GAO: SEC Inconsistent In Financial Oversight

by KEN BLACK Targeted News Service

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WASHINGTON, June 5 — If one thing has been consistent about the Securities and Exchange Commission's oversight of the Financial Industry Regulatory Authority's programs, it has been inconsistency, the Government Accountability Office revealed.

In a report titled, "Securities Regulation: Opportunities Exist to Improve SEC's Oversight of the Financial Industry Regulatory Authority" (Report No. GAO-12-625) the GAO said that some programs received very little oversight and some received a great deal more. While oversight has included aspects of programs dealing with examinations, surveillance and enforcement programs, some areas, such as advertising and arbitration programs, did not receive the same level of attention. In most cases, those programs did not receive even the level of attention initially planned.

The SEC was in the process of enhancing and expanding oversight of the Financial Industry Regulatory Authority and its programs. To determine which programs were in need of more attention, the SEC was using a risk-based approach. The GAO said the SEC made some good progress of incorporating previous recommendations to enhance oversight, but still had some work to do.

The GAO recommended the SEC conduct reviews of rules and establish a timeframe for reviews, and follow all elements of a risk-management framework in developing future oversight plans. The SEC generally agreed with the recommendations.

"We anticipate as we conclude our current review of FINRA later in 2012, we will work to implement effectively the remaining three elements of a risk-management framework described in the draft report," said Carlo di Florio, director of the office of Compliance Inspections and Examinations, and Robert W. Cook, director of the Division and Trading Markets.

A full copy of the report is available at: http://www.gao.gov/assets/600/591222.pdf

***** Ken Black is a Targeted News Service writer based in Orlando, Fla.

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