WASHINGTON — The Securities and Exchange Commission would significantly boost its enforcement division as well as push for changes to its Rule 2a-7 on money market funds under the Obama administration’s proposed fiscal 2010 budget.
The administration yesterday released its first detailed figures for federal agencies for the fiscal year beginning Oct. 1, proposing an increase in the SEC’s funding to $1.026 billion from about $960 billion in the current fiscal year.
Funding for enforcement, by far the largest division within the SEC, would rise to $353 million from $331 million estimated for the current year.
The division would use the additional funding to help respond to the current financial crisis, the budget documents said.
“The division plans to invest in enhanced technologies that are similar to those used by the law firms it faces during investigations and litigation,” the documents said.
Specifically, these additional technologies include “forensic analysis of data produced in the course of ... investigations,” as well as improvements to processing and pursuing leads from investor complaints, tips, and forwarded e-mail spam.
SEC spokesman John Heine said the number of full-time enforcement positions at the commission’s headquarters and regional offices is expected to rise to 1,192 for the next fiscal year from about 1,174 this year.
Those figures compare to an estimated 3,692 in overall full-time positions at the SEC for fiscal 2010, up from about 3,652 this year.
Heine also said that the enforcement division plans to open about 940 investigations next year, up from about 925 this year.
Meanwhile, the “top strategic priority” next year for the SEC’s investment management division, which regulates investment companies and investment advisers, is to determine whether Rule 2a-7 “needs revision in light of recent market events,” the budget documents said. The rule generally limits money market funds to short-term securities that have ratings of double-A or higher.
Earlier this week, SEC chairman Mary Schapiro told independent mutual fund directors meeting here that she has asked the staff to draft proposed changes to the money market fund rule by next month.
In previewing the changes, she said that the SEC may boost the credit quality and shorten the maturity of eligible money-market fund investments, as well as raise funds’ capital requirements to ensure that they have enough cash to meet investor redemptions.
Schapiro added that the SEC could go beyond revisions favored by the industry, possibly by recommending floating net-asset values for money market funds to better protect investors from runs on the funds. Money market funds currently strive to keep stable asset values, typically of $1 per share.
The budget details for agencies and the proposed budget savings released by the administration yesterday follow the release of a general budget outline in late February. On Monday, the administration will release two additional budget documents containing budget highlights as well as more data and analyses.