Regulation and Compliance Federal Regulation SEC

SEC Chief Presses Senators to Fund More Reg BI Exams

News September 15, 2022 at 02:48 PM
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Securities and Exchange Commission Chair Gary Gensler told senators Thursday that the agency needs more resources, noting that the exam division's "work is essential to ensuring strong compliance across the board," including "work to test for compliance with Regulation Best Interest."

In testimony before the Senate Banking Committee, Gensler said that the enforcement division "is doing more with less." For example, "more cases are being litigated and going to trial. The SEC has tried the same number of cases to verdict in federal courts in FY22 (14) as we did in the prior three fiscal years combined."

In fiscal 2021, Gensler said, the agency received 46,000 tips, complaints and referrals from the public, up from about 16,000 five years earlier.

As to the exam division, Gensler said that in the most recent completed fiscal year, this division exceeded the previous year's numbers by completing more than 3,000 exams.

The exam division "grew modestly (4%) since FY16," Gensler said. The fiscal 2023 budget request supports an additional 4% increase in full-time examiners compared with fiscal 2021, he said.

The SEC, Gensler told the lawmakers, oversees 24 national securities exchanges, 99 alternative trading systems, 10 credit rating agencies, seven active registered clearing agencies, five self-regulatory organizations and other external entities.

"We review the disclosures and financial statements of more than 8,200 reporting companies," Gensler said. "Markets don't stand still. The world isn't standing still. Our resources can't stand still, either."

For instance, since 2016, Gensler said, "the number of private funds managed by registered investment advisers has increased 40%, to 50,000."

Further, he continued, "the amount of data that the SEC processes has swelled by 20% annually for each of the last two years. And yet, our agency has shrunk. Last year, the agency had 4% fewer staff than it did in 2016. We can't shrink when we're trying to maintain a gold standard."

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