SEC Chairwoman Mary Schapiro is touting the agency’s fraud lawsuit against Goldman Sachs Group as she seeks more funding from Congress.
Ms. Schapiro, in testimony before a Senate appropriations subcommittee on Wednesday, said the SEC’s enforcement activity has “increased significantly” during her 15 months as chairwoman.
She cited the Goldman Sachs case, in which the agency this month accused the firm of misleading clients, as an example of “the importance of the actions we brought.” The SEC sued Goldman Sachs on April 16, accusing it of selling a collateralized debt obligation tied to mortgages without disclosing to investors that hedge fund Paulson & Co. helped pick the underlying securities. Paulson was betting against the CDO, the SEC said.
Goldman Sachs has pledged to fight the case, saying it lacks merit.
“Swift and vigorous prosecution of those who have broken the law is at the heart of the agency’s efforts to restore investor confidence,” Ms. Schapiro said. “In recent years, the SEC’s enforcement program had suffered under a variety of procedural, structural and budgetary constraints.”
President Barack Obama proposed $1.26 billion in spending for the SEC in the fiscal year starting Oct. 1, a 12% increase over its current budget. Democratic lawmakers and SEC officials have said stagnant budgets during President George W. Bush’s second term caused the agency to lose employees, making it difficult to keep pace with Wall Street.
At Wednesday’s hearing, Ms. Schapiro also addressed concerns about SEC employees viewing pornography on their work computers. Investigations by SEC Inspector General H. David Kotz’s office found that 33 agency employees violated internal policies in the past five years by accessing pornography, according to a report released April 22 by Republican Sen. Charles Grassley of Iowa.
“We will deal with this swiftly and very severely,” Ms. Schapiro told lawmakers.
