WASHINGTON -- SEC chairman Arthur Levitt Jr. suspended all nonessential services and expenses at the commission yesterday following Congress' failure to approve funding for the fiscal year that started on Saturday.
In a memo to Securities and Exchange Commission employees, Levitt announced a freeze on hiring, promotions, "pay awards," procurement activities, and travel for enforcement activities and examinations of brokerdealers, mutual funds, and investment advisers.
He also announced a reduction in the fees paid by issuers to register securities offerings from 1/29th of 1% to 1/50th of 1% of the offering amount, saying the decrease would result in a loss of $740,000 per day for the commission.
Levitt's action came after an unidentified Republican senator put a hold on a bill Friday that was to have authorized the SEC to collect $192 million in user fees.
The bill, which would have followed an appropriations measure approved by House and Senate conferees on Thursday, is needed to fully fund the commission at $306 million for fiscal 1995.
But action on it had to be postponed because of the hold. Members of the Senate, under their own rules, are permitted 19 anonymously put holds on bills.
Sen Phil Gramm, R-Tex., had put a hold on the bill last week in an attempt to tie it to some unrelated legislation. But Gramm removed the hold by the end of the week, congressional aides said.
At press time, SEC officials and congressional aides had not yet determined which senator had put the hold on the bill or why.
They were hoping to learn the identity of the senator and to resolve the matter after the Senate came back in session at 5 p.m. so that funding for the commission could be approved and Levitt could avoid sendmg employees layoff notices later in the week.
Levitt and SEC officials were discussing the possibility of such notices yesterday but had reached no decision. They stressed they were hoping the funding matter would be resolved soon.
"We are working diligently to restore all agency operations," Levitt told employees in his memo. "I am hopeful that the leadership of the Senate will act quickly to pass this essential legislation."