Bush to Weigh SEC Boost in Funding
The Bush administration said Wednesday that it would consider boosting funding for the Securities and Exchange Commission beyond the 30% increase that White House officials said last week was enough for the agency.
“We will work with the Congress to make sure [the SEC] has the resources it needs,” said White House spokesman Ari Fleischer.
The SEC requested $568 million for the current fiscal year, a 30% increase. Congress called for a 77% increase in a law that set up a new board to review accounting standards after Enron Corp. and WorldCom Inc. declared bankruptcy. Last year’s SEC budget was $438 million.
Final funding for the agency will be worked out when Congress returns after the Nov. 5 elections.
Democrats said President Bush’s refusal to support the full $776-million congressional budget request for the SEC is an example of Republican foot-dragging on corporate accountability issues.
“We strongly condemn the Bush administration’s decisions not to adequately fund the Securities and Exchange Commission, a decision that significantly undermines the recently enacted corporate reform law,” House Minority Leader Richard A. Gephardt (D-Mo.) and other Democrats said in a statement.
The SEC is operating under last year’s budget until Congress passes the spending legislation that includes a new budget for the agency. Neither the House nor the Senate has approved a bill including a new SEC budget.
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N.Y. Prosecutors to Question Citigroup Chief
Citigroup Inc. Chairman and Chief Executive Sanford I. Weill will meet with investigators from New York Atty. Gen. Eliot Spitzer’s office as part of the investigation into Citigroup research practices, a Spitzer aide said Wednesday.
“Sandy Weill has offered to meet with our office, and we’ve accepted his offer of cooperation,” said Spitzer spokeswoman Juanita Scarlett.
She said Weill is not a target of the investigation at this time and a meeting hasn’t been scheduled. Spitzer will consider all evidence he collects and won’t rule out any action, she said.
Scarlett emphasized the time frame after Weill released a statement quoting his legal advisor, Marty Lipton, as saying “any charge against Sandy Weill is inconceivable.”
Spitzer’s office has told Citigroup attorneys that the company’s interests may have diverged from those of Weill, according to the Wall Street Journal, which reported the probe Wednesday.
But Weill issued a memo to Citigroup’s senior managers Wednesday, rebutting the notion that his interests and those of the company had diverged.
“The Board has been kept fully informed as the investigations have progressed and is fully supportive of my decision to testify,” Weill stated.
It’s unclear what new information investigators have found, the Journal said, except that it falls under Weill’s actions regarding Salomon Smith Barney’s rating of AT&T; Corp., where he is a board member. Salomon is Citigroup’s brokerage unit.
Weill said Wednesday that he never told any analysts what they should write. “My conduct has been entirely appropriate and proper,” he said.
Earlier this month, Weill announced his resignation from AT&T;’s board and said he won’t stand for reelection to the board of United Technologies Corp.
Spitzer’s office is investigating what role Weill had in Salomon’s AT&T; rating, including an upgrade made by telecom analyst Jack Grubman right before the firm was planning a massive stock sale to finance its wireless unit. AT&T; Chief Executive C. Michael Armstrong is a longtime Citigroup board member.
Citigroup’s stock closed Wednesday at $35.49, down 4 cents, in New York Stock Exchange trading.
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Instinet’s Island Subpoenaed by SEC
Island ECN Inc., the electronic trading network acquired by rival Instinet Group Inc., has been subpoenaed by the Securities and Exchange Commission as part of an examination into the prices the networks charge.
The SEC is seeking information on the different fees Island charges subscribers and non-subscribers to trade with stock orders posted on the network, New York-based Instinet said in an SEC filing. Instinet is owned by Reuters Group.
In another subpoena, the SEC is seeking information on trading and market rebates in a probe of customer trading practices in exchange-traded funds, the filing said.
The subpoenas come as the SEC is planning public hearings over the next four weeks on issues in U.S. equity markets. The SEC will hear testimony on inconsistent links between markets as well as different regulatory obligations and fee requirements between exchanges and electronic trading networks, known as ECNs.
Officials at the SEC and Island declined to comment.
Instinet shares fell 6 cents Wednesday to $2.90 and Reuters lost 58 cents to $16.55 in, both on Nasdaq.
