Budget Gives SEC Only Slight Boost Despite Calls for Better Enforcement
By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
February 4, 2002
WASHINGTON -- Despite widespread demands for increased scrutiny of corporate accounting following Enron Corp.'s collapse, the White House is expected to recommend only a slight increase in funding for the lead regulator on such matters when its budget is unveiled Monday.
What's more, the Securities and Exchange Commission's operating budget wouldn't include money to back up a recent commitment from both Congress and the Bush administration to raise SEC salaries to stem an exodus of experienced staff, people familiar with the matter said.
Just three weeks ago, the agency appeared to score an important victory when President Bush signed legislation that would raise SEC staff pay to the levels of their counterparts at federal banking-regulation agencies, who earn an estimated 24% to 39% more. Funding the increase was to be handled later.
But just a week after the bill was signed, Chairman Harvey Pitt told staff in an e-mail, "Unfortunately, the Office of Management and Budget has advised us that funding for pay parity will not be included in the president's proposed budget for fiscal year 2003, which starts in October. While I am enormously disappointed by this, we are part of one government, and must abide by government-wide budget decisions."
The SEC originally requested more than $500 million for 2003, including $76 million to implement pay parity for its lawyers and investigators, according to people familiar with the request. As it is, the White House is expected to recommend a rise of about 4% from the agency's overall budget of $438 million this year, with the increase allotted mostly to additional technology rather than beefed-up salaries, these people said. In his e-mail, Mr. Pitt said the administration has agreed to let the SEC use some of this year's budget to partially implement pay parity in the current year.
The SEC experienced a major exodus of experienced staff in recent years, as the bull market drove up the salaries they could earn in the private sector. During one two-year period in the late 1990s, the SEC's New York regional office lost more than half of its 137-member enforcement staff. Critics say that hampered both the level of scrutiny the agency could bring to the markets and its ability to pursue cases.
For example, the SEC tries to review annual reports from large companies at least once every three years, but in the late 1990s its staff was so inundated with reviewing initial public offerings they were unable to scrutinize the usual number of annual reports. Last month, The Wall Street Journal reported that Enron Corp.'s 2000 annual report was scheduled for SEC review, but staffers delayed the process for another year, not only to await newly required derivatives disclosures but also, a person with knowledge of the process said, because they didn't want to take the time to wrestle with Enron's complicated filings.
The SEC could face fresh demands on its resources, as better policing of corporate reports and accountants is sought in the aftermath of Enron's collapse. SEC spokeswoman Christi Harlan said Mr. Pitt "has said that we have the staff and the resources to do the job we need to investigate Enron. What we will be interested in seeing is what additional duties Congress might ask the SEC to take on."
White House budget director Mitchell Daniels Jr. said in an interview Friday that the administration doesn't consider the SEC's request for pay parity "justified." He added, "I think the SEC is amply provided for. ... If they need more money, it might be for more investigations, as opposed to doing the same investigations and pay everybody more."
Write to Greg Ip at greg.ip@wsj.com
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HELLO.....When's the Government going to wake up and give our enforcement agencies the appropriate budget and resources they need to investigate and SERIOUSLY HUNT DOWN AND GO AFTER WHITE COLLAR CRIMINALS...??? Even hard-line conservatives like Kudlow are calling for The SEC budget to be DRAMATICALLY INCREASED....I hope Congress overhauls this proposed budget in a big way. We may need to cut out one of our inefficient weapon systems and use the funds to help The SEC go after some of the folks that are terrorizing our economic system right now.....----> lets go get 'the Ken Lays of this world' before they continue to ruin more companies and more innocent worker's lives....Folks are mad out there...In the health club sauna yesterday Enron came up in discussions MUCH MORE than The Super Bowl or The War on Terrorism...Americans are worried about 'future Enrons' and THEY WANT TO SEE THE GOVERNMENT TAKE ACTION...It will send the wrong message if 'The Ken Lay's of this world' continue to get away with things like O.J did....Most Americans want him to pay a price for what he's done...I'm not going to judge him right now BUT I do feel The SEC and our Justice Dept. need adequate funding and talent to really follow through for the country. The integrity of our economic system is at stake here. We need a new 'Special Forces Team' to go after high profile corruption and white collar criminals. Lets take this problem seriously..!! |
