The Securities and Exchange Commission will need to hire hundreds of new workers to meet its burgeoning responsibilities as required by the financial services reform bill recently passed by Congress, SEC Chairman Mary Schapiro said on Tuesday during Congressional testimony.
Speaking before a U.S. House financial services subcommittee dealing with SEC oversight in the post-reform world, Schapiro said the agency is working to develop estimates of the resources it will need to fully carry out Congress' regulatory reform mandate.
"While the dollar cost of full implementation will depend greatly on the effective date of new rules, the timing of hiring, and other factors, we currently estimate that the SEC will need to add approximately 800 new positions over time in order to carry out the new or expanded responsibilities given to the agency by the legislation," Schapiro said.
The expansive 2,300-page legislation, which awaits President Obama's signature, calls for more than 250 rulemakings and studies to be carried out by federal agencies-including 124 actions by the SEC.
The reform bill requires the SEC to promulgate a large number of new rules, create five new offices, and conduct multiple studies-many within one year.
"The importance and complexity of the rules, coupled both with their timing and high volume and the rulewriting agenda currently pending, will make the upcoming rulewriting process both logistically challenging and extremely labor intensive," Schapiro said.
Among its newly-assigned duties, the SEC is required to conduct a six-month study on the fiduciary standard of care and whether it should apply to brokers who provide investment advice to retail clients.
The reform bill also directs the SEC to study or take action on a host of issues potentially affecting financial advisors ranging from private placements and arbitration to public disclosure of advisor information and whether or not advisors to family offices need to register with the SEC.
In her testimony, Schapiro said that while the financial markets have grown exponentially in size and complexity in recent years, the SEC's workforce has decreased and its technology capabilities have lagged.
"Only this year, with Congress's support, has the SEC reached the levels of staff and technology investments of five years ago," she said.
Schapiro said she believes the regulatory overhaul contains certain measures-such as a mechanism that links SEC's appropriation with the fees the agency collects, along with a reserve fund that was created for the agency-will help the SEC meet its increased workload.
Schapiro said the Obama administration is requesting nearly $1.3 billion for the agency in fiscal year 2011, a 12% boost over the prior year's funding. The agency is also in line to get an additional $12 million to upgrade its information technology systems.