Fact File: Annual Budget Of The U.S. Securities And Exchange Commission

Includes: IVV, SPY, VOO
by: CFA Institute Contributors

By Jason Voss, CFA

The U.S. Securities and Exchange Commission, which is charged with ensuring the proper functioning of U.S. financial markets worth at minimum $18,929 billion in market capitalization (the NYSE, NASDAQ, and AMEX combined), has a paltry annual budget of just $1.321 billion.

Why paltry?

To put this in perspective:

  • The SEC budget is 99.99% smaller than the markets it is supposed to protect.
  • The SEC budget is equal to $1 for every $14,329 that it is charged with protecting.
  • The SEC's recent additional budgetary request amounts to an additional $0.13 for every $1,000,000 it supervises.

To further contextualize the SEC's funding, we've compared its budget to various other line-items in the U.S. federal budget.

  1. The SEC budget of $1.321 billion versus U.S. budget line item for:
    • "Agriculture, forestry, fishing and hunting: surveys, investigations, and research" - $1.1 billion, or 16.7% smaller than the SEC budget.
    • "Recreational and sporting services" - $4.2 billion, or 217.9% larger than the SEC budget.
    • "Fish and wildlife service" - $1.6 billion, or 21.1% larger than the SEC budget.
    • "Marshalls service" - $1.2 billion or 9.2% smaller than the SEC budget.
    • "General property and records management" - $2.3 billion, or 74.1% larger than the SEC budget.
  2. The SEC budget of $1.321 billion is 0.03% of the entire 2013 U.S. budget of $3.803 trillion.
  3. The SEC budget is $1 for every $2,878.88 spent on other programs.
  4. The SEC budget of $1.321 billion versus key 2011 financials for just one major bank, Citigroup:
    • Bank profits of $11.1 billion, equivalent to 7.4 more SECs.
    • Total assets of $1,873.9 billion, equivalent to 1,417.5 more SECs.
    • Net working capital of $33.8 billion, equivalent to 24.6 more SECs.
    • Citi's vague net working capital line-item "other, net" is $9.3 billion, equivalent to 6.0 more SECs.
    • The closest line-item to the SEC budget in Citi's financial statements is "proceeds from sales of premises and equipment, subsidiaries and affiliates, and repossessed assets," which was $1.323 billion. Put another way, Citigroup disposed of assets last year that were worth more than the SEC's entire budget.
    • This is just one major bank in the United States and represents just 12.7% of the total assets of the United States' largest 50 banks at $14.8 trillion
  5. The SEC budget of $1.321 billion versus just three investment professionals that the market regulator will ultimately be charged with overseeing under the Dodd-Frank financial reform legislation:
    • Ray Dalio of Bridgewater Associates earned $3.9 billion in 2011, equivalent to 1.9 more SECs.
    • Carl Icahn of Icahn Capital Management earned $2.5 billion, equivalent to 89% of another SEC.
    • James Simons of Renaissance Technologies earned $2.0 billion, equivalent to 51.4% of another SEC.