SEC's Donaldson Says It'll Take Time To Fix Agency

by Glen Shapiro, LawAndTax-News.com, New York

18 March 2003

Despite a huge budget increase after years of financial neglect, the Securities and Exchange Commission will take longer than previously thought to shore itself up with the hiring of 800 lawyers, accountants, investigators and other employees, the agency's new chairman testified on Friday.

In his first appearance before Congress since his arrival at the SEC three weeks ago, chairman William H. Donaldson tried to lower political expectations after lawmakers had rushed to give him money to fix the agency's long-simmering problems. He said that he would make good use of the budget increase but that it would take time to restore the agency.

Congress is proposing giving the SEC $716 million this year after it received about $514 million in fiscal 2002. President Bush has recommended an $841.5 million SEC budget for fiscal 2004, which begins 1st Oct. - an increase of over 63% in two years.

"The unprecedented new resources for the agency present many challenges, but more importantly, many opportunities," Donaldson said. "We will hire aggressively but thoughtfully, not just to increase head count. As a result, these hiring targets may only be met over a longer period of time, but they will be met with people that we are sure can perform the vital tasks that we assign to them."

Aides to Mr. Donaldson said that his two biggest priorities were finding a chairman for the Public Company Accounting Oversight Board, a new accounting oversight board, shoring up the management and morale of the SEC itself and additional resources to international affairs. He emphasized his commitments to these areas in testimony before a House appropriations subcommittee.

On the proposed $841.5 million fiscal 2004 budget President Bush recommended for the SEC, the largest amount ever requested for the agency, Donaldson said the agency would continue hiring new staff as well as expand its information technology systems.

"In particular, it will allow us to focus further on financial frauds, review of public company filings, our new risk-based examination program, and the ongoing requirements of Sarbanes-Oxley," Donaldson said in his testimony.

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