Jan. 20 (Bloomberg) -- Robert Khuzami, the U.S. Securities and Exchange Commission’s top enforcement official, said the agency’s efforts to root out fraud are being hampered by Congress’ decision to restrict funding.
“It’s clearly impairing our efforts,” Khuzami said at a securities law conference today in Coronado, California. “It’s requiring us, frankly, to make some difficult choices,” such as limiting travel to interview witnesses and postponing hiring experts needed to help monitor Wall Street, he said.
Government funding for the fiscal year ending Sept. 30 has been caught up in partisan battles over taxes and spending, particularly after Republican gains in November elections. Federal lawmakers agreed Dec. 21 to fund the government at current levels through March 4, denying budget increases sought by the SEC to implement the Dodd-Frank financial-regulatory overhaul.
The division also can’t afford the technology upgrades it needs to store and manage as much as 2 terabytes of data it receives each month, he said. Instead of sending a team of investigators to interview witnesses, Khuzami said he sometimes sends only one attorney for the meeting and others participate by video conference.
Khuzami said the budget constraints have made it difficult to hire experts, including equity and municipal-bond traders, or even fill positions that open when someone leaves. Adding specialists to the enforcement staff was central to Khuzami’s overhaul of the division after the agency was faulted by lawmakers and investors for having missed Bernard Madoff’s multibillion dollar fraud and failing to curb Wall Street practices that helped fuel the financial crisis.
“It’s forcing us to triage,” Khuzami said. “We’re not going to accomplish everything I’d hoped for as quickly as I had hoped.”
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