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SEC Calls for Extra $158 Million, Does This Mean More Enforcements Incoming?

Last Updated March 19, 2024 11:12 AM
Teuta Franjkovic
Last Updated March 19, 2024 11:12 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The SEC requests more funds to tame the crypto ‘Wild West’.
  • The Regulato plans to expand its workforce, with a focus on the Division of Examinations to address risks in crypto.
  • While exceeding expectations in most areas, the SEC fell short in litigation win rates.

The United States Securities and Exchange Commission (SEC) has requested  an additional $158 million in federal funds for next year.

With this, the SEC is aiming to tackle the rapid growth and transformation within financial markets. Most notably, the unregulated nature of cryptocurrency markets, often referred to as the “Wild West”, is in its sights.

SEC Requests $2.59 Billion to Combat Crypto Wild West and Market Shifts

In its Congressional Budget Justification for the fiscal year 2025, dated March 11, the SEC is asking for $2.594 billion . This marks an increase from the $2.436 billion requested for 2024 .

In the 148-page document, which also serves as a performance report for the previous year, SEC Chair Gary Gensler emphasized  that rapid technological advancements are reshaping market dynamics and business models.

Gensler wrote :

“There has been dynamic change in communications to and among investors, from Reddit forums to celebrity influencers. Further, we’ve seen the Wild West of the crypto markets, rife with noncompliance, where investors have put hard-earned assets at risk in a highly speculative asset class.”

Gensler also said  that these changes increase the potential for misconduct. He emphasized that the SEC, acting as the regulatory authority, must be equipped to counteract malicious actors effectively.

Seeking More Funds for Workforce Expansion and Better Oversight

The SEC has indicated  that a portion of the requested additional funding will be used to increase its workforce. It wants to have 5,621 roles in 2025, up from its 2024 target of 5,473.

The Division of Examinations , responsible for compliance checks, is seeking to add 23 positions to better address critical and evolving risks, such as those associated with crypto assets and new financial technologies.

Additionally, the Office of Investor Education and Advocacy plans to add a new position focused on addressing inquiries and complaints related to crypto asset securities fraud.

The SEC’s Office of the General Counsel (OGC), leading its legal team, has requested two additional positions. One will manage the rising number of civil and administrative lawsuits filed against the Commission, while the other will bolster its whistleblowing program, which has experienced a significant increase in activity.

SEC Outperforms in Some Areas, Crypto Crackdown Gains Traction

In its 2023 performance report, the SEC reported that it “met or exceeded” 28 out of 36 performance targets. The agency fell short of achieving six targets and lacked enough data for two. These performance goals varied from completing a specified number of examinations to achieving a certain win rate in lawsuits on at least one claim, a target it did not meet in 2023.

SEC performance
Credit: SEC.gov

The targets stem from three objectives outlined by Gensler in 2022 as part of the agency’s four-year strategic plan. The regulator wants to protect the public from fraud, establish a comprehensive legal framework, and diversify its workforce.

In 2023, the SEC initiated 46 crypto-related enforcement actions, either through litigation or administrative proceedings.

This figure is more than double the number from 2021, the year Gensler assumed the role of chair. However, it is less than 6% of the agency’s total 784 enforcement actions  for the year.

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