Thursday, May 7, 2009

SEC Enforcement Subject of Senate Hearing as GAO Issues Report

"Strengthening the SEC's Vital Enforcement Responsibilities" is the subject of a Senate Banking Committee hearing slated to take place at 2:30 pm EDT today. SEC Enforcement Director Robert Khuzami is scheduled to testify, along with Richard Hillman of GAO, Prof. Mercer Bullard of the Univ. of Mississippi School of Law, and Bruce Hiler of Cadwalader, Wickersham and Taft.

The hearing takes place one day after the public release of a GAO report entitled: "Greater Attention Needed to Enhance Communication and Utilization of Resources in the Division of Enforcement." According to GAO's Summary, GAO recommends: "To help ensure that SEC is effectively and efficiently using its resources in bringing enforcement actions, and that its enforcement policies are working effectively, the SEC Chairman should:
  • consider an alternative organizational structure and reporting relationship for the [Office of Collections and Distributions], to address the organizational concerns identified.
  • expand Enforcement's current examination of its methods to include the level and mix of resources available to investigative staff in the areas of administrative and paralegal support, specialized services and expertise, and information technology support; and include in the examination an evaluation of the impact of the case review process on organizational culture factors such as risk aversion and incentives to drop or narrow the scope of cases.
  • examine the effects of the 2006 corporate penalty policy to determine whether the policy is achieving its stated goals and any other effects the policy may have had in adoption or implementation.
  • take steps to ensure that the Commission, in creating, monitoring, and evaluating its policies, follows the agency strategic goal and other best practices for communication with, and involvement of, the staff affected by such changes
All of the recommended actions are currently "in process" at the Commission, GAO notes. (See our related Feb. 6 post on current SEC Chairman Mary L. Schapiro's initiatives.)

Additional coverage of GAO's report can be found in these articles:
Cox's SEC Hindered Probes, Slowed Cases, Shrank Fines, GAO Says (Jesse Westbrook and David Scheer, Bloomberg)
GAO: Cox's SEC Discouraged Corporate Punishment (Tim Reason,

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1 comment:

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