SEC's Schapiro seeks funding, says targeted exams coming

* Schapiro will portray SEC as tough cop on the beat

* Schapiro to seek large budget boosts for SEC

By Sarah N. Lynch

WASHINGTON, March 10 (Reuters) - U.S. Securities and Exchange Commission Chairman Mary Schapiro will urge Congress on Thursday to boost the agency's funding, telling lawmakers the agency is planning major targeted examinations in a move designed to restore confidence after the financial crisis.

Schapiro and other top SEC officials are slated to appear in a trio of Congressional hearings on Thursday, where they will face tough questions about everything from funding and management to ethics issues surrounding former SEC General Counsel David Becker.

In her morning appearance before the Senate Banking Committee, Schapiro plans to tell lawmakers that a sweeping overhaul of the agency's enforcement and examinations divisions following the agency's failure to detect Bernard Madoff's Ponzi scheme has produced results.

A new risk-based approach to conducting exams at financial firms led to "three" significant enforcement cases in January 2011, she said in prepared testimony. The exams, which focus on specifically targeteted areas, are known as sweeps.

"Going forward, the national exam program will continue to conduct sweeps in critical areas from trading practices to market manipulation to structured products," she said.

The agency's current budget is frozen at fiscal 2010 levels as Democrats and Republicans continue to fight over a permanent spending measure to fund the federal government for fiscal 2011.

The agency is seeking increases to both its fiscal 2011 and fiscal 2012 budget. Schapiro will reiterate on Thursday that the agency needs the funding to help it implement roughly 100 new rules under the Dodd-Frank Wall Street reform law.

Meanwhile, top SEC staffers will make a similar pitch during a hearing before the House Financial Services Committee.

Thursday's hearings come as Republicans look to make big cuts in federal spending to lower the U.S. deficit. While the SEC's budget starting in 2012 will not contribute to the deficit, it has still become a target for cuts by Republicans seeking to slow down implementation of key provisions in the Dodd-Frank Wall Street reform law or punish the agency for its recent mishaps.

But Republicans will not likely make it easy for the SEC, especially after they learned that former SEC General Counsel David Becker advised the SEC on the net equity method that determines which Madoff victims are eligible to file claims. As a co-executor of his mother's estate, he and his two brothers are now being sued by Madoff trustee Irving Picard to clawback $1.5 million in phony profits.

Schapiro is expected to be grilled later in the afternoon hearing held by House Oversight Committee Chairman Darrell Issa. (Reporting by Sarah N. Lynch, editing by Dave Zimmerman)