April 15th was not only the dreaded federal tax deadline day, but it is also the date that Jackie Robinson played his first professional baseball game and the day Abe Lincoln died. It also happens to be the date (this year) that SEC Chair Mary Jo White marched up to Capital Hill for a visit to the House Appropriations Financial Services Subcommittee to pitch for more funding.
Chaired by Congressman Crenshaw, the committee heard the SEC’s plea for a 15% increase in funding for fiscal 2016. This represents a 15% increase over year prior – the entire budget request being $1.7 billion. In contrast to year prior, the SEC only asked for an 11% increase (around $150 million).
And does the SEC need the funding? Well our securities regulators hold a vaunted position in the global economy, one that is not always recognized nor understood. The SEC must guarantee efficient and competitive markets, guard the public from nefarious characters, make rules while fostering access to capital. Quite a list.
Technology, and the rapidly evolving environment of securities trading, has been an ongoing challenge. While financial firms spend billions to have the best and the brightest in IT the SEC struggles to keep pace.
But according to Chair White, “the challenge is the volume and complexity and not having mandated rule making crowd out the other things they do.” Read Dodd-Frank.
One interesting comment of note was on Bitcoin and the feds approach. Queried by Congressman Bishop on virtual currencies, Chair White responded; Is bitcoin an investment contract? Then it would be a security… we have not made that conclusion (yet) … there is a working group addressing bitcoin.
Congressman Yoder, a member from Kansas City, pressed Chair White on retail crowdfunding rules inquiring as to the priority and timeline for Title III. White responded;
“I always get kicked from behind when I do timelines,” stated Chair White. “This is one that I think is enormously important. It’s our last major, significant rulemaking under the JOBS Act. It is one that I have actually in the last six weeks or so had really extensive meetings with the staff. They’re progressing on this. Essentially the lay of the land on this is we knew it was going to be complicated rulemaking, basically we need to be true to the statutory requirements, but also make it workable and cost effective. That has proven to be even more complicated, to get that right balance than we thought, but it is one that I am certainly prioritizing it for this year. “
The video of the subcommittee meeting is embedded below.