employees Union. "Everyone knows the SEC is undergoing severe recruitment and retention problems," she said. "By largely ignoring the need for true pay parity for SEC employees, the administration continues to skirt the real issue."