[Congressional Record Volume 140, Number 143 (Wednesday, October 5, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 5, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                  NEED TO PASS SEC FUNDING LEGISLATION

  Mr. RIEGLE. Mr. President, last week I took this floor to discuss the 
urgent need to provide funding to the Securities and Exchange 
Commission. We face a very serious situation: the SEC has not yet been 
provided with funding sufficient to carry it through the new fiscal 
year that began on October 1.
  As I remind the Senate last week, the Congress has provided the 
agency with only a portion of the funding that it needs for the next 12 
months. Legislation that would provide the needed full funding was 
passed by the House of Representatives last week. That bill, H.R. 5060, 
is now at the Senate desk. It is crucial that the Senate immediately 
take up and pass this bill.
  In the absence of full funding, the SEC has begun preparing to shut 
down. I ask unanimous consent to enter into the Record a letter I 
received yesterday from Arthur Levitt, Chairman of the SEC. He writes, 
``the SEC has been forced to suspend vital services.'' He notes that an 
examination of brokerages and investment advisers have been halted. The 
agency has had to stop seeking to recover funds from offshore accounts. 
The electronic filing system for all publicly traded companies will 
shut down next week, slowing down the process of filing registration 
statements for every public company in America. In addition, Congress's 
failure to pass the SEC funding bill is costing the U.S. Treasury an 
estimated $740,000 every day, because of the reduced fee schedule now 
in place.
  If Congress adjourns without providing the needed funds, the SEC will 
have to shut down. This would be a catastrophe, because the SEC is 
crucial to the smooth operation of the capital markets that stand at 
the heart of our economy. The success of the U.S. financial markets is 
due, in large part, because the markets and their investors know that 
the SEC is a vigilant ``cop on the beat.'' Leaving the SEC in budgetary 
limbo jeopardizes investor confidence in the market.
  An SEC operating on a partial budget will not have the ability to 
police the markets or effectively respond to a market emergency. This 
needlessly places the stability of the markets and the personal savings 
of millions of individual investors at risk. In turn, the Nation's 
economy as a whole could be severely harmed. We cannot run that risk.
  Mr. President, we can avoid that fate by taking up and passing H.R. 
5060. The language contained in H.R. 5060 passed the Senate earlier 
this year. This legislation enjoys the strong support of both of the 
SEC's regulated industries and the administration. It is crucial that 
the Senate take up and pass this legislation today, to protect the 
smooth operation of our markets, to ensure that investors are 
protected, and to guarantee the efficient operation of our Government. 
I urge all my colleagues to give their consent so that the Senate can 
today take and pass this crucial bill.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                           Securities and Exchange Commission,

                                  Washington, DC, October 4, 1994.
     RE H.R. 5060.
     Hon. Donald W. Riegle,
     U.S. Senate, Washington, DC.
       Dear Senator Riegle: I know you share my commitment to 
     protecting U.S. investors by maintaining the integrity and 
     efficiency of our nation's capital markets. I am deeply 
     distressed that the interests of U.S. investors and U.S. 
     corporations are being jeopardized because H.R. 5060, the 
     SEC's funding legislation which was approved by the House 
     last Tuesday, has not yet been approved by the Senate.
       I am most troubled that the SEC has been forced to suspend 
     vital services. This has affected enforcement investigations 
     and examinations of mutual funds, brokerage firms and 
     investment advisers. Because of a mandated reduction in our 
     fee schedule, the U.S. Treasury will continue (as of October 
     3) to needlessly forego $740,000 every day without a funding 
     bill.
       Although the agency is doing everything possible to 
     maintain critical operations, this delay in the agency's 
     funding has already impacted our program operations. For 
     example, during the last 24 hours, six SEC examination staff 
     members were recalled from an exam of a brokerage firm in 
     Tennessee. An inspection of a $250 million investment adviser 
     was cancelled. In addition, in a legal proceeding, the 
     Commission is seeking the return of some $330,000 in funds 
     belonging to defrauded investors which were transferred to 
     offshore accounts. The Commission is unable to obtain the 
     return of these funds for investors without being able to 
     contract with foreign attorneys. Further, the agency today 
     issued a ``stop-work'' order to its electronic filing system 
     contractor. The effect of this action is that all electronic 
     filings will cease effective 8:00 a.m., Tuesday, October 11. 
     This action affects approximately 3,400 public companies 
     throughout the nation and will slow the processing of filings 
     for every registrant in this country.
       We must maintain our preeminent position as the world's 
     leading capital market, where last year American companies 
     raised $868 billion. I urge you to move swiftly to approve 
     H.R. 5060 and restore full protection for American investors.
           Sincerely,
     Arthur Levitt.

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