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Testimony at Hearing before the Subcommittee on Financial Services and General Government

Washington D.C.

March 29, 2023

Good afternoon, Chair Womack, Ranking Member Hoyer, and members of the Subcommittee. Thank you for inviting me to testify today on the Securities and Exchange Commission’s Fiscal Year (FY) 2024 budget request. As is customary, I’d like to note that my views are my own, and I am not speaking on behalf of my fellow Commissioners or the SEC staff.

Protecting the Public for 90 Years

The SEC is critical to the American public. For 90 years, the federal securities laws—and our work to oversee them—have played a crucial role in good times and in times of stress. These laws, the first of which was enacted in 1933, benefit investors, issuers ranging from startups to multinational corporations, and the markets in the middle. The core principles of U.S. securities markets regulation have contributed to America’s economic success and geopolitical standing around the globe.

This agency’s clients are the 330 million Americans, your constituents who invest in their 401(k)s and IRAs, trade through brokerage apps, take out mortgage or auto loans, or use robo-advisers. They’re also Americans accessing the capital markets to fund their businesses from small to large, their new ideas and innovations. We oversee broker-dealers, stock exchanges, clearinghouses, mutual funds, asset managers, and public company issuers, among other participants in our financial markets.

It’s for the investing public and issuers that our staff must continue to drive efficiencies, help protect for financial stability, and modernize our rulesets for today’s $100 trillion capital markets as well as today’s technologies, in a manner consistent with our Congressional authorities.

Growth and Change in the Markets

We’ve seen tremendous growth and change in our markets. More people than ever are participating—trading and using tools and technologies that were unavailable even a few years ago.

For example, from 2017 to 2022, the number of clients of registered investment advisers grew 60 percent from 34 million to 53 million. During that same period, average daily trading in the equity markets more than doubled from more than 30 million transactions to more than 77 million.

Technology is rapidly transforming our markets and business models. These changes range from electronic trading and the cloud to artificial intelligence and predictive data analytics, just to name a few. There has been dynamic change in communications to and among investors, from Reddit forums to celebrity influencers. Further, we’ve seen the Wild West of the crypto markets, rife with noncompliance, where investors have put hard-earned assets at risk in a highly speculative asset class.

Such growth and rapid change also means more possibility for wrongdoing. As the cop on the beat, we must be able to meet the match of bad actors. Thus, it makes sense for the SEC to grow along with the expansion and increased complexity in the capital markets.

I am proud of this agency. I am proud of our dedicated staff. It has done remarkable work with limited resources. With funding to meet the scale of our mission, we can be an even stronger advocate for the American public—investors and issuers alike.

Further, while recent market volatility raises many important issues for policymakers and the American public, it is also a reminder of the SEC’s need to be adequately resourced.

Budget Request

I am pleased to support the President’s FY 2024 request of $2.436 billion for the SEC, to put us on a better track for the future.

To put this in context, with this committee’s help, FY 2023 funding for the first time brought the agency’s staffing back above where we were seven years ago. The SEC now is approximately three percent larger than it was in FY 2016. Meanwhile, the demands on our talented staff have grown dramatically.

The agency’s oversight function is vast. In addition to the approximately 40,000 entities I mentioned above, we oversee credit rating agencies, the Public Company Accounting Oversight Board, the Financial Industry Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investor Protection Corporation, and the Financial Accounting Standards Board.

In FY 2023, the number of positions funded by Congress was 5,303, a much-needed increase of 400. We’re now in the process of filling those positions. The FY 2024 request seeks funding for an additional 170 positions, as well as full-year funding for those staff hired in FY 2023. Considering full-time equivalents (FTEs)—or actual time worked—the FY 2024 request would support 5,139 FTEs.

As this committee considers its work, it’s worth noting the SEC’s funding is deficit-neutral; appropriations are offset by transaction fees.

The SEC has 30 Divisions and Offices across our 11 regional locations and Washington, D.C., headquarters. I’m summarizing below the budget requests for our six Divisions and will briefly touch on technology and real estate. For further details as well as a review of the other offices of the SEC, please reference the FY 2024 Congressional Budget Justification.[1]