Congress Slashes SEC’s Technology Budget


This isn’t a political post, I assure you.  We don’t do that sort of thing at Cady Bar the Door.  I’m just saying that the Washington Post reported a couple of weeks ago that Congress had taken away half of the $50 million the SEC had set aside for technology initiatives.  Vincent Morris, communications director of the Senate Appropriations Committee, apparently said in e-mails that the “SEC has as much tech money as it needs” and that the agency’s leaders “should feel confident that they have sufficient revenue to carry out their technology mission.”

Well, they might not feel all that confident.  Just a few days ago, Commissioner Dan Gallagher discussed the importance of further integrating technology into the SEC’s disclosure regime.  But here are some things that will likely suffer from cutting $25 million from the Commission’s technology budget:

  • Efforts to expand data-tagging in public filings;
  • the Consolidated Audit Trail, which could help diagnose and avoid trading malfunctions like the flash crash from May 2010, and which would drastically improve the SEC’s ability to track insider trades; and
  • the Accounting Quality Model, an analytical tool that trawls corporate filings to flag high-risk activity for closer inspection by SEC enforcement teams

There will always be more securities violations going on out there than the staff can effectively police.  These sorts of initiatives are designed to make the SEC’s staff more efficient and better at their jobs and would ultimately enable them to protect more investors at a lower cost.   This particular budget is disappointing, and it’s hard to tell who wins from it. 

Topics:  Automation Systems, Daniel Gallagher, Federal Funding, SEC

Published In: Elections & Politics Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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