WASHINGTON, April 1 Congressional investigators
have been asked to review whether the U.S. Securities and
Exchange Commission has enough enforcement staff and funding to
properly police the markets amid the current credit crisis,
Senator Jack Reed said on Tuesday.
"There has been an almost 50 percent decrease in
disgorgements by the SEC in 2007, which in my mind raises
questions about whether changes have taken place in enforcement
philosophy or scope of activity," said Reed in prepared remarks
to be delivered at a securities conference.
Reed and Christopher Dodd, the chairman of the Senate
Banking Committee, have also asked the Government
Accountability Office (GAO) to review whether there has been a
fundamental change in the way the SEC's enforcement division
The GAO is the investigative arm of Congress.
Reed, chairman of the Senate's subcommittee on securities,
insurance and investment, said enforcement and adequate
resources are critical components of strong oversight. Despite
the current market turmoil, the SEC asked for less than a 1
percent increase in its budget for 2009, he said.
"This is a significant concern given that increased demands
are being placed on staff and the agency during this critical
time," said Reed, a Democrat from Rhode Island.
Speaking at the same event, SEC Chairman Christopher Cox
told reporters he had just learned of the investigation.
"I'm sure whatever the GAO examines, parts of our
regulatory enforcement program will benefit from the
experience," Cox said.
The SEC has more than three dozen subprime lending-related
investigations under way. It is investigating several areas,
including the securitization process and how firms and
individuals valued and disclosed complex mortgage-backed
Morgan Stanley (MS.N) and Merrill Lynch MER.N have
disclosed that government investigators are seeking information
about their subprime activities.
(Reporting by Rachelle Younglai and Karey Wutkowski; Editing
by Tim Dobbyn)