On February 17th, in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, SEC Chairman Mary Schapiro provided a detailed description of the SEC's efforts to implement the relevant provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes more than 100 provisions applicable to the SEC. According to Chairman Schapiro, the SEC thus far has issued 25 rule proposals, seven final rules, and two interim final rules. It has received thousands of public comments, completed five studies, and hosted five roundtables.

Chairman Schapiro discussed the SEC's efforts to establish an oversight regime for over-the-counter derivatives; to work with the CFTC and other regulators to write rules addressing capital and margin requirements, clearing, execution facilities, data repositories, business conduct standards, and transparency; and to develop anti-fraud and anti-manipulation rules for security-based swaps. The SEC is also working on requirements for registration of hedge fund and private equity fund advisers, rules relating to asset-backed securities and nationally recognized statistical rating organizations, rules to enhance investment adviser oversight and provide investors with better information about investment professionals, and regulations for paying awards to whistleblowers and implementing the Volcker Rule. As part of these efforts, the SEC plans to create four new offices: the Office of Credit Ratings, Office of the Investor Advocate, Office of Minority and Women Inclusion, and Office of Municipal Securities, each of which will report directly to the Chairman.

Chairman Schapiro pointed out that the Dodd-Frank Act's major expansion of the SEC's responsibilities will require significant additional resources for full implementation. The SEC's recently submitted budget request estimates that, over time, full implementation of the Dodd-Frank Act will require approximately 770 new staff members with expertise in derivatives, hedge funds, data analytics, credit ratings, and other new or expanded responsibility areas; and investment in technology to facilitate the registration of additional entities and capture and analyze data on new markets. However, this past week it became apparent that, in contrast to the Obama Administration's proposal to increase the SEC's budget by more than 10 percent, Congress is discussing whether to significantly cut the SEC's funding. According to the SEC Inspector General, that could result in the layoff of hundreds of workers, rather than the addition of more professionals contemplated by Chairman Schapiro.

Clearly, the SEC has an ambitious set of goals for the next few years, much of it mandated by Congress in the Dodd-Frank Act. But it is hard to see how the SEC can adequately address all of the issues on its plate unless it is adequately funded and able to hire and retain the kind of qualified, experienced professionals needed to achieve its objectives. It will be very interesting to see whether congressional budget cuts, if adopted, will result in the SEC having to delay or cancel some of its plans and, if so, how that will be viewed in light of the congressional mandates of the Dodd-Frank Act.