The US Securities and Exchange Commission (SEC) is facing a significant staff exodus as hundreds of employees accept voluntary resignation offers amid President Donald Trump's efforts to reduce the federal workforce, according to sources familiar with the matter.

More than 600 people have agreed to leave the agency, representing over 12 per cent of the SEC's staff based on the agency's latest budget report to Congress. The departures will affect key departments including the Division of Enforcement and the Office of General Counsel.

"Trump and Musk's efforts to slash the federal workforce" are behind these exits, sources told Reuters. The White House had given agencies until 13 March to create plans for a "second wave of mass layoffs" as part of Trump's initiative to reshape and downsize the government.

Friday marks the deadline for the SEC's latest resignation incentive programmes, with some staff receiving offers to be paid to retire early or resign. According to one source, more than 700 SEC staff members have handed in resignation notices since late January, including over 150 in enforcement.

The Trump administration has characterised the federal government as "bloated and inefficient," justifying these workforce reduction measures. However, some employees hope these voluntary incentives will reduce calls from Elon Musk or Trump for more drastic layoffs at the agency.

These departures could "significantly hamper the watchdog's efforts to police markets and protect investors," the sources warned.

The reduction efforts began under SEC acting chairman Mark Uyeda, a Republican, before the arrival of Trump's nominee for replacement, Paul Atkins, who is scheduled to testify before Congress next week.

Critics have questioned the consistency of these cuts with the administration's mission to reduce federal government costs. A group of Columbia Law School professors noted in a blog post: "The Trump administration may claim that all agencies should be reduced in size by a roughly similar margin, in effect sharing proportionate reductions. But this ignores one extraordinary fact about the SEC: It consistently has generated more in fees than in operating expenses."

Beyond staff reductions, the SEC also plans to eliminate leases for its Los Angeles and Philadelphia offices, with the potential closure of the Chicago office also under consideration despite significant financial penalties that might result.

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