The Securities and Exchange Commission is holding off forming several departments required under the Dodd-Frank financial reform law
The Securities and Exchange Commission is holding off forming several departments required under the Dodd-Frank financial reform law.
In a short notice posted on the agency's website Dec. 2, the SEC said “budget uncertainty” had caused it to delay creating an office to oversee access by women and minorities to the SEC process, an investor advisory committee, an investor advocate, a whistle-blower office, and units dedicated to oversight of credit ratings and municipal securities.
Functions that were to be handled under some of the new offices will be kept within existing departments, the SEC notice said.
In an e-mail, SEC spokesman John Nester wrote that it's uncertain how long the delay might be. He said the agency has submitted a request to Congress to provide authorization and funding for the new departments.
Congress has not approved a federal budget for fiscal year 2011, so the SEC is operating at its fiscal 2010 funding level. That doesn't give the agency enough money to pay for the new offices, said Barbara Roper, director of investor protection at the Consumer Federation of America.
“Before it starts staffing up [for the new offices], the SEC wants to know if it's going to have to turn around and staff down” if it doesn't get a budget increase, Ms. Roper said. The delay is a “logical response” to the budget uncertainty, she added.
But Edward Siedle, founder of Benchmark Financial Services Inc., who investigates money managers for pension funds, doubts that the SEC really wants an effective whistle-blower program.
“Our government will spend more money this month combating WikiLeaks than it would cost to fund an effective SEC whistle-blower program for the next decade,” Mr. Siedle wrote in a column on Forbes.com. “My advice to would-be whistle-blowers: contact WikiLeaks.”
Mr. Nester disagrees, saying SEC chairman Mary Schapiro asked Congress for the authority under Dodd-Frank to compensate whistleblowers.
Last month, in proposing procedures the SEC would use to reward whistle-blowers, Ms. Schapiro said they can be a good source of leads, but that of the thousands of tips the SEC gets every year, few come from whistle-blowers.
E-mail Dan Jamieson at djamieson@investmentnews.com.
