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This page was last updated on May 15, 2001. Articles by Fund Democracy: Archives SEC Staff Cuts Are Penny-Wise But Pound-Foolish, TheStreet.com (May 8, 2001) View the full text of the article. Mutual fund assets continued to swell last year, despite their poor performance, and more Americans than ever before are mutual fund shareholders. Yet President Bush proposes to cut 57 SEC staff, with 13 coming from the ranks of mutual fund examiners. With the SEC currently inspecting funds only once every five years, these staff cuts are reason to celebrate if you're a fund manager who makes money by playing fast and loose with your shareholders' money. These cuts will compromise investor protection, and may come back to haunt Congress in the form of more fiascos such as the recent mispricing of the Heartland bond funds. Congress also is opposing attempts to give remaining SEC staff pay parity with banking regulators. SEC staff earn 24% to 39% less than attorneys, accountants and examiners at banking agencies, and turnover at the SEC is more than double that experienced at the Federal Reserve Board. An important initial test for the new SEC Chairman, which will likely be securities lawyer Harvey Pitt, will be to convince Congress of the importance of SEC oversight to the vitality and credibility of the U.S. capital markets, and to get the staff the compensation it deserves. If you support pay parity for the SEC, let Congress know! |