The report, released Wednesday by the U.S. Government Accountability Office (GAO), listed the continuing issues as: the level of administrative and technical support provided to investigative attorneys, and the process for division review and approval of enforcement actions against alleged violators.
“Inadequate administrative and paralegal services, specialized services and subject matter expertise, and information technology support can delay the completion of a case or affect its quality and scope,” auditors wrote in the report. “Similarly, although Enforcement should take due care in exercising its authority and discretion in bringing an enforcement action, a burdensome internal review process can undermine efficient use of investigative resources.”
The auditors continued: “As noted in SEC’s strategic plan, making effective and efficient use of resources is a priority. While Enforcement management has moved to address some of these resource concerns, the effort may benefit from a focus that includes both process and organizational culture issues.’
The GAO called on SEC officials to expand their internal organizational improvement efforts 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. The SEC also needed to further ponder the impact of the review process on organizational culture factors such as risk aversion and incentives to drop or narrow the scope of cases.
Finally, the GAO said the SEC needs more improvement in its process for managing the imposition of penalties as part of the enforcement process.
The report, “Securities and Exchange Commission: Greater Attention Needed to Enhance Communication and Utilization of Resources in the Division of Enforcement,” is available here.