(February 14 – 16:50 ET) – Lon Gorman, president of Schwab Capital Markets and vice chair of the Securities Industry Association addressed the U.S. Senate Banking Committee today, talking about the issue of SEC fees.

Gorman argued that the SEC fees that were set several years ago to fund the cost of regulating the securities markets, “now seriously exceed the government’s cost of regulation to such a degree that they constitute a drag on capital formation, and a special burden on every American investor.”

Senators Phil Gramm and Chuck Schumer have introduced the Competitive Market Supervision Act, which proposes a fee-rate cut and a cap on revenue generated by transaction fees. Gorman estimated that if enacted, the Gramm/Schumer proposal would save investors US$8 billion over five years.

In fiscal 2000, SEC fee collections exceeded US$2.2 billion, while the SEC’s budget only ran to US$377 million. The surplus is expected to grow to more than $2 billion in 2001, and for each year through 2005. “We do not believe it is in the interest of investors — or, the nation’s capital markets — for these fees to so grossly surpass the regulatory costs incurred,” Gorman testified.

Gorman suggested that a fee reduction would positively impact investors immediately. “We know that our markets have been made better, and fairer, by the presence of a strong and effective Securities and Exchange Commission. And, because it is in our interest — and, more importantly, in the public interest — to have an effective SEC, SIA has always strongly supported full funding for the agency so that it can carry out its important investor protection mission.”
-IE Staff