TheCorporateCounsel.net

Last week, SEC Chair Gary Gensler testified before the U.S. Senate Appropriations Subcommittee on Financial Services and General Government about the SEC’s Fiscal Year 2024 budget request. In his written testimony, Chair Gensler noted:

We’ve seen tremendous growth and change in our markets. More people than ever are participating—trading and using tools and technologies that were unavailable even a few years ago.

For example, from 2017 to 2022, the number of clients of registered investment advisers grew nearly 70 percent from 34 million to 57 million. During that same period, average daily trading in the equity markets more than doubled from more than 30 million transactions to more than 77 million.

Technology is rapidly transforming our markets and business models. These changes range from electronic trading and the cloud to artificial intelligence and predictive data analytics, just to name a few. There has been dynamic change in communications to and among investors, from Reddit forums to celebrity influencers. Further, we’ve seen the Wild West of the crypto markets, rife with noncompliance, where investors have put hard-earned assets at risk in a highly speculative asset class.

Such growth and rapid change also mean more possibility for wrongdoing. As the cop on the beat, we must be able to meet the match of bad actors. Thus, it makes sense for the SEC to grow along with the expansion and increased complexity in the capital markets.

I am proud of this agency. I am proud of our dedicated staff. It has done remarkable work with limited resources. With funding to meet the scale of our mission, we can be an even stronger advocate for the American public—investors and issuers alike.

Further, while recent market volatility raises many important issues for policymakers and the American public, it is also a reminder of the SEC’s need to be adequately resourced.

Gensler spoke in support of the President’s FY 2024 request of $2.436 billion for SEC operations. He noted that FY 2023 funding would bring the agency’s staffing back above where it was seven years ago, and the agency is continuing to work to fill 400 new positions. Gensler notes that the SEC is expected to be approximately 3 percent larger this year than it was in FY 2016. With respect to the Division of Corporation Finance, Gensler notes that staffing levels remain approximately 17% below FY 2016 levels, while the number of public companies has increased by 18% to 7,836. The testimony notes that the SEC is on track to move its DC headquarters, with $39.6 million requested for the moving and build out costs.

– Dave Lynn