Wall Street Cop Said to Purge Contractors as Budget Fight LoomsBy and
SEC eliminates dozens of outside workers who assist on probes
Regulator concerned it faces deep funding cuts under Trump
Facing possible budget cuts under President Donald Trump, the Securities and Exchange Commission is eliminating dozens of contractors hired to help root out Wall Street fraud, said two people with knowledge of the matter.
The contractors aren’t full-time federal employees, but the SEC, which oversees the finance industry, relies on them to help shoulder complex investigations that often lead to trials that can go on for months or years.
The recently eliminated positions include data-entry staff and paralegals, raising concerns within the SEC that the pace of enforcement actions will slow as those responsibilities increasingly fall to career attorneys, said the people, who asked not to be identified because the cuts haven’t been publicly announced.
The SEC and other agencies have been operating under what’s known as a continuing resolution, which is temporary funding that keeps the government running until Congress and the White House agree on a formal budget.
In February, the Trump administration issued a preliminary budget plan that proposed deep reductions for many agencies to offset a $54 billion increase in defense spending. While the SEC wasn’t included in Trump’s outline, it stoked expectations that the White House might recommended less money for the regulator when a full budget proposal is released later this year.
The SEC said concerns about budget cuts didn’t prompt the elimination of contractor jobs. It “reflects the normal ebb and flow under continuing resolutions,” SEC spokesman John Nester said. The agency declined to provide information on how many positions were eliminated and the number of contractors the agency employees.
Acting SEC Chairman Michael Piwowar didn’t order any cuts, said his spokesman, Chris Carofine.
The SEC’s enforcement division -- the group responsible for policing securities laws -- has already banned non-essential travel, imposed a hiring freeze and isn’t replacing departing staff, people with knowledge of the matter said last month.
The expectation that spending will be tighter going forward has factored into efforts to try to start saving money now, said the people who discussed the SEC’s reduction in contract workers.
Contractors don’t have the same labor protections as thousands of SEC federal staff, many of whom also belong to a union. So laying them off is a quick way to reduce expenses.
Many contractors work side-by-side with SEC enforcement attorneys to build cases against financial firms. For example, some clean up and format data, such as trading records or phone call logs, so they’re easily searchable for attorneys looking for patterns. Contractors also assist other SEC divisions, including ones that regulate stock exchanges and mutual funds.