Under Section 967 of Dodd-Frank, the SEC was directed to hire an independent consultant "to examine the internal operations, structure, funding, and the need for comprehensive reform of the SEC, as well as the SEC's relationship with and the reliance on self-regulatory organizations and other entities relevant to the regulation of securities and the protection of securities investors that are under the SEC's oversight."

On October 15, 2010, the SEC hired Boston Consulting Group to perform this study. BCG's report is due March 14, but a draft report is now circulating and some of its preliminary findings have already been made public. As reported by Bloomberg, BCG's study shows that the SEC presently has a "capacity gap" of 375 to 425 employees, i.e., it is about 400 employees short of what is required for it to handle its current workload. “Without sufficient human resources," BCG stated, "the agency will be unable to complete the requirements of Dodd-Frank while maintaining its current activities.”

Will Congress--which ordered this study in the first place--now accept the study's findings that the SEC is significantly understaffed? That will require a significant change in mindset for some members of Congress. As the Bloomberg article notes, Rep. Scott Garrett (R) of New Jersey, chairman of the House subcommittee that oversees the SEC, declared back in January that a major spending increase for the SEC “would further the mindset that our nation's problems can be solved with more spending, not more efficiency.” The solution, he said, is not more money but for government agencies to "learn to operate effectively within their budgets."

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