WASHINGTON - Congress was expected to act by today to keep the Securities and Exchange Commission operating in the new fiscal year that started Saturday.

The Senate was expected to pass legislation approved by the House last week that would ensure the SEC would be fully funded at $306 million for fiscal 1995.

The bill, which would authorize the SEC to collect $192 million in user fees, stipulates that the current rate of fees the SEC collects from registering securities - its main source of fees - will remain at 1/29 of 1%.

On Thursday, House and Senate conferees approved a spending bill for the Defense Department that contained an appropriation of $192 million for the SEC.

The SEC provision could be included in the defense appropriations bill because it would be paid for with SEC user fees and not any Defense Department funds.

SEC chairman Arthur Levitt warned key lawmakers last week that the SEC would have to begin sending lay-off notices to some of its employees if Congress didn't approve the legislation by Oct. 1.

The SEC would be funded through a combination of both user fees and public funds as a result of this legislation and measures enacted earlier this year.

Levitt has vowed to push for legislation next year to fully fund the commission through user fees.

Levitt, along with some members of Congress, believes the SEC can lower its user fees, once the commission is fully funded by them, because it collects more fees than it needs.

Sen. Lauch Faircloth, R-N.C., complained at a Senate Banking Committee hearing last Wednesday that the fees not used by the commission "are nothing more than one more tax on capital."

Levitt, who was testifying before the committee on the U.S. and international capital markets, agreed with him.

"It relates not only to fairness in the system that we regulate, but I think all of the self-regulating organizations, the brokerage firms and American's investors feel this way," Levitt said.

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