Kelley Applauds Key Lawmakers’ Support of Frontline SEC Employees


Early this month, NTEU National President Colleen Kelley welcomed recognition by key House members that structural issues involving both the SEC and more broadly the nation’s financial regulatory system played a major role in the proliferation of a long-running financial scheme.

President Kelley pointed in particular to the view expressed by Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee, who, in speaking about SEC employees, said in the face of structural problems at the agency, that “no one should infer from this terrible situation that the working personnel of the SEC were at fault. There is no suggestion that any of them were less than diligent.”

“Any investigation into the Madoff situation needs to be done impartially,” President Kelley said, “and not have a pre-determined conclusion about where to lay blame.”

Under current leadership, Kelley noted, SEC staff has been cut, resources have been limited, employees have faced serious workplace issues and deregulation of the financial industry has been pursued. In fact, said Kelley, the frontline employees at the SEC have been outgunned, underfunded and have suffered from inadequate leadership.

Rep. Frank’s comments were delivered at a committee hearing on the growing scandal involving the financial activities of Madoff, who is alleged to have conducted a Ponzi scheme running over many years, causing financial harm both to individuals and organizations.

The hearing was called by Rep. Paul Kanjorski (D-Pa.), chairman of the Capital Markets, Insurance and Government-Sponsored Enterprises Subcommittee, who noted a sharp decline in enforcement personnel assigned to review the operations of investment advisors, such as that run by Madoff.

Separately, former SEC Chairman Arthur Levitt wrote in an op-ed piece published recently in the Wall Street Journal that while the number of investment advisors has grown by some 50 percent since 2002, the agency’s enforcement resources have been flat or reduced, noting that Enforcement Division personnel were cut – by 146 to 1,192 from 1,338 – from 2005 to 2007.

In mid-December, President Kelley rejected statements by SEC Chairman Christopher Cox which sought to lay the blame for the Madoff scandal on agency frontline employees. Kelley noted the importance of ensuring that financial regulatory agencies, such as the SEC, have sufficient resources and personnel to perform their congressionally-mandated missions. “That clearly has not been the case in recent years,” President Kelley said.