The US Securities and Exchange Commission (SEC) has made the National Exam Program a top priority in its FY 2016 budget proposal, looking to hire 225 new examiners in order to increase its examination coverage of registered investment advisers.
Of the total staffing request of 225 additional positions for the Office of Compliance Inspections and Examinations (OCIE), the SEC plans to dedicate 204 positions to the examination of investment advisers and broker dealers. If the SEC achieves its hiring goal, it will bring the OCIE headcount to 1,305 in FY 2016, which begins October 1 of this year. Currently, the OCIE employs a 975-member staff.
The OCIE anticipates that these additional examiners will increase the percentage of investment advisers and investment companies examined from 10 percent for each currently, to 12 percent and 14 percent, respectively.
Last year, the SEC requested an additional 316 OCIE positions for FY 2015, for a total of 1,283 positions by the end of this September. However, the budget enacted by Congress slashed that request, only allowing for 1,080 positions for this fiscal year. This year’s more modest request for 2016 might have a higher chance of success, but it is still unlikely that the OCIE will get all the examiners it needs to examine the approximate 12,000 advisers that will exist by FY 2016, according to its calculations.
In total, the SEC submitted a budget request of $1.722 billion for fiscal 2016, up 9 percent from the enacted 2015 budget of $1.574 billion. The $350 million proposal for the OCIE was the second-highest line item in the SEC’s FY 2016 budget, trumped only by the $528 million requested for the Office of Enforcement.
Based on the reception for previous SEC budget proposals, it is doubtful that the regulator will receive the total amount requested. The White House has sought to fund the SEC at roughly $1.7 billion for the past several years, but has been blocked each time by Republican lawmakers. For fiscal year 2015, Congress agreed to boost the SEC’s funding to $1.5 billion in a last-minute federal spending plan last December, marking $250 million less than what the commission originally sought.