WASHINGTON -- President Bush is seeking a 13 percent increase in the budget for the Securities and Exchange Commission, including $18.7 million for new staff to work on its huge caseload of corporate and mutual fund misconduct.
The $913 million request to Congress yesterday for the budget year starting Oct. 1 includes $20 million the SEC was unable to spend last year because it couldn't hire new accountants and attorneys fast enough.
Under landmark antifraud legislation enacted in 2002 amid the corporate scandals, Congress gave the SEC expanded powers and almost doubled the budget of the traditionally low-profile agency with 3,300 employees.
The 13 percent rise, while moderate, is notable at a time when the administration's $2.4 trillion budget proposes few major increases other than for defense and homeland security, and spending for many government programs is being held at current levels or cut.
"It's a budget that continues what we have started," SEC executive director James McConnell told reporters.
It was the first budget drafted by SEC chairman William Donaldson, who assumed the post a year ago after Bush's first SEC chief, Harvey Pitt, resigned under pressure following a series of political missteps that embarrassed the White House.
Over the past year, the agency has used its civil enforcement powers to bring a number of cases related to the Enron, WorldCom, and other accounting scandals, conflicts of interest in Wall Street investment houses and, more recently, alleged trading and marketing abuses in mutual funds.
The budget documents noted that more than $1.5 billion in restitution and civil penalties is being returned to defrauded investors from agency enforcement actions.
The SEC has been straining under an unprecedented load of investigations and prosecutions.
It also took action against several big accounting firms, and after missing signs of trouble at companies like Enron that filed financial reports replete with Byzantine partnerships and ventures, it has stepped up routine reviews of annual reports and other filings.
The SEC derives its funding from fees that companies pay to register new stock, but the agency is subject to the congressional budget process in the same way as other federal departments.
Because of the delay in hiring new professionals, especially accountants who can often earn more in the private sector, the SEC closed out last fiscal year without spending $103 million -- 40 percent of its budget increase -- appropriated by Congress in January 2003.
The agency now has brought on 660-670 new professionals against last year's goal of 842, SEC officials said yesterday. The $18.7 million in the latest budget request is for additional positions: including 44 to work on mutual funds (a 6.4 percent increase), 30 on corporate and other antifraud efforts, and another 30 on regulating the nation's securities markets.
The budget request also includes nearly $32 million for the SEC to rent a new headquarters in a building under construction on Capitol Hill.