August 19, 1994
TO: BOARD OF GOVERNORS NO. 83-94
FEDERAL LEGISLATION COMMITTEE NO. 26-94
FEDERAL LEGISLATION MEMBERS NO. 23-94
SEC RULES COMMITTEE NO. 94-94
RE: SEC APPROPRIATION CUT BY CONGRESS
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On its way to the President for signature is legislation
that fails to fund fully the SEC for FY 1995. Instead, the
Appropriation bill only provides $125 million, which is expected
to fund the agency through February. This amount represents less
than half of the $306 million requested in the President's
Budget. In the Conference Report summarizing action, it is
stated:
... [T]his agreement only provides the SEC with sufficient
budgetary resources to operate at current services levels
for approximately 5 months. The conferees are confident
that an agreement can be worked out by that time to resolve
the fee issue so that the SEC can receive the funding it
needs to fully protect the investing public. Failure to
arrive at a compromise on this fee issue could endanger the
securities markets and result in increased fraud and
malpractice in the securities and financial markets. The
nation needs a strong SEC and the conferees encourage a
quick resolution to this problem.
The Conference Report refers to the need for completing action on
the House-passed bill providing self-funding for the SEC through
fee collections. In response to the Conference Report, SEC
Chairman Levitt stated, "We are very disappointed that
disagreements among the Conferees have resulted in a severe
reduction for the SEC's fiscal 1995 budget." A copy of Chairman
Levitt's statement and the Conference Report are enclosed.
In the last five years, the SEC has collected fees both
under the authority of the Securities Act of 1933 and also under
the authority of annual appropriations acts. The Securities Act
requires an applicant to pay the SEC a registration fee equal to
1/50 of 1% (0.0002) of the maximum aggregate price at which the
securities are proposed to be offered. By 1994, the fee rates
set by annual appropriations acts had been increased to 1/29 of
1% (0.00034483), until September 30, 1994. Under the Conference
action, however, the fiscal year 1995 Appropriation bill does not
contain additional fee collecting authority. Therefore, the
registration fee will return to 1/50 of 1% on October 1, 1994,
unless there is further Congressional action.
We will keep you informed as developments occur. Please
call me or the Legislative Affairs Department (202/326-5890) if
you wish further information.
This memo can be found on FUNDS, the Institute's Fund User
Network and Delivery System, under "Legislative Affairs;
Washington Update."
Matthew P. Fink
President
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