SEC's Schapiro says agency should be self-funding

Securities Exchange Commission Chairwoman Mary Schapiro speaks during her testimony at the Senate Banking Committee on Capitol Hill in Washington July 23, 2009.

CAMBRIDGE, Massachusetts (Reuters) - Congress should allow the U.S. Securities and Exchange Commission to retain the fees it collects and become self-funding, Commission Chairwoman Mary Schapiro said on Thursday.

Speaking at Harvard University, Schapiro said that large swings in the agency's annual budget have made long-term planning difficult.

"It is truly critical that, if the SEC is to become the kind of regulatory agency that the American people have a right to expect, we have sufficient, stable long-term funding," Schapiro said.

The SEC collects fees from the thousands of companies it regulates. Its budget, which is much smaller than the fees it collects, is determined annually by Congress.

"Virtually, every other financial regulator is self-funded, which gives them the flexibility to respond to market events through increased staffing and technology developments. Like them, the SEC should be self-funded," Schapiro said.

Schapiro also said she is increasing the agency's focus on educating retail investors about voting in corporate proxy elections for boards of directors and other matters.

The agency plans to offer a "very aggressive program" to counter the trend of the declining participation of retail investors, she said.

That comment followed a speech Schapiro gave on Wednesday, in which she said the agency was in the midst of a full-scale review of shareholder voting procedures.

The review will look at the low rate of voting by retail shareholders, the accuracy of vote tabulations and the use of proxy votes, she said in a speech to the Practising Law Institute in Washington.

(Reporting by Aaron Pressman, writing by Ros Krasny, editing by Leslie Gevirtz)