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News March 28, 2011 Issue

Feeling The Budget Pinch(?)

As Congress puts a stranglehold on the federal government in an effort to reduce spending, the SEC is tackling the problem in new ways.

One big expense reduction the SEC appears to have embraced – no traveling around the country to get out the regulatory word. SEC officials have been conspicuously absent from several recent conferences held in places far away from the agency’s headquarters, opting instead to participate in the conferences via satellite or audio feed.

At the recent Investment Company Institute Mutual Funds and Investment Management Conference in Palm Springs, California, new director of the Division of Investment Management Eileen Rominger and former acting director of IM Jennifer McHugh made remarks via satellite. SEC chairman Mary Schapiro and Division of Enforcement director Robert Khuzami did the same when speaking before the SIFMA Compliance and Legal Division Annual Seminar in Phoenix, Arizona. IM associate director Robert Plaze participated on a panel at the ICI conference by audio link, with a bobble-head doll holding his place on the dais.

It could be that they simply had other commitments and couldn’t be two places at once. After all, the spring conference season is in full swing at a time when regulators are being repeatedly hauled before Congress to justify what they do. Appeasing Dodd-Frank Act mandates can also keep a regulator tied to his or her desk.

It could be that the optics of appearing in a cushy resort setting when the SEC is on the fiscal ropes are not good.

It also could be a reservation of resources for more critical travel needs, such as taking depositions in enforcement litigation matters, or conferring with global regulatory counterparts.

Whatever the reason, "virtual regulators" may be a trend. Imagine what it could do for the bobble-head industry.