Deal Struck To Lower Sec Fees Agreement Removes One Obstacle To Passage Of Securities Reform Legislation

An agreement to reduce Securities and Exchange Commission fees by $850 million over 10 years removes a major obstacle to legislation aimed at trimming red tape for mutual funds and streamlining state securities regulation, officials said Tuesday.

House Commerce Committee Chairman Thomas Bliley Jr., R-Va., late Monday reached an agreement with the Clinton administration on the fee rollback, spokesmen for the Office of Management and Budget and Bliley said. In addition, Sen. Ernest F. Hollings, D-S.C., a ranking Democrat on the Senate appropriation panel that handles the SEC budget, also agreed to the fee rollback, a spokesman said.

The fee reduction is part of a broader bill to eliminate state registration requirements for mutual funds and makes other changes to eliminate overlapping state review of new securities offerings that already are covered by the SEC. A House and Senate conference committee has been stalled until resolution of the SEC fee dispute.

The new Bliley agreement now must receive the blessing of Democrats on the conference committee. In the past, Democrats have supported an earlier version of the fee cut plan, so long as Bliley won support of the OMB.

Kaye Williams, the SEC’s legislative affairs director, said while the fee issue was an obstacle, there are other issues in the securities bill that have yet to be resolved.

“There are a lot of open issues that need to be aired,” she said. One such matter concerns how to improve regulation of investment advisers.

The Office of Management and Budget, which develops budget policy for the White House, had initially opposed the rate of the Bliley fee reduction, said Larry Haas, OMB spokesman. It argued it would remove an independent funding source of the SEC, placing it in competition with other agencies for scarce federal dollars. But Bliley and OMB officials reached agreement on a fee reduction that was less severe in 1997 and 1998, said Haas, OMB spokesman. “We support the agreement,” he said.

Currently, the SEC collects about $2 in fees for every $1 it spends in its yearly budget; the surplus is turned over to the government’s general fund, where it is used for various spending programs. Bliley and other congressional Republicans have long sought to reduce the SEC’s fees for registering stocks and bonds with the agency, calling them a hidden tax on companies that issue stock.

The agreement would reduce the so-called 6(b) registration fee from the current level of 1-29th of 1 percent of the total amount of stocks or bonds companies register with the SEC to 1-33rd of 1 percent in 1997 to 1-150th of 1 percent by the year 2007.

A second fee would be reduced as well: the so-called Section 31 fee on trades of exchange-listed stocks would be extended to Nasdaq-listed stocks, and then cut from 1-300th of 1 percent currently to 1-800th of 1 percent by the year 2007, Bliley’s office said.