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SEC Seeks Funding for More Exams

SEC Chair Mary Jo White presented her agency’s fiscal year (FY) 2017 budget request to a House Appropriations subcommittee on March 22. Among the initiatives for which the SEC seeks funding is increasing its examinations of investment advisers and other key entities who interact with retail and institutional investors.

White told the subcommittee, “Under the FY 2017 request, a top priority will be to hire 127 additional examiners, primarily to conduct additional examinations of investment advisers,” and that improved oversight and examination functions related to broker-dealers is also a high priority.

“The need for significant additional resources to permit the agency to increase its examination coverage of registered investment advisers and investment companies cannot be overstated,” said White. She told the subcommittee that the current projection is that the number of investment advisers “will grow to 12,500 investment advisers managing more than $70 trillion in assets by FY 2017.”

Funding at the requested level "will permit the agency to hire an additional 250 staff in critical, core areas and continue to improve our information technology so that we can better oversee today’s markets with the sophisticated tools necessary to safeguard investors,” said White. She said that among the SEC’s priorities for FY 2017 is to “increase examination coverage of investment advisers and other key entities who interact with retail and institutional investors.”

In addition, said White, SEC examination staff faces challenges posed by the increased use of new and complex products by investment advisers and broker-dealers, as well as “the growth of complex ‘families’ of financial services companies with integrated operations that include both broker-dealer and investment adviser affiliates.”

The SEC's plea for hiring more examiners follows:


  • a new focus on 12b-1 fees announced last spring;

  • last June's launch of the new “ReTIRE” (Retirement Targeted Industry Reviews and Examinations) initiative focused on retirement savings; and

  • onsite exams that began in November under the ReTIRE program focusing on 401(k) specialists and managers of QDIAs.

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