Risk & Compliance

Hiring Cuts at the SEC

''This is going to be very difficult, and we will all have to make sacrifices for the foreseeable future,'' says an SEC director.
Stephen TaubJune 7, 2005

The Securities and Exchange Commission may be embarking on a new, leaner regulatory era in more ways than one.

Bloomberg has reported that the commission will cut hiring by 10 percent, citing a memo by SEC Pacific regional director Randall Lee to his staff. “Unfortunately, the budget crisis is real and severe,” wrote Lee. “This is going to be very difficult, and we will all have to make sacrifices for the foreseeable future.”

This is a reversal of fortune for the SEC, which in recent years has enjoyed funding increases that more than doubled its budget since 2002, according to the wire service. Indeed, Bloomberg pointed out that in 2003 and 2004, the commission received so much funding that it returned more than $150 million to federal coffers.

Just last month, however, the SEC uncovered a $48 million shortfall; in addition, President Bush plans to cut the commission’s budget by nearly 3 percent for the fiscal year beginning October 1.

The wire service pointed out that due to lack of funds, the SEC typically doesn’t fill all of its allocated 4,196 employee slots, so the anticipated reduction in hiring won’t be as large as the memo might suggest. “We have 80 people left to hire to hit our maximum cap,” Peter Derby, who runs operations and management at the SEC, told Bloomberg. We’re going to hire them based on the strategic priorities of the agency.”

The wire service also said the SEC is curtailing all “non-mission critical” travel for the rest of this fiscal year and fiscal 2006. “Although travel for exams and cases should proceed, we are being asked to consider in each instance whether the travel expenses can feasibly be limited without harm, such as by reducing the number of participants, making day trips, and the like,” Lee reportedly wrote. “Nearly all travel for training, conferences and speeches will be canceled or postponed.”