While Securities and Exchange Commission officials are fighting for a budget increase to deal with new duties put in place by the financial reform bill, reports say the regulator can't keep track of it's own income.
The SEC has failed to keep accurate books for seven years running, according to a Government Accountability Office report quoted by the New York Times.
Last year, the SEC failed to track income from fines, filing fees, and the "return of ill-gotten profits," according to the NYT, which says the mistakes were corrected before the SEC's financial statements were finished. The SEC is facing criticism for it's messy books as officials wrangle over the agency's budget allocation.
SEC officials say they need an increase in funding to help them invest in new technology. A Congressional report reported by the NYT found SEC analysts resorting to "printouts, calculators and pencils," thanks to slow systems which took three days to process data while investigating the "flash crash" in May 2010, according to the NYT.
The Financial Times reports that the enforcement division that missed Bernie Madoff's multibillion-dollar ponzi scheme also needs beefing up. Enforcement staff sometimes have to postpone taking testimonies because the commission can't afford travel costs.
The cash-strapped agency is also angling for a bigger budget to deal with new regulatory duties set out in the Dodd-Frank financial reform bill. The agency was allotted $1.1 billion in 2010, 15 percent higher than the $960 in the year before, according to the NYT.
SEC chair Mary Schapiro also told the NYT that the agency also needs to increase its workforce by 20 percent -- another 800 employees -- to deal with Dodd-Frank duties:
"Ms. Schapiro said that she understood the skepticism over her call for more resources but she noted that Dodd-Frank significantly expanded the agency's responsibilities over hedge funds, derivatives and credit ratings agencies. 'When you look at the composite picture of how the agency has changed and I hope will continue to change,' she said, 'I think we're really poised to be that agile regulator that the country has a right to expect of us.'"
Groups are lining up to back the SEC.
The North American Securities Administrators Association, which coordinates consumer protection measures, has called for congress to give the SEC the 18 percent increase mandated by the Dodd-Frank bill, a total of $1.3 billon in funding for 2011, according to Reuters.
Last year, the SEC collected $300 million more in fees from Wall Street than it cost to run the agency, according to the NYT, the difference went to the Treasury. Last week, securities lawyers, including former SEC directors and commissioners, sent a letter to lawmakers arguing that the SEC could keep the fees and fund itself, rather than going through the appropriations process, Bloomberg reported.
"The regulator of our capital markets is running almost on empty," said the letter, from members of the executive council of the Federal Bar Association's securities law committee.
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