FOR IMMEDIATE RELEASE: April 28, 2009
SCHUMER, SHELBY ANNOUNCE FINAL SENATE PASSAGE OF MEASURE GIVING SEC $40M OVER TWO YEARS TO HELP CATCH FINANCIAL SCAMMERS
Funds Will Enable Hiring of 60 New Officers To Agency's Enforcement Division And Finance Needed Technology Upgrades
Senators Had Successfully Amended Anti-Fraud Bill Last Week After Agreement With Grassley
WASHINGTON, DC—U.S. Senators Charles E. Schumer (D-NY) and Richard Shelby (R-AL) announced Tuesday that the Senate has given final approval to legislation that includes their provision increasing the Securities and Exchange Commission (SEC) budget by a total of $40 million over the next two years. The funding boost would enable the agency to hire 60 new enforcement officers, as well as perform critically needed upgrades of its information technology systems.
“This legislation will ensure that the SEC has the resources it needs to investigate fraud. We hope it can get to the President’s desk quickly,” Senator Schumer said. “If federal regulators miss even one scam, that’s one too many. This bill says we can’t overlook criminal behavior just because the culprits are disguised in business suits.”
“By increasing the SEC’s resources to investigate and prosecute financial crimes, the Senate today sent an important message to financial criminals that they will be caught and brought to justice. I believe this is a critical step toward restoring trust in our financial markets,” Senator Shelby said.
Last week, Schumer and Shelby successfully amended S. 386, the Fraud Enforcement and Recovery Act. That bill, co-sponsored by Senators Patrick Leahy and Chuck Grassley, provides badly needed resources for the Federal Bureau of Investigation to bolster its white-collar crime division, but in its original form, did not provide any resources for the SEC. Schumer and Shelby’s amendment fixed that, since it only makes sense to bolster the SEC’s ability to prevent future Ponzi schemes and other financial frauds. The final bill passed, 92-4.
SEC Chair Mary Schapiro had strongly endorsed the Schumer-Shelby amendment. Its incorporation into the larger bill was secured last week after an agreement was reached with Senator Chuck Grassley (R-IA). Under that deal, Schumer and Shelby’s amendment will also provide $1 million to the SEC’s Inspector General office for each of the next two years, bringing the amendment’s total cost to $42 million.
The resources allotted by the Schumer-Shelby amendment will address understaffing at the SEC, which saw a 10-percent decline in its employee ranks from 2005-2007. Since that time, the modest upticks in the agency’s annual budgets have mostly covered cost-of-living adjustments for the reduced workforce. Even the four percent budget increase in this year’s omnibus package made only a small dent in getting the SEC back up to 2005 staffing levels, and the SEC’s technology budget is still more than 50 percent lower than 2005 levels.
At the same time, the burdens on the agency have never been greater. So far, in this month alone, the SEC has put a stop to $155 million in fraudulent Ponzi schemes. And, as a critical component of its current enforcement efforts, the SEC is currently investigating over three dozen cases involving subprime mortgage-backed financial instruments.
The amendment offered by Schumer and Shelby represented their latest joint effort to secure increased resources for federal agencies charged with responding to the financial crisis. In January, Schumer and Shelby announced the Supplemental Anti-Fraud Enforcement (“SAFE”) Markets Act, which sought to authorize $110 million annually for new hires at the Justice Department and the SEC. The Leahy-Grassley legislation, which was introduced soon after and went on to win approval from the Senate Judiciary Committee, adopted Schumer and Shelby’s call for $75 million for the FBI and has now incorporated their push for greater SEC funding as well.