* Schapiro says SEC will reduce spending, time on project
* SEC had hired Booz Allen to help with agency restructuring
* Project stems from a requirement in 2010 Dodd-Frank law
* House Republicans critical of SEC spending on the project
* SEC says project has helped save millions
By Sarah N. Lynch
WASHINGTON, April 25 U.S. securities regulators
have scaled back their spending on a project to restructure the
agency, a move that comes after critics questioned the costs of
"It is anticipated that the level of activity... will be
reduced in FY 2012," said Securities and Exchange Commission
Chairman Mary Schapiro in prepared testimony before a House
Financial Services panel for an SEC oversight hearing on
W edn esday.
"Staff and management time to devote to this initiative will
continue to be in short supply, and future phases of
implementation are likely to require levels of funding that must
be directed at other agency priorities at this time."
In February, Reuters reported that the SEC had spent over
$8.5 million on dozens of consultants from Booz Allen Hamilton
to help advise on reforming workflows and back-office
That work was the result of a separate operational study
required in the 2010 Dodd-Frank Wall Street reform law and
conducted by the Boston Consulting Group.
The law tasked the SEC with becoming a more nimble agency
after embarrassing enforcement misses, including Bernard
Madoff's $65 billion Ponzi scheme.
However, the law did not require the SEC to hire consultants
to help with the follow-up work to carry out the Boston
Consulting Group's reform recommendations
The so-called MAP project work by Booz Allen has cost the
SEC between around $100 an hour to over $300 an hour, with the
burn rate at one point being as high as $1.4 million per month.
The SEC's chief operating officer, Jeffrey Heslop, has said
the agency needed the outside expertise and said the project has
created efficiencies that will save millions of dollars.
In her testimony on Wednesday, Schapiro said one piece of
the project has helped the SEC identify ways to save more than
$8.3 million over the next two years.
But Republican Representative Scott Garrett expressed
concern about the MAP project at the hearing and said he was
hard-pressed to support the SEC's request for a fiscal 2013
budget boost of $245 million to roughly $1.57 billion.
Although the SEC's budget is covered by fees it imposes on
the industry, Congress still must approve the SEC's annual
"I have heard estimates that you have spent as much as $10
million on something that you could have done internally through
the office of the chief operating officer," Garrett said. "This
type of blatant example of millions of dollars wasted, I find it
difficult to sympathize with your request for millions of
dollars of additional taxpayer money year after year."
When asked to explain why the SEC was scaling back
implementing the reforms from the Boston Consulting Group's
report, Schapiro reminded lawmakers that the estimated cost to
complete the reforms was between $45 million and $50 million.
"We don't have that kind of money to spend on this," she
said, adding that the SEC will instead take incremental steps to
get it done.