Thousands of American institutions are struggling to keep business running smoothly with a limited staff in the Covid-19 era.
That includes Wall Street’s top regulator, the Securities and Exchange Commission.
Chairman Gary Gensler said Wednesday that the SEC is trying to juggle an unprecedented list of financial challenges with a smaller staff.
“We are short staffed,” Gensler told “Squawk on the Street.” “It might sound odd to say that at an agency with 4,400 remarkable, dedicated staff working remotely during this challenging pandemic. But that’s 4% to 5% less than we had just five years ago.”
“We’ve got an IPO boom, we have a SPAC boom, we have cryptocurrencies to deal with. We have the issues we talked about earlier about China,” he added. “I’d like to at least get back to where we were in 2016 and I think we should probably be 5% or 10% larger than that.”
Gensler, who took over as SEC chief earlier this year, testified to Senate lawmakers on Tuesday that he needs “a lot more people” to deal with some 6,000 new digital assets. He said that the regulator is trying to balance an investor’s liberty to spend their own money with decades-old laws that require the SEC find fraud in a broad range of assets.
“Investors get to decide what to invest in as long as companies make full and fair disclosures. In those laws, there is a very broad definition of what is a security,” he said. “Cryptocurrencies have come along, I think the laws are clear – the case law, the Supreme Court’s weighed in on this multiple times – that many of these tokens do come under the securities law.”
SEC regulators are parsing through reams of new cryptocurrencies and digital assets to determine which qualify as securities under U.S. law and subject to the agency’s oversight.
Gensler said that his team is spread thin investigating fraudulent China-linked companies, managing those looking to enter public markets and determining whether the SEC needs to crack down on payment for order flow.
Gensler’s appeals for a bigger staff – and budget – mirror more-urgent pleas from the Internal Revenue Service, the division of the Treasury Department responsible for collecting federal taxes.
Deputy Assistant Treasury Secretary Mark Mazur told lawmakers in June that budget cuts have left the department unable to prosecute tax evasion and other fraud through regular audits.
Budget reductions at the IRS forced it to cut 33,378 full-time positions between fiscal 2010 and 2020, including a significant number of taxpayer service and enforcement personnel.
