Panel Agrees to $850-Million Cut in SEC Fees

Leaders of a congressional conference committee reached an agreement late Monday on an $850-million cut in the fees that corporations pay to the Securities and Exchange Commission.

The compromise removed what congressional sources said was the final roadblock to passage of the most far-reaching revision of U.S. securities laws in 50 years.

The bill would update regulations written in the wake of the stock market crash of 1929, end state regulation of mutual funds and give the SEC broad authority to drop obsolete rules and grant exemptions to other regulations.

The House and Senate passed considerably different forms of securities legislation earlier this year, and efforts to reconcile the two bills had been hung up over Republican demands for a substantial rollback in the fees charged by the SEC.

Congressional sources said an agreement to reduce the fees by $850 million over five years was reached late Monday between Rep. Thomas J. Bliley Jr. (R-Va.), chairman of the House Commerce Committee, and Sen. Ernest F. Hollings (D-S.C.), the leader of Senate Democrats on the conference committee.

The compromise would still allow the SEC to finance its operations from the fees it charges when corporations sell stock, arrange mergers or take other actions that require filing reports with the SEC.

A Republican source said the SEC now takes in about twice as much in filing fees as it spends running the agency, which regulates securities sales, investment markets and the brokerage industry. What the SEC does not use goes into the Treasury. The fee cut proposal has not been submitted to the Office of Management and Budget for a review of its impact on the federal budget deficit.

Bliley had argued that the fees are “a tax on investors” that comes out of corporate profits that might otherwise be used to benefit shareholders.

The White House had opposed the fee cut on the grounds that it could reduce resources needed by the SEC, but now has agreed to go along with the rollback, congressional sources said.

The massive rewrite of the securities laws began as a proposal by Rep. Jack M. Fields Jr. (R-Texas), who became chairman of the influential House securities subcommittee when the Republicans won control of Congress in 1994.

The original Fields bill was considered so radical that even securities industry lobbyists said it had little chance of passage. The bill would have reduced federal regulation of corporate takeover fights, cut the SEC from five members to three and ended most state regulation of securities. State securities regulators, many of them Republicans, led the attack on the original proposal.

Fields quickly dropped the most controversial provisions.