The SEC's Budget: An Enforcement Heavy Agency (Part 2)
As for the specifics of the SEC's budget, the details are here. How did the divisions fair in the request? The details, however, hold considerable interest. The operating divisions will, if the budget goes through, be funded at levels below fiscal 2014. Thus, CorpFin had a 2014 budget of $186 million, something that would fall to $159 million in 2015 and $162 million in 2016. Trading and Markets? $99 million in 2014; $88 million in 2015; $93 million in 2016. IM largely stayed flat ($67/$63/$68).
The increases mostly went two places: enforcement (Enforcement and OCIE) and DERA. For Enforcement, the proposed increase from 2014 would result in a total increase of around 36% ($349 million in 2014; $442 in 2015 and $474 in 2016). For OCIE, the numbers were even more significant, reflecting a 71% increase, with the budget almost in parity with the Division of Enforcement ($242/$340/$413). As for DERA, the office saw a big increase from 2014 to 2015 but nothing much after that. Nonetheless, over the three years (assuming full funding), DERA's budget will increase by over 100% ($23/$52/$54).
What overview do these numbers provide? If you add together the budgets for OCIE and Enforcement and compare it to the three operating divisions (CorpFin, IM and T&M) you see an interesting shift. Total new obligations in 2014 were $1.336 billion. Of that amount, OCIE/Enforcement made up 44% of the total; the three operating divisions 26%. Fast forward to the 2016 proposed budget (total new obligations of $1.647 billion). OCIE/Enforcement represent 54% and the operating divisions have fallen to 20%.
Said another way, the SEC is becoming primarily an enforcement agency. The funds for rulemaking, market oversight, and public disclosure in the three main operating divisions is decreasing and, if the 2016 budget is approved as is, will sink to perhaps record lows, at least when measured as a percentage of the overall budget.
By the way, the total number of budgeted, full time positions for the agency responsible for overseeing the securities markets? 637 in 2014; 773 in the 2016 request. Not many people for such a broad set of tasks.