Bush Proposes Cuts in Fraud Enforcement

President Bush’s budget proposes staff cuts in securities fraud investigations and enforcement, even as the Securities and Exchange Commission acknowledges that the jumpy stock market brings more opportunities for abuse. SEC attorneys will be limited in their ability to cope with securities fraud on the Internet but will try to remain “proactive and flexible,” the agency said in budget documents. It expects to handle 136,500 investor complaints and inquiries concerning fraud of all types during the fiscal year that begins Oct. 1. The SEC budget proposal, the first since Bush took office, also includes staff reductions in inspections of mutual funds, now owned by 49% of all U.S. households and with $7.4 trillion in assets under management. “The pace of review of [mutual fund] enforcement cases may not keep up with the incoming matters,” the documents say. The proposals sent to Congress are part of the SEC’s $437.9-million budget request for fiscal 2002, up from the current spending level of $422.8 million for the 3,200-person watchdog agency.