The Securities and Exchange Commission released its fiscal year 2019 budget on Monday, requesting a total $1.658 billion, up 3.5 percent from the $1.602 billion requested for fiscal year 2018. The budget includes an increase for its National Examination Program from $346 million to nearly $366 million.
The request would allow the exam program to restore 24 positions that were lost in a hiring freeze imposed at the beginning of fiscal year 2017, 13 of which will focus on examining investment advisors and investment companies.
Last year, SEC Chair Jay Clayton said the agency was on track to examine 20 percent more investment advisors compared with fiscal year 2016, when it completed 1,600 exams. In fact, the agency increased it by 32 percent, to a total of 2,114. He also set a goal of increasing it by 5 percent in fiscal year 2018, but the agency expects to fall far short of that goal, completing 2,120 exams. It expects to boost investment advisor exams by nearly 2 percent in fiscal year 2019.
The SEC examined about 15 percent of RIAs in fiscal year 2017, while nearly 35 percent have never had an examination.
“Significant additional resources are critical to the examination program in order to improve the examination coverage of these entities,” the budget report said.
The agency continues to use a risk-based approach to exams, using analytics to point to areas that could be a problem at certain types of registrants.
