WASHINGTON -(Dow Jones)- The U.S. Securities and Exchange Commission will need to add about 800 employees to its already growing staff to carry out the responsibilities given it under a financial overhaul bill that will soon become law, according to SEC Chairman Mary Schapiro.
In written testimony prepared for a House hearing Tuesday, Schapiro said SEC staffers already have begun discussions about a new whistleblower rule that allows regulators to compensate tipsters up to 30% of sanctions that exceed $1 million. SEC's enforcement division considers the new ability to woo industry informers to be a crucial tool in ferreting out insider trading and other market abuses.
Schapiro said in testimony that the agency has completed the first phase of a multiyear project to unify tips and leads from informants across the country, putting them in a single database. The SEC also has implemented for the first time agencywide policies and procedures to govern how all employees should handle the tips they receive.
Schapiro said in testimony that she expects the next several months of the SEC's rulemaking activity to be "dominated" by implementing the financial overhaul law. The measure passed the Senate last week and now is awaiting a signature by President Barack Obama.
The financial bill requires the SEC to write dozens of new rules, create five new offices, and conduct multiple studies, many within one year. The SEC will be given new power over hedge funds, credit rating agencies, some over-the-counter derivatives, and executive compensation disclosures, to name a few.
Before the financial bill was completed, the White House had requested almost $1.3 billion for the SEC in fiscal 2011. If Congress gives the SEC that money, the staff would grow from its current level of more than 3,700 to about 4,200, according to the testimony.
The 800 staffers needed for financial overhaul would be in addition to the current requests for the 2011 budget year. The SEC budget includes $24 million solely for financial overhaul, and it will allow the agency to begin the implementation process.
Schapiro said the cost of implementing the financial overhaul law for the SEC "will depend greatly on the effective date of new rules, the timing of hiring."
Schapiro is slated to appear Tuesday before the House Financial Services Capital Markets Subcommittee.
In a statement, subcommittee Chairman Paul Kanjorski (D., Pa.) said Congress will be closely watching the SEC's efforts. The financial overhaul bill includes a provision drafted by Kanjorski for an independent, comprehensive examination of the SEC.
Schapiro's testimony said SEC staff have begun "the initial work necessary to move forward with a formal procurement on the study."
Copyright 2009 Dow Jones Newswires
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