Oral Testimony before the Subcommittee on Financial Services and General Government

Good morning, Chair Van Hollen, Ranking Member Hagerty, and members of the Subcommittee. Thank you for inviting me to testify today on the Securities and Exchange Commission’s Fiscal Year (FY) 2025 budget request.

As is customary, I’d like to note that my views are my own as Chair of the SEC, and I am not speaking on behalf of my fellow Commissioners or the SEC staff.

At the SEC, we just had our 90th birthday last week.

Congress and President Roosevelt set up our agency in the aftermath of the Great Depression to ensure that our capital markets work for investors and issuers alike.

They knew this was critical to restoring trust in the markets and promote the economy. The SEC they created serves investors building for a better future and issuers raising money to fund innovation, while overseeing the capital markets where they meet.

The SEC is the cop on the beat watching out for the investing public and issuers.

I believe the securities laws and this agency have been a significant contributor to our economic success as well as the U.S. dollar’s global role ever since.

Today, the $110-plus trillion U.S. capital markets are the deepest, most liquid in the world.

We cannot, however, take this leadership for granted.

Today, our limited resources contrast against the tremendous growth and change in our markets.

In the face of this significant growth in registrants, complexity, and individual investor engagement in markets, one may have thought that our agency would have grown. The reverse was the case—the SEC actually shrank between 2016 and 2022. With Congress’s help, we were authorized to hire 400 people in FY 2023 to bring us just modestly above where we were in 2016.

While our funding was kept flat for FY 2024, growth in market activity was anything but flat. We are losing pace with the ever-increasing scale of the capital markets.

Transaction volume in listed equities doubled in the last five years and tripled in the last 17.

Today, more than 15,400 registered investment advisers advise 57 million clients. At the end of 2016, by comparison, 12,000 registered investment advisers advised 43 million clients.

I’d note that the more than $32 trillion in registered funds and $30 trillion in private funds each are larger than the entire $23 trillion U.S. banking system.

Such growth and rapid change also mean more possibility for wrongdoing. We’ve seen the number of tips, complaints, and referrals we get climb from 16,700 in 2019 to 40,000 in 2023.

Allow me to put flat funding into context. Seventy percent of our budget is for staff, 15 percent technology, 5 percent facilities, and 10 percent everything else. Flat funding means cutting staffing, technology, and real estate.

We have paused on nearly all job postings and backfilling for departing staff. We are currently more than 300 positions below the level Congress authorized for both FY 2023 and 2024.

While the agency’s rules get outsized attention in the media, the vast majority of the SEC’s staff works on oversight of the markets and responding to inquiries. We collectively review tens of thousands of filings a year.

Without additional resources, oversight of markets is at risk. Our ability to find bad actors is at risk. Our responsiveness to market participants is at risk. American capital formation and innovation are at risk as issuers will have to wait longer to hear from us.

As this Committee continues its work, it’s worth noting the SEC’s funding is deficit-neutral; our appropriations are offset by transaction fees.

I am pleased to take your questions.