WASHINGTON, Nov 16 (Reuters) - The Securities and Exchange Commission lacks expertise to police all parts of the $3.7
trillion U.S. municipal bond market, its director of
enforcement told a Senate panel on Wednesday.
"The Enforcement program continues to face challenges in
securing the necessary expertise, human capital and technology
resources to fulfill our mission of investor protection," said
SEC Enforcement Director Robert Khuzami, as he discussed "a
broader array of challenges stemming from the fast-paced change
and increasing complexity apparent in the financial products,
markets, transactions, and practices."
"In the municipal securities markets, we need better
understanding of pension liability disclosures, valuation
issues, and tax-arbitrage activities," he added.
It has been more than a year since the Commission settled
charges with New Jersey that the state misrepresented its
pension liabilities to its bond buyers. Since then, state and
local governments have been under pressure to ensure they have
enough money to cover pension promises to future retirees and
to tell investors and taxpayers about possible shortfalls.
The financial reform law passed last year, the Dodd-Frank Act, required advisers to those selling debt into the market to
register with the federal government, which would put them
under a host of regulations.
But when the SEC came close to defining who exactly would
have to register last December, it received more than 1,000
comment letters, "including many expressing concerns regarding
the treatment of appointed officials and traditional banking
products and services," Trading and Markets Director Robert
Cook told the same panel, the Senate Bank Committee.
Cook said that his division is "carefully considering all
of these comments in preparing its recommendation" for the
definition, but did not provide a timeline. He also said that
it is preparing an eagerly-awaited report on the state of the
(Reporting by Lisa Lambert)
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