5/6/09: NTEU is looking forward to working with new leadership at the SEC “to alter the course of the misguided human capital policies” of the last administration, NTEU National President Colleen Kelley today told the Senate Banking, Housing  and Urban Affairs Subcommittee on Securities, Insurance and Investment in testimony submitted in connection with a hearing focused on strengthening the SEC’s enforcement program. Review her testimony here. Her testimony covered a range of topics, including improving organizational structure, the need for additional market, financial and accounting expertise, specialization, enforcement metrics, empowering front line staff, expanding regulatory authority, reducing bureaucratic tasks, funding and staffing.

NTEU President Colleen M. Kelley said that “without fundamental change in the agency’s approach” to a range of issues impacting employees, “morale will continue to suffer,” which ultimately would have a negative impact on the agency’s ability to effectively enforce federal securities laws.

Kelley’s remarks were a continuation of NTEU’s call for a broader approach to addressing issues in the nation’s financial regulatory structure; NTEU represents 10,000 employees in five such agencies. In addition to the SEC, they are the Office of Comptroller of the Currency, National Credit Union Administration, Federal Deposit Insurance Corporation and Treasury Departmental Offices.

As the economic crisis enveloped the nation, NTEU consistently called for these and other regulatory bodies to have adequate staffing and resources to meet their responsibilities; sufficient and appropriate authority to deal with increasingly complex financial instruments and trading techniques; and leadership committed to the vital missions these agencies play in our society.

“In the recent past,” Kelley said, in speaking about the economic crisis, “federal financial regulatory agencies moved away from their historic missions, and the nation will best be served by a return to basics on the part of these agencies.”

To that end, she said NTEU is “hopeful that, in this new era, the SEC will begin the work of restoring the morale of frontline staff and rededicating the agency to its mission as the investor’s advocate.”

President Kelley said NTEU agrees with a number of initiatives advanced by Robert Khuzami, the SEC’s new director of enforcement, including his “basic goal of a smart, swift, strategic and successful enforcement program.”

She recommended the agency flatten its management structure to increase the ability of frontline employees to have timely regulatory impact; supported Khuzami’s call for the hiring of additional technical and analytical support staff to assist first-line employees in conducting investigations—noting that while the Enforcement Division has some 500 non-managerial investigative attorneys, it has only nine bargaining unit “market surveillance” experts nationwide; agreed with the enforcement director that an improved “prioritization metric” would allow frontline employees to more effectively evaluate potential enforcement matters; and supported both an increase in staffing and a self-funding mechanism—such as is widespread among other financial regulatory agencies—so the SEC would have the needed independence “in establishing budget and staffing needs.”

At the same time, the NTEU leader urged caution on a proposal to reorganize the Enforcement Division into specialized groups that would target specific types of cases. “This would constitute an historic and fundamental sea change” in the organization, Kelley said, and it “requires extremely careful consideration and deliberation before implementation.”

The SEC, she said, “enjoys a deep reservoir of highly-skilled, resilient and capable employees who will continue to play a critically-important role as we move ahead together to address the problems we face.”