Former Securities and Exchange Commission chairman and current Kalorama Partners CEO Harvey Pitt tells Reuters correspondent David Clarke the new law allowing small investors to directly fund start-ups will put an already beleaguered SEC under greater strain.

“The SEC is going to have to spend a lot of time monitoring these companies to make sure that investors aren’t defrauded,” Pitt says. “That means that their enforcement resources which are already strained beyond belief will be strained even further. So I think all in all, the SEC needs a great deal more money than it’s being given currently as more and more responsibilities are put on its plate. The solution would be to allow the SEC to become self-funded to let those people who benefit from regulation actually pay the costs instead of having tax payers pay that cost. If we did that, the SEC could get the resources it needs but the budget wouldn’t be influenced to an iota and that would be a positive.”

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