White Says SEC Must Be Everywhere Even as Budget Fight LoomsJoshua Gallu and Dave Michaels
U.S. Securities and Exchange Commission Chairman Mary Jo White says she wants to send the message that her agency is omnipresent -- and needs funding to back up the claim.
“You always have to attend to making sure Wall Street and other market participants are getting a sufficiently strong message,” White said at the Bloomberg Markets 50 Summit in New York today. “We’ll be everywhere.”
White, 65, said that the agency is “all over” high-frequency trading, poised to sanction exchanges over technical glitches and ready to risk going to trial in order to wring admissions of guilt from more wrongdoers. She said progress on those goals could be halted unless Congress approves SEC budget increases proposed by President Barack Obama.
Even current levels of spending “would mean we can’t carry out the responsibilities and we have a lot of new ones,” White said. “We are doing the rules on the over-the-counter derivatives market and if we can’t implement and enforce those rules, you can see how the rest of the story is written.”
The Obama administration proposed a budget of $1.67 billion for the SEC in fiscal 2014, a 27 percent increase over the agency’s appropriated 2013 budget.
White’s remarks come as Congress faces a deadline to fund the government beyond Sept. 30, when current spending authority expires. The Senate will begin considering a measure this week, earlier passed by the House, that finances the federal government through Dec. 15 while cutting off funding for the Obama administration’s health-care law.
White is currently facing a slate of high-profile policy and enforcement issues.
Lawmakers and investors continue to question whether the SEC has a grasp on fragmented equity markets that are dominated by high-speed, electronic trading and have experienced multiple technical failures in recent years.
“We have the safest, most reliable markets in the world, but we also have to have a zero tolerance for any systems issues in a very high-speed, interconnected market,” White said.
At the same time, White said the regulator is “keeping a very close, responsible eye” on investor protection now that a ban on general solicitation for hedge funds has been lifted.
She also said the agency is moving to propose rules that would allow companies to raise money through equity crowd-funding and more lightly regulated offerings. The rules may be done this year, she said.
“Those are things we are devoting maximum resources to, not neglecting everything else we have to do with our limited resources,” White said.
She also vowed the agency would eventually adopt a June 5 proposal to add new restrictions to money-market mutual funds and said it is making “lots of progress” toward finishing the Volcker rule, which bans federally insured banks from trading for their own account.
On enforcement, White said “no company, no financial institution is too big to charge” for the SEC.
“If the evidence is there, and you should very aggressively pursue the evidence as far up in the chain as it will go, then you proceed,” she said.
White said a recent policy shift to seek admissions of wrongdoing could lead to more litigation, which requires greater resources. To reach adequate settlements, the SEC has to be regarded as a potent trial force, she said.
“No press conference ever solves the dilemma of limited resources,” said Donald Langevoort, a securities law professor at Georgetown University in Washington. “If one asks whether the SEC has the resources to be everywhere, the answer is no, sadly.”