FOR IMMEDIATE RELEASE: December 20, 2001

SENATE GIVES FINAL APPROVAL TO GRAMM-SCHUMER BILL TO REDUCE SECTION 31 FEES

Legislation that would save investors billions of dollars now heads to the White House to be signed into law by the President

US Senators Phil Gramm (R-TX) and Charles E. Schumer (D-NY) today applauded the Senate's passage of the Competitive Markets Supervision Act, bipartisan legislation that would reduce Section 31 and 6(b) fees and allow the Securities and Exchange Commission (SEC) to bring the pay of its employees in line with the pay of other financial regulators. The Senators said the legislation, which has the SEC's endorsement, will save investors billions of dollars.

"When you can't get a big stimulus, you settle for a little one. These fees became a tax on investors and their reduction is long overdue," Schumer said. "This bill cuts Section 31 fees in an investor-friendly manner that ensures that the SEC has the funding it needs for its day-to-day operations and to attract new staff."

"This amounts to a $14 billion tax cut, funds that will now stay in the hands of those saving to buy a house, educate their children or provide themselves a secure retirement," Senator Gramm said. "Higher returns for Americans who save and invest will boost America's ability to create jobs and provide a shot in the arm at a time the economy can use it."

Section 31 fees are a surcharge placed on securities transactions that fund the operation of the SEC. While the fees were in line with the SEC's budget for several years, the democratization of the securities market in the 1990s caused the volume and amount of Section 31 fees to skyrocket. Today, Section 31 fees stand at $2.3 billion – over 500% of the SEC's $377 million annual budget. The excess fees – totaling nearly $2 billion – are currently funneled into the federal budget for other uses.

Gramm and Schumer's legislation would lower Section 31 fees by reducing the fee rate and capping the total fees collected. The bill would save investors – who pay 87% of Section 31 fees – an estimated $14 billion over 10 years while guaranteeing the SEC adequate funding. The bill would also raise SEC employee pay so that it is on par with other federal banking regulators.

In addition to helping investors, Schumer and Gramm said the bill would have the added benefit of making US securities markets more competitive in an era of increasing globalization by helping securities firms eliminate an unnecessary part of their cost structures. Foreign securities traders currently have a competitive advantage in US marketplaces because they do not have to pay Section 31 fees.

Gramm and Schumer's legislation now goes to the President to be signed into law.

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