Auditing and Financial Management:
Expenditures and Revenues of State Securities Regulatory Agencies
GGD-00-189R, Aug 15, 2000
Pursuant to a congressional request, GAO provided information on expenditures and revenues of state securities regulatory agencies for fiscal years 1998 and 1999, focusing on: (1) the expenditures and revenues of state securities regulatory agencies; and (2) quantifying the revenues of state securities agencies by types of activity.
GAO noted that: (1) GAO securities markets operate under a dual system of state and federal regulation; (2) in the early 1930s, Congress created the Securities and Exchange Commission (SEC); (3) securities regulation in some states predates the creation of SEC by more than 2 decades; (4) federal securities statutes focus primarily on, among other things, the national markets; (5) state securities registration requirements, known as blue sky laws, generally are aimed at new and unproven companies and speculative ventures, which often have local or regional impact; (6) generally, state securities agencies are funded by appropriations from state legislatures; (7) they also collect revenues from a variety of securities-related activities, including fees or licensing/registration and securities offerings, as well as fines and fees for a variety of civil and administrative violations; (8) most of the state securities departments that responded to GAO's survey said that revenues exceeded expenditures for securities activities for both 1998 and 1999; (9) two states, California and Colorado, told GAO that their state laws require a balancing of revenues and expenditures; (10) California reported that its securities-related expenditures exceeded revenues in both 1998 and 1999; (11) in Colorado, revenues exceeded expenditures by only a small margin in each year; (12) however, revenues, on average, were more than 6 times greater than expenditures for both 1998 and 1999, for all states reporting; (13) GAO asked state securities departments to break down the the total revenues received for securities-related activities into four categories; (14) revenue from registration and licensing constituted 42 percent of the total revenue collected overall by states securities departments, and revenue from the registration of securities offerings and notice filings equaled 57 percent; and (15) revenue from violations and penalties was about 1 percent, and other revenues were a fraction of 1 percent in both years.