variety lated the security laws doesn't keep kol being back over and over and own again. >> i don't argue that point at all. but we're going back to the numbers. on the within hand we're talking about $745 enforcement actions but yes than 500 were more than orange nat actions. the reason i make this point is because we're sitting here today looking at the better part of a kwur billion dollar increase and we're making the argument that these -- thisins forment restructuring on this enforcement action by the sec is demonstrating its enormous success, if you will, in what its doing. now, either the numbers are misleading or the actions we're talking about are much more -- >> sure. i appreciate that.

and i don't believe the numbers are misleading at all. i do believe that the actions are far more complex than they ever have been historically. if you look at the many financial crisis cases involved, incredibly complex structured products and sales practices and of course our disgorgement and penalty number is also very significant for this year, $2.8 billion that i think helps to recognize and represent the complexity of the kinds of cases we're bringing. we have brought cases against firms for improper selling to school districts, we have brought cases for misleading investors in the sales of cdos, we have brought cases for bid rigging in the municipal securities markets, extremely complex types of matters. obviously the entire web of insider trading cases that has involved an enormous amount of investigate every resources to

connect all of the people who were in a conspiracy really to insider trade. we brought very corrupt foreign practices act cases. soap i think the numbers don't give the full story and we always try to say the numbers don't give the full story, that the complexity of the cases that we're bringing and the number of senior people that they are important factors in showing the efficacy of the additional funding program. >> the additional funding that you had last year, how do you break down that funding insofar as how much of it went into enforcement related activities? >> in last year we had an increase of 47 portions, 63 i believe went to litigation, building up our trial

capabilities. the largest number in this current fiscal year went to trading in markets division, which is responsible for all of the regulation and oversight of the security markets and much of the dodd-frank implementation, the issue of market structure like high frequency trading and kole location dart pools, the response to the macic crashed. >> it i think that the forecast is making the organization that the emerging issues effectively and appropriately allocated? >> absolutely. i vau that as one of the most important parts of what i'm there to do is to make sure that

we are goodsturts of the resources we have, that we are acting smarter or faster than we ever have been. weep are doing significant rebuilding of the infrastructure of the security to reorganize our enforce then the and examination program but and to build the support there. >> i have one more question, mr. chairwoman, if i maynd that is the information between the information technology president obama, whatever you call it in your agency. what -- can you bruised briefly describe what you're attemptling to do insofar as your automated platforms are designed to do and how that may be able to save the

agency money and reduce our dependence on more and more personnel. >> we believe we can dramatically cut our o'& m costs just by moderning them and getting them off 10-year-old infrastructure and that those savings for ed car and sec.gov could be as much a 14 percent. those are two very quick things. i believe also by eliminating the siloed strurtier of our technology and allowing our staff to access one layer without having to go in and out of hult many different systems. those are just a couple examples. >> thank you for your answers. i need back. >> thanks, mr. wallmart. i would like to have a separate

meeting with your director, please. i want to know how fast we could work together to get that ip system unsigh loted. -- unsiloed. obviously in the past in between the times that you were there, new been able to put in the name bernie madoff, just for example, and had found any kind of filings that he and his company did in several different places, maybe we could have found something faster. but i would like to have a separate meeting so that we can discussion how much it would cost to get this up and running and to totally modernize his system. if i could add to that, we would be happy to demonstrate the up in system examination that allows examiners have to have particular of all information at their fingerprints beez of

having to merge all clips and complaints. and also that the agency deployed last year and we intend to spell some of our technical. >> again, tips that come into -- they can be linked together so that bernie madoff's name might show all of the tips that might have come in against his conduct. >> by doing that at the internal revenue service, for example, it has made life a lot easier. and it's become more efficient and quite frankly they need fewer people to perform a lot of those das beings. -- tasks. >> thank you. thank you for your service. >> thank you. >> i'd like to go back to the

proposed 298-page volker rule. it's my understanding that other agency received 17,000 public spoken that was spoken about a little while ago. commissioner gallagher said yesterday, even a quick review of the many substantial letters, comments and the rule effect on the funding of global markets and the economy tiff of the u.s. financial industry. he's going on to a, with so many concerns rounding the proposed rool, wouldn't you agree it would be a step back to go back to the drawing board and start all over again. we're dealing with va lot here. >> we did get 15,000 and the length and depth of the quality

letters we're depend see but one some very real concern and issues for the agency to collectively think about. so whether we right from the beginning again or not, i will tell you that we will and are theyfully reviewing the comment letters and i certainly have not read them all and rethinking how we should approach the statuary requirement. our goal at the sec and i believe i can speak forall regulators in this is to try and fulfill the obligations of the statute but not to the detriment of our market or mark making, we we fully understand they are critical in the successful -- >> and you've heard all that? >> we have had hundreds of

meetings with industry. chairman bernanke said it would be very unlikely and possible to get this done by the statuary deadline of july. our goal were be the time to get it right, not to get it fast. >>. >> today frank requires fec and fscc. tradition swap are the agencies to make sure the definition is consistent. one reason it's taking so long is that it is a challenge. we have different db we have different statuary reej ems upon which each of us are building. frankly there are differences for the security based swap market for which we have responsibility. it's created a lot of challenges in the joint rule make bug we are working together to try to make those definitions as consistent as we possibly can.

i don't want to tell you we'll be identical on every single thing, but we appreciate the goal of consistency here and we're working through some final issues between the two agencies. lastly and as my time is running out, regarding the mf global issues, what actions has the sec taken to recover those missing funds? >> well, you know, it is a tremendous tragedy what has happened with respect to mf global. ly say the sec has been deeply involved, though there were only about 318 active security accounts at the firm while there were close to 40,000 futures account. our role has necessarily been more secondary. we in trying to determine what has happened, where her final

days and we'll seek to call back money where appropriate. under sipc, which applies on the security side and but futures accounts. expectation is 85% of customers will get 100% of their funds back when the firm is finally resolved. we're working closely with the trust years and we'll have an enforcement view as well. >> thank you for that. alts huge tragedy for so many people. next 953 of the dodd-frank act requires the sec prol um gate regulations for the so-called play rate disclosure or what you have heard from the issues and the corresponding cost related to the implementation of the pay ratio provisions? >> well, weir heard a lot. the statute is veryly per

scriptive. and it creates some call ngs as we pretty the move. it did not have a deadline,although there's obviously interest in our getting this done. but some of the challenges reality to the fact that many companies have hundreds or thousands of tens of thousands of employees overseas. how do count them, who to arrive at an average compensation numbers, whether to count employees have joined ventures. fork, there are a lot of burdens to making the calling lake because it's an average of ul playies we're trying to work through. >> as a matter of fact, i've heard some nightmares on trying to accumulate who takes longer

in the private sector, it takes a lot longer to -- you're a military national hard to accumulate the didn'tia because you have to go to many. >> it always sounds easier on the surface. but when you kind of dig into it, sometimes i think we is it for more than we expect to get. >> this case in particular. it's quite a preskriktive provisions. it's not as if we could take the wd forms and compare to the coo's compensation. it's much more complex than that. >> thank you. the chair recognizes mr. yodder. >> i wanted to pick up where the chair was leading off there regarding some of the effie burdens that kalt matly has pent your way, certainly other with

down frank and probably had you spinning lats in the air. we pent a lot of time out in members of congress, small business owners, folks that create the job and make the country go and creates the prosperity everyone in the room wants to see from their kids and gray ground. it's there's a twin set of chals that can be affected by agency like yourself. first of all, the regulatory uncertainty in this country business owner, in the investors express and certainly. many folks expressed a concern hon pow that wind

back -- aren't fully known by the folks who were expecting to make twice. the second challenge, we have a huge been, as we try to find ways to cut spunding wu are asking resolve and make information information to the free market system that we want to promote in this country while at the same time finding ways to do it in a cheaper fashion. what we're asking you to do is produced a better product with less resources and less people. and so miech question for you is how do we work together and with the sec to find ways to produce better results in a more repre-districtable fashion and one that doesn't require additional federal resources.

are we creating too many demands upon the commission at once? do we need to wok together to retiert the department. we're emphasizing those and not other items? is it it blume case? are we asking too many agencies to do too many thing? when i'm out my district i hear agency after agency, we are and you mountain of new uncertainty pip hear it from banks, small business owners and whoever. we're expecting those companies to take jobs, how do reresolve this a way in a limb bit and promote certainty in the economy? >> i have a couple thoughts about that. one is on your point about regulatory uncertainty. i absolute live agree it impacts the willingness of businesses to take risks because it's uncertain. whether what the reward might be

or whether they might not be aible to follow through on what they started. it's in conflict with our desire to get these rules right. sow when congress passes a statute, when we get there done a long time to get it done because ewant to do it the right waybe there is certain information coming from washington to makes it harder tore businesses to plan now because of the volume of work that's come to all of the back and regularation entrintories. on a small business aspect, i mean, we're very focused not frank thins that we're working on today are areas woor we think we can relief sofle of -- so

people are comfortable money and al owe cat in the mat, maybe get their feet on the ground due ideas like onramp. they add skill disclosure whether the 500 shareholder tig figurer for public it should be higher and high are for community beak engs folks. so we have a full plate of small business capital formation cinch tifs that we looking at. we're also looking at areas within the sec where we can cut spending, where we can save money. two have a continuous improvement program. one of the recommendations out

of a large study done by a and through that initiative as well as others we've identified $8.3 million in savings just over the next few years. when a relatively smaf lift. in savings that we think that we can find. then we have in our technology group, a very conscious effort to save money. we replaced 500 servers with virtual servers. we will recoup that $7.6 million in 15 month afrpd over the next five years save close to $19 million. we can redeploy it towards more yufl purposes within the agency. that's being done on a consistent basis, tightening up contracts, putting in higher service agreements and performance metrics to catch problems earlier so we have much less utilization under our support. contract support agreements and

therefore, lower our costs of delivering technology. so that's a long way of answering multiple part of your question. the last thing i would say, while this is not -- we must be good stewards of the appropriation that we receive, our funding is fully offset by fees that are paid on securities transactions. about two cents per thousand dollars of transactions. >> i noted that in your testimony. certainly, i appreciate that. i also appreciate your acknowledgment that many of these investors and these businesses and folks that we hope will create jobs are dependent upon the regulations coming out of the s.e.c. and other agencies and so our ability to work with private industry and to come up with regulations that make sense, that are acceptable that create certainty, i think, is just really critical towards getting our economy back on track.

not all the folks in this panel were supporters of many of those things thrown your way. so some are politically divisive topics. in general, we can agree across the aisle and across executive and legislative branch that anything we can to do create a certain environment will help put people back to work. >> i agree with that. wherever we can delay -- that pus less burden on small businesses while being conscious of the fact that we want to protect investors because fraud in this area will not heb everybody. >> certainly. i appreciate that. i have one other question related to some of your proposed rules related to conflict minerals. i don't know if you recall last year when you appeared before the committee, i asked you about this as well. there was a concern among some companies in the country related

to really minimal amounts of materials that are very increasingly difficult for a small device manufacturer to be able to track and just a few questions and you can answer. what are the anticipated date for the adoption of the final rule regarding conflict minerals. has there been any consideration given to setting a guidelines for the amount of a conflict mineral that will trigger the proposed requirements? last year we discussed creating a de minimis level in whether there was enough latitude given to the s.e.c. in federal statute that allows you to do that. certainly, there's some broad discretion in terms of implementation of these amounts. and they also, would the s.e.c. considering to moving to category for indeterminate origin where metals are purchased with no origin can be determined. is there a way to resolve that so some of these companies that

make small devices, for example, i have garmin in my district who is affected by this. are there situations where companies like that could work with the s.e.c. to come up with a rule that was actually feasible to be implemented? >> congressman, as you point out, this is a particularly complex rule, a fairly descriptive -- to disclose whether there are conflict minerals originated in the democratic republic of the congo. we missed the deadline on this one quite some time ago. it is owe so out of the ordinary for the s.e.c. commissions working to finalize the adoption and i'm hopeful that in the next couple of months we will be done. we've met with many industry participants as well as ngo's and the conference of catholic bishops, other project. people on the ground with experience in the congo and understand as i think we all do,

the good intention, the important intention behind this provision. and so we're working to finalize it. we held a roundtable where we could hear from industry about the particular issues that they were concerned about. i don't believe the de minimis exception is possible under the statute. but the rule will try to give latitude and flexibility in some areas that i think will be helpful to different kinds much businesses in order to comply. we will have a phase-in period. i don't know how long that will be to give sufficient time for some supply chain due diligence mechanisms to be developed and put in place. we are look closely in terms of guidelines. it's still a bit of a work in progress. >> i appreciate your work to try to find a rule that can be workable, can be feasible and

certainly the conversation we're having previously related to just that regulatory uncertainty. this is another thing that affects privacy and industry's ability to create jobs and grow in this country and so these rules frustrate and affect sometimes very negatively some of our folks we're asking to grow and be great companies. anything you can do to resolve these in a way that actually -- sometimes these companies look at the rules and say, i can't implement this. this is not feasible. your response may be congress need to give us new direction. as you said, it's written pre descriptively. maybe congress needs to look at that. in other cases it's an impossibility for some of the companies with a minimal amount to track this pack to the point of origin. you can imagine the amount of expense and effort and not understating the impact to the region that we're trying to protect and make sure there's not this happening. the effort to pinpoint every

single mineral that's coming in to a small device, multiple steps down the chain can be very, very cumbersome and difficult. thank you for your efforts there. thank you, madam chair. >> i might add, mr. yoder, oftentimes these things come about because the people writing the laws don't have a clue of working in the private sector. that said, the question then chairman schapiro, with regard to your -- the division or department in the s.e.c. that actually houses your economists, if you will, i'm curious because i don't know how often you utilize your economists in determining the economic impact of a certain type of regulation, but certainly with regard to what mr. yoder is saying, it seems to me that, regardless of the intent of congress, that in fact the economic impact on a

company such as garmin, is it? who needs to use some of those minerals because you can't get them anywhere else or they would become anti-competitive should be subject to some kien of analysis. do you ask those folks within your organization to help on this? >> absolutely. we have significantly expanded the size of our economics group in the last two years. they are involved right from the beginning and the cost analysis of the regulations we might impose helping us analyze costs of different alternatives, if possible. they have a request for comments on both analysis we did and asking others for data that would help inform the public policy choices that we're making. we have a superb chief economist in the last year and built up that function significantly. but they are deeply involved in

rulemaking. they're also deeply involved in enforcement and in studies and helping us do things like reconstruct trading after the flash crash. they're well-integrated into the organization. >> so would you use them also, for example, to -- this is just using this as an example. i wasn't going to bring up the money market issue again. however, within the discussion. >> absolutely. >> of the rulemaking, i mean, do they get involved in trying to pull a, consider, if you will, the economic impact of broader capital markets or the like. >> yes. they're very involved in the money market fund work that we're doing right now. >> okay. when we do the rules two years ago, met the increased credit quality and other standards. they were very involved. >> how many economists do you have versus how many lawyers? >>e