This morning, SEC Chairman Mary Schapiro testified before the Subcommittee on Financial Services and General Government in support of President Obama's FY 2011 budget request of $1.258 billion for the SEC. Her testimony reiterated much of what has been said before on this blog and elsewhere about the SEC's recent restructuring and developments, but also raised a number of items that have not been previously discussed in much detail.

Items of interest to me from today's speech included:

Schapiro said that in her first 12 months as Chairman, the SECs enforcement activity increased significantly compared to the previous year. She said the agency had brought more than twice as many TROs and asset freezes; issued over twice as many formal orders of investigation; won $540 million more in disgorgement orders, while penalty orders more than doubled; and filed nearly 10 percent more actions overall, including nearly twice as many involving Ponzi schemes.

In the area of examinations and oversight, Schapiro stated that "in response to ever-changing Wall Street practices and lessons learned from the Madoff fraud," the SEC now requires examiners to routinely verify the existence of client assets with third party custodians, counterparties, and customers.

Between FY 2005 and FY 2009, investments in new information technology systems for the SEC dropped by more than half. New funds in FY 2010, however, have enabled the SEC to launch new initiatives, including centralizing into a single, searchable database the existing tips and complaints that were previously in multiple databases.

This week, the SEC released for the first time a set of agency-wide policies and procedures to govern how employees should handle the tips they receive.

Between FY 2005 and FY 2007, the SEC lost 10 percent of its employees due to flat budgets.

The proposed FY 2011 budget of $1.258 billion would permit the SEC to hire an additional 374 professionals (10 percent increase over FY 2010), bringing the total number of staff to over 4,200. In the Enforcement area, this would allow for 130 new professionals, which Schapiro estimates would enable the SEC to open 75 additional inquiries, conduct 130 additional formal investigations, and file charges in 70 additional civil or administrative cases.

The FY 2011 budget would also allow the SEC's Enforcement Division to hire additional trial attorneys, increase administrative staff to free up the Division's lawyers, and improve IT resources.