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U.S. Securities and Exchange Commission

Oral Statement of
SEC Chairman Arthur Levitt

Before the Subcommittee on Commerce, Justice, State and the Judiciary Committee on Appropriations, U.S. House of Representatives, Concerning Appropriations for Fiscal Year 2000

April 14, 1999

Chairman Rogers, Ranking Member Serrano, and Members of the Subcommittee:

I appreciate the opportunity to testify here today in support of the Securities and Exchange Commission's budget request for 2000.

I am deeply grateful for the support the Subcommittee has always given to the Commission and its work. I come before you this morning to ask that you continue your commitment to America's investors and our capital markets. That commitment has never been more crucial.

Precedent-setting trading volume, tremendous market growth, increasing complexity and volatility, globally integrated markets and continual advancements in technology have become the defining characteristics of our markets on the eve of the 21st Century.

These changes present tremendous challenges for the Commission. To meet them, we seek an appropriation of $360.8 million for 2000 – an increase of $19.5 million and 55 staff years over last year's spending and staffing levels.

Today, approximately 5 million people trade on-line on a typical day, accounting for approximately 25% to 30% of all retail stock trades. In the past year, every major market index – including the Dow Jones Industrial Average and the Standard & Poors Index – has risen to an all-time high.

The number of investors in our markets has grown to the highest level in history. The value of mutual-fund assets is now nearly double the total value of deposits in U.S. commercial banks. One out of three Americans today invest in mutual funds. In 1980, that number was one in 18.

We need additional resources simply to keep pace with the demands and the developments of the 21st century marketplace. Already, we are cracking down on fraud on the Internet, stopping abuses in the microcap sector, pursuing complex litigation, and protecting the fundamental building block of investor confidence in our markets by pursuing accounting fraud.

We are asserting effective oversight of the exchanges and of new technologies for trading; reviewing companies' financial information, initial public offerings, and merger and acquisition filings.

Our request is not just for additional staff; we need additional technical resources as well. It is awfully difficult to monitor securities fraud on the Internet if you don't have the technical capability to keep up with the fraudsters. Our examiners in the field need the tools to analyze mutual funds' data. And our litigators need document management capability comparable to opposing counsel.

Without these additional resources, we just can't keep up. And, I don't say that lightly. For over 60 years, the SEC has been known as an efficient and effective agency. We have leveraged our resources where we could. We have worked with the industry to create the conditions necessary for strong capital formation while passionately protecting the interests of investors.

But, today, the Commission is confronted with an almost unprecedented confluence of challenges that are pushing our resources beyond their limits. Our FY 2000 request will help, but quite frankly, only for a short while. I expect that similar staffing increases will be needed in subsequent years.

Our capital markets are the strongest, deepest, and most liquid in the world. They are fair to investors, they are efficient for business, and they are vital to our nation's economy. I know you share my commitment to ensuring that they remain so.

I look forward to continuing to work with you.

Thank you very much, Mr. Chairman.