Legislation to reform the financial system not only proposes regulatory changes but asks for studies. Lots of studies.

The Securities and Exchange Commission would get saddled with many of them-perhaps as many as ten. That new burden would almost certainly strain an agency that already has resource issues and is trying to reassert its authority and effectiveness in areas of critical importance.

Requests for studies are often lawmakers' way of punting on specific issues, but for the SEC it could mean diverting as many as 10 to 15 full-time staffers to each one, according to Lynn Turner, former SEC chief accountant. Multiply that by the number of studies being asked for, and "that's a lot of people," he observes.

A bill approved by the U.S. Senate Banking Committee in March would require the SEC to conduct as many as seven studies, including examinations of complex issues such as the impact of short selling, how to strengthen the independence of credit ratings and whether a higher ethical standard is needed for brokers. A version passed by the House late last year would require some other SEC studies, including one about disclosures investors receive before they purchase securities.

After the studies, the SEC would have to issue reports, and in some cases fashion new rules.

Richard Nummi, a former lawyer in the SEC's office of compliance inspections and examiners, questions how the SEC could conduct so many studies while still effectively performing its many other roles.

"So which of its 3,600 staffers are we going to devote to these studies and who should we take away from what they need to do," says Nummi, who now heads Accounting & Compliance international, a New York-based consultancy.

SEC resources are already thinly spread. The White House is asking for $1.258 billion for the agency in fiscal 2011, a 12% increase over this year. If granted by Congress, it would allow the agency to increase staff in its enforcement and investigative divisions, Chairman Schapiro told a House panel in March.

Some question whether all of the studies are needed. For example, the issue of raising the ethical standard for brokers already has been studied at length, and seems more a case of lawmakers tabling a decision but wanting it to appear otherwise. "It's an excuse for delay," says Denise Voigt Crawford, president of the North American Securities Administrators Association, or Nasaa, in Washington, D.C.

There are also questions about whether the SEC is the right agency to study itself in some cases-such as examining possible gaps in its own regulatory processes and those of the Financial Industry Regulatory Authority, or Finra, the Wall Street self-policing watchdog. SEC Chairwoman Mary Schapiro recently served as Finra's former chief executive, and SEC Commissioner Elisse Walter was at Finra before her appointment in 2008.

"If you give it to SEC, there are all sorts of built-in biases that come into play," says Crawford. She says the U.S. Government Accountability office, or GAO, the Congressional watchdog, would be better suited for some of the studies.

Some studies, however, may be worthwhile. A look at financial planners and the use of certain designations, such as "financial consultant," could be helpful because those issues haven't yet been formally examined, says Barbara Roper, director of investor protection for the Consumer Federation of America in Washington, D.C. The GAO is in line to conduct that study.

Turner, the former SEC official, who now is a managing director in the forensic accounting practice at LECG Corp., notes that some studies don't accomplish much in the end.

He recalls one of many studies required by the Sarbanes-Oxley Act of 2002, passed in the wake of major corporate accounting scandals that brought down large companies such as Enron and WorldCom. It was an examination of the breadth of off-balance sheet transactions, and whether accounting rules dealt with them properly. No changes followed the SEC's report, he said, and more off-balance sheet crises later erupted at Citigroup and State Street Corp.

"It's not only that you spend the money and the time you can dedicate to other projects," he says. "But typically nothing ever happens."

An SEC spokesman declined comment.

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