foia request - crew: sec: regarding reforms in wake of madoff scandal: 6/13/2011

8/3/2019 FOIA Request - CREW: SEC: Regarding Reforms in Wake of Madoff Scandal: 6/13/2011

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CREW I citizens for responsibilityand ethics in washingtonJune 13,2011

By facsimile (202-622-3895) and first class mailFreedom of Information OfficerSecurities and Exchange Commission100 F Street, N.E.Washington, D.C. 20549-2736

Re: Freedom of Information Act RequestDear Sir/Madam:Citizens for Responsibility and Ethics in Washington (CREW) makes this request for

records, regardless of format, medium, or physical characteristics, and including electronicrecords and information, audiotapes, videotapes and photographs, pursuant to the Freedom ofInformation Act ("FOIA"), 5 U.S.C. 552, et~, and U.S. Securities and ExchangeCommission ("SEC") regulation 17 C.F.R. 200.80.

As described more specifically below, CREW seeks records related to steps the SEC hastaken to institute reforms in the wake of Bernard Madoff's $65 billion Ponzi scheme and AllenStanford's $8 billion Ponzi scheme. These reforms are described in, inter alia, the BostonConsulting Group's independent report, U.S. Securities and Exchange Commission:Organizational Study and Reform (available athttp://v,ryvvv.sec.gov/news/studies/2011/967study.pdf); the Office ofInspector General auditOCrE Regional Offices' Referrals to Enforcement (available at http://www.sec-oig.gov/Reports/ AuditsInspections/20 11/493 .pdf); Division of Enforcement ("Enforcement")Director Robert Khuzami's May 12,2011 testimony before the House Committee on FinancialServices, Subcommittee on Oversight and Investigations; the SEC's FY 2011 BudgetJustification; Office of Compliance Inspections and Examinations ("OCIE") Director Carlo diFlorio's March 10,2011 testimony before the House Committee on Financial Services,Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises; and FortWorth Regional Office Director Rose L.Romero's September 11,2010 testimony before theSenate Committee on Banking, Housing, and Urban Affairs. CREW also seeks records relatedto the SEC's efforts to institute reforms and increase hiring in the face of budget constraints,described in Ben Protess, U.S. Regulators Face Budget Pinch as Mandates Widen, New YorkTimes, May 3, 2011 (attached as Exhibit A).

Specifically, CREW seeks records related to the following categories of reforms:(1) All records that reflect the steps the SEC has taken to implement and respond to the

recommendations in the Boston Consulting Group's report, U.S. Securities andExchange Commission: Organizational Study and Reform.

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http://www.citizensforethics.org/http://www.citizensforethics.org/


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Freedom of Information OfficerJune 13,2011Page Two

(2) The memorandum, referenced in Ben Protess, U.S. Regulators Face Budget Pinch asMandates Widen, New York Times, May 3, 2011, requesting that each SEC divisionand office compile a list of their top 10 priorities for hiring, and the responses of eachdivision and office to the memorandum.

(3) The written corrective action plans prepared by OCIE and Enforcement addressingthe recommendations made to their respective units in the OIG report, OCIE RegionalOffices' Referrals to Enforcement.

(4) All minutes and agendas of meetings of the Home Office Referral Review Committeeand the "successor committee to the Home Office Referral Review Committee,"referenced in the OIG report OCIE Regional Offices' Referrals to Enforcement.

(5) All minutes and agendas of the monthly meetings between Enforcement, OCIE, andother divisions to, among other things, discuss issues raised in ongoing examinations,referenced in Enforcement Director Robert Khuzami's May 13,2011 testimonybefore the House Committee on Financial Services, Subcommittee on Oversight andInvestigations.

(6) Documents sufficient to show the 70 new positions created, or that will be created, inFY 2011, referenced in the SEC's FY 2011 Congressional Budget Justification.(7) Documents sufficient to show the status and components of the SEC's newmanagement and leadership training programs, referenced in OCIE Director Carlo diFlorio's March 10,2011 testimony before the House Committee on Financial

Services, Subcommittee on Capital Markets, Insurance and Government-SponsoredEnterprises.(8) All records sufficient to show the number ofIndustry and Market(s) Fellows hired

since the position was authorized.(9) All records from March 10,2010 to the present related to the status of the SEC'supdated system for receiving, tracking, analyzing, and acting on tips, complaints, and

referrals, including but not limited to SEC administrative notices, and briefings,presentations, and other records provided by the MITRE Corporation to the SEC.(10) All minutes and agendas of the regular meetings between the home office andregional offices to coordinate and monitor performance and compliance, referenced inOCIE Director Carlo di Florio's March 10,2011 testimony before the House

Committee on Financial Services, Subcommittee on Capital Markets, Insurance andGovernment-Sponsored Enterprises.


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Freedom of Information OfficerJune 13,2011Page Three

(11) All records sufficient to show the steps the SEC has taken to improvecoordination with other offices and divisions in the agency, referenced in the SEC'sFY 2012 Budget Justification.

(12) All records sufficient to show the steps the SEC has taken to improvecollaboration and teamwork across the examination and enforcement programs,including documents sufficient to show the "number of specific actions" taken,referenced in Fort Worth Regional Office Director Rose L.Romero's September 22,2010 testimony before the Senate Committee on Banking, Housing, and UrbanAffairs.

Please search for responsive records regardless of format, medium, or physicalcharacteristics. Where possible, please produce records electronically, in PDF or TIF format ona CD-ROM. We seek records of any kind, including electronic records, audiotapes, videotapes,and photographs. Our request includes, but is not limited to, any telephone messages, voice mailmessages, daily agenda and calendars, information about scheduled meetings and/or discussions,whether in-person or over the telephone, agendas for those meetings and/or discussions,participants included in those meetings and/or discussions, minutes of any such meetings and/ordiscussions, the topics discussed at those meetings and/or discussions, e-mail regarding meetingsand/or discussions, e-mail or facsimiles sent as a result of those meetings and/or discussions, andtranscripts or notes of any such meetings and/or discussions.

If it is your position that any portion of the requested records is exempt from disclosure,CREW requests that you provide it with an index of those documents as required under Vaughnv. Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977 (1972). As you are aware, aVaughn index must describe each document claimed as exempt with sufficient specificity "topermit a reasoned judgment as to whether the material is actually exempt under FOIA."Founding Church of Scientology v. Bell, 603 F.2d 945,949 (D.C. Cir. 1979). Moreover, theVaughn index must "describe each document or portion thereof withheld, and for eachwithholding it must discuss the consequences of supplying the sought-after information." Kingv. U s. Dep tof Justice, 830 F.2d 210,223-24 (D.C. Cir. 1987) (emphasis added). Further, "thewithholding agency must supply' a relatively detailed justification, specifically identifying thereasons why a particular exemption is relevant and correlating those claims with the particularpart of a withheld document to which they apply. '" Id . at 224 (citing Mead Data Central v. u s.Dep 't of the Air Force, 566 F.2d 242, 251 (D.C. Cir. 1977)).

In the event that some portions of the requested records are properly exempt fromdisclosure, please disclose any reasonably segregable non-exempt portions of the requestedrecords. See 5 U.S.C. 552(b). If it is your position that a document contains non-exemptsegments, but that those non-exempt segments are so dispersed throughout the document as tomake segregation impossible, please state what portion of the document is non-exempt, and howthe material is dispersed throughout the document. Mead Data Central, 556 F.2d at 261. Claims


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Freedom of Information OfficerJune 13,2011Page Fourof nonsegregability must be made with the same degree of detail as required for claims ofexemptions in a Vaughn index. If a request is denied in whole, please state specifically that it isnot reasonable to segregate portions of the record for release.

Fee Waiver RequestIn accordance with 5 U.S.C. 552(a)(4)(A)(iii) and 17 C.F.R. 200.80(e)(4), CREW

requests a waiver of fees associated with processing this request for records. The subject of thisrequest concerns the operations of the federal government and expenditures, and the disclosureswill likely contribute to a better understanding of relevant government procedures by CREW andthe general public in a significant way. Moreover, the request is primarily and fundamentally fornon-commercial purposes. 5 U.S.C. 552(a)(4)(A)(iii). See, e.g., McClellan Ecological v.Carlucci, 835 F.2d 1282, 1285 (9th Cir. 1987).

These records are likely to contribute to greater public awareness and understanding ofthe changes the SEC instituted in the wake of its failure to detect the multi-billion dollar fraud ofMr. Mafoff, and the failure to detect the multi-billion dollar fraud ofMr. Stanford 12 yearsearlier. See SEC Office of the Inspector General, Office of Investigations, Investigation ofFailure of the SEC to Uncover Bernard Madoff's Ponzi Scheme, Report No. OIG-509, Aug. 31,2009, at 20-21 (available at http://www.sec.gov/news/studies/2009/0ig-509.pdt); SEC Office ofthe Inspector General, Office ofInvestigations, Investigation of the SEC's Response to ConcernsRegarding Robert Allen Stanford's Alleged Ponzi Scheme, Report No. OIG-526, March 31,2010 (describing Examination staff's concerns in 1997 that Stanford was operating a Ponzischeme, and Enforcement's failure to fully persue the matter) (available athttp://www.sec.gov/news/studies12010/0ig-526.pdt). The requested documents are essential tounderstanding the extent to which the SEC has implemented meaningful and necessary reformand the extent to which the SEC currently is capable of enforcing the nation's securities laws.The public's interest in the requested documents is particularly pronounced in light of the recentreport issued by the SEC's Inspector General documenting failures of collaboration andcoordination between Enforcement and OCIE, and the Boston Consulting Group's recent reportrecommending significant agency-wide reforms. See SEC Office of Inspector General, Office ofAudits, OCIE Regional Offices' Referrals to Enforcement, Report No. 493, March 30, 2011);Boston Consulting Group report, U.S. Securities and Exchange Committee: OrganizationalStudy and Reform, March 10. This interest is underscored by media coverage of the InspectorGeneral's and the Boston Consulting Group's reports. See, e.g., Brad Allen, Study Calls for SECOverhaul, The Business Insider, March 15,2011; Robert Schmidt and Jesse Hamilton, Audit:SEC Staffing Too Small to Fulfill Law, The Journal Gazette (Fort Wayne, IN), March 14,2011;Doug Cornelius, Report on SEC Referrals to Enforcement, Corporate and Securities Blog, April7,2011 (all attached as Exhibit B).

CREW is a non-profit corporation, organized under section 501(c)(3) of the InternalRevenue Code. CREW is committed to protecting the public's right to be aware of the activities


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Freedom of Information OfficerJune 13,2011Page Fiveof government officials and to ensuring the integrity of those officials. CREW is dedicated toempowering citizens to have an influential voice in government decisions and in the governmentdecision-making process. CREW uses a combination of research, litigation, and advocacy toadvance its mission. The release of information gained through this request is not in CREW'sfinancial interest. In addition, CREW will disseminate any documents it acquires from thisrequest to the public through its website, www.citizensforethics.org, which also contains links tothousands of other pages of documents CREW acquired from multiple FOIA requests, and onwww.scribD.com.

Under these circumstances, CREW satisfies fully the criteria for a fee waiver.News Media Fee Waiver Request

CREW also asks that it not be charged search or review fees for this request becauseCREW qualifies as "representative of the news media" pursuant to the FOIA and SEC regulation17 C.F.R. 200.80(10) and seeks the records here in that capacity. In Nat 'I Sec. Archive v. Us.Dep 't of Defense , 880 F.2d 1381, 1386 (D.C. Cir. 1989), the Court of Appeals for the District ofColumbia Circuit found the National Security Archive was a representative of the news mediaunder the FOIA, relying on the FOIA's legislative history, which indicates the phrase"representative of the news media" is to be interpreted broadly; "[i]t is critical that the phrase'representative of the news media' be broadly interpreted if the act is to work as expected .... Infact, any person or organization which regularly publishes or disseminates information to thepublic ... should qualify for waives as a 'representative of the news media. '" 132 Congo Rec.S14298 (daily ed. Sep. 30, 1986) (emphasis added), cited in id.

CREW routinely and systematically disseminates information to the public in severalways. First, CREW maintains a frequently visited website, w\vw.citizensforethics.org, thatreceived 36,383 page visits in May 2011. The website reports the latest developments andcontains in-depth information about a variety of activities of government agencies and officials.In addition, since April 14, 2010, when CREW began postings its documents onwww.scribD.com. there have been 930,800 visits to its documents.

Second, since May 2007, CREW has published an online newsletter, CREWCuts, thatcurrently has 15,632 subscribers. CREWCuts provides subscribers with regular updatesregarding CREW's activities and information the organization has received from governmententities. A complete archive of past CREWCuts is available at\NWW.citizensforethics. org/news 1etter.

Third, CREW publishes a blog, Citizens Bloggingfor Responsibility and Ethics inWashington, that reports on and analyzes newsworthy developments regarding governmentethics and corruption. The blog, located at www.citizensforethics.org/blog, also provides links
http://www.citizensforethics.org%2C/http://www.scribd.com./http://www.scribd.com./http://www.citizensforethics.org/blog,http://www.citizensforethics.org/blog,http://www.scribd.com./http://www.scribd.com./http://www.citizensforethics.org%2C/


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Freedom of Information OfficerJune 13,2011Page Sixthat direct readers to other news articles and commentary on these issues. CREW's blog had5,951 hits in May 2011.

Finally, CREW has published numerous reports to educate the public about governmentethics and corruption. Examples include: CREW's Most Corrupt 2010: Unfinished Business;Top 10 Ethics Scandals of 2010; and FOIA at the Mid-term: Obstacles to Transparency Remain.These and all other CREW reports are available at ~'W.citizensforethics.org/reports.

Based on these extensive publication activities, CREW qualifies for a fee waiver as a"representative of the news media" under the FOIA.Conclusion

Please respond to this request in writing within 20 days as requested under 5 U.S.C. 552(a)(6)(A)(I). If all of the requested documents are not available within that time period,CREW requests that you provide it with all requested documents or portions of documents thatare available within that time period.

If you have any questions about this request or foresee any problems in releasing fully therequested records within the 20-day period, please call me within that time period. I can bereached at (202) 408-5565. Also, if CREW's request for a fee waiver is not granted in full,please contact me immediately upon making such determination. Please send the requestedrecords to Anne L.Weismann, Citizens for Responsibility and Ethics in Washington, 1400 EyeStreet, N.W., Suite 450, Washington, D.C. 20005.

Sincerely,jJW~Anne L.WeismannChief Counsel

Enclosures


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EXHIBIT A


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U.S. Regulators Face Budget Pinch as Mandates Widen - NYTimes.com Page 1 of 4

lb t~W1U(trk(5tmfilDealMAY 3, 2011, 8:50 PM

U.s. Regulators Face Budget Pinch as Mandates WidenBy BEN PRO TESS

Government regulators on the Wall Street beat have longbeen outnumbered and outspent by the companies they aresupposed to police. But even after receiving budget increasesfrom Congress last month, regulators are still falling behind.The Securities and Exchange Commission and the Commodity Futures TradingCommission are struggling to fill crucial jobs, enforce new rules, upgrade marketsurveillance technology and pay for travel.

Jacquelyn Martin/AssociatedPress, AndrewHarrer/Bloomberg News RobertKhuzami, left, and GaryGensler.

On a recent trip to New York to tour a trading t1oor, a group of employees from thecommodities watchdog rode Mega Bus both ways, arriving late to their meeting despite a5:30 a.m. departure. The bus, which cost $30 a person round trip, saved the agencyroughly $1,000 over Amtrak."We spent hundreds of billions of dollars on a hideous bailout, and now we're not goingto fund reforms to prevent another one," said Bart Chilton, a commissioner with theagency.The money squeeze comes as Wall Street regulators take on added responsibilities in thewake of the financial crisis, including monitoring hedge funds, overseeing the $600trillion derivatives market and other tasks mandated by the Dodd-Frank law.Their budgets may soon be even tighter, with Republicans looking to cut the regulators'spending beginning Oct. 1, the start of the government's fiscal year. Gary Gensler, thechairman of the commodities agency, and Mary L . Schapiro, the head of the S.E.C., willdiscuss their budgets for the 2012 fiscal year before a Senate committee on Wednesday.Current and former regulators warn that budgets cuts would prevent the agencies fromenforcing hundreds of new rules enacted under Dodd-Frank, or worse, catching the nextBernard L. Madoff.But critics contend that the agencies don't deserve extra money, given that they missedwarning signs and failed to catch serious wrongdoing in the years leading up to the crisis.The S.E.C., too, has been accused of mismanaging its finances. The GovernmentAccountability Office has faulted the agency's accounting almost every year since it beganproducing financial statements in 2004.

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Some Republicans argue that the regulators' cries of poverty are overblown. The S.E.C.'sbudget this year is $1.18 billion, up 6 percent over 2010 - and nearly triple what it was adecade ago."A dramatic spending increase to fund the S.E.C. and C.F.T.C., as envisioned by theauthors of the Dodd-Frank legislation, would further the mind-set that our nation'sproblems can be solved with more spending, not more efficiency," Representative ScottGarrett, the New Jersey Republican who leads the House Financial Services Committee'sCapital Markets panel, said in a statement earlier this year.While hiring bans and travel restrictions have been eased since the new budget,regulators say they are largely in a holding pattern as lawmakers debate the 2012 budget.Any further cuts, they say, could undermine their efforts to police Wall Street.The commodities agency says the uncertainty has forced it to delay some investigationsand forgo other potential cases altogether."We don't have the sufficient number of bodies to pursue all relevant investigations andleads," said Mr. Gensler, adding that his agency was short nearly 70 people in itsenforcement division.Robert S. Khuzami, the S.E.C.'s enforcement chief, has similar worries, noting that someWan Street investigations have faced mounting delays. Recent departures oflawyers willonly magnify the problem, he added.Mr. Khuzami also said he faced a "significant backlog" of tips and referrals, including inthe area of market manipulations and accounting irregularities. The tips, which comefrom whistle-blowers, law enforcement agencies and investors, often prompt S.E.C.investigations."The biggest concern is we're not going to get to fraud and wrongdoing as early as weshould," he said. And if the agency's budget is not increased in 2012, the S.E.C.'senforcement division "won't cast as wide a net," he added.Already, the S.E.C.'s enforcement division has adopted cutbacks. The division, forinstance, has curbed its use of expert witnesses in some securities fraud trials, Mr.Khuzami said.The division also started sending only one lawyer - sometimes a junior staff member -to conduct depositions and interview witnesses, according to defense lawyers and peopleclose to the agency. Senior S.E.C. lawyers monitor the depositions via videoconference.To avoid hotel costs, some S.E.C. investigators have shuttled between New York andWashington on Amtrak trains that leave around dawn and return the same day. Theagency only recently started to again examine investment firms and public companies insome Southern states, after postponing reviews to avoid paying for plane fares.

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Despite the recent budget increase, the S.E.C. "still must closely monitor expenses suchas travel to make sure that each expense is truly mission-critical," according to aninternal agency memo dated April 14that was provided to The New York Times. "It is notat all clear what fiscal year 2012 funding level will be approved by Congress," said thememo, 'which was signed by Jeff Heslop, the S.E.C.'s chief operating officer.While the S.E.C. offsets its budget with fees from Wall Street banks and other financialfirms - and in recent years has even turned a profit for taxpayers - Congress sets theagency's spending levels each year. Lawmakers in April raised the S.E.C.'s budget for thenext few months by $74 million, to $1.18 billion. President Obama had requested $1.25billion for the agency, and Dodd-Frank called for $1.3 billion.The Commodity Futures Trading Commission received $202 million. Although that was a20 percent increase over the previous year, the budget fell short of the $261 million theagency said it needed to enforce Dodd-Frank The law requires the commission's staff forthe first time to oversee swaps, a type of derivative. The industry is seven times the size ofthe futures business now under its jurisdiction, Mr. Gensler said."With $202 million, we can grow moderately," he said. But "we need more resources toprotect the public and oversee the swaps market."After the budget increases, regulators ended a yearlong hiring freeze. But both agenciessay they are reluctant to significantly increase staffing for fear of having their budgets cutin October."Please keep in mind that this round of hiring will focus on the agency's very highestpriorities, and many divisions/offices may receive approval for very few, if any, oftheirpriorities at this time," the internal S.E.C. memo said. The memo further instructedofficials to compile a list of the "top 10 priorities for hiring," which will then be reviewedon a "case-by-case basis."The agency said it had not been able to fill nearly 200 positions this year owing to budgetconstraints. The S.E.C. had five open spots for experts in complex trading and receivedabout 1,000 applicants for the roles; it could afford to hire just one person.The agency also lacks money to adequately train the enforcement lawyers already onstaff, Mr. Khuzami said. Some lawyers who wanted to attain their brokerage licenses tobetter understand the industry had to put off prep classes."I don't think people realize how serious the problem is and how serious theconsequences are," said Harvey Pitt, who was chairman of the S.E.C. from 2001 to 2003.The regulators, for instance, have had to slow down the adoption of Dodd- Frank rules.The S.E.C. has put off creating several offices mandated by the law, including a bureauthat will oversee the credit rating agencies and a special office of "women and minorityinclusion."

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The commodities agency, which planned to complete its 50 new rules by July, is nowhoping to finish by early fall. Once the rules are complete, the agency will not have thefunds to enforce them, Mr. Gensler said. Some 200 firms registering with the commissionas swaps dealers may have to wait months for the agency to process their applications -unless it can hire several new employees in the department.Regulators fear that Congress will soon slash their budgets, which could send theagencies scrambling to cut costs again - much as they did in recent months amid thethreat of a government shutdown.Until recently, employees from the commission were instructed not to order certain officesupplies - items like three-hole punches and heavy-duty staplers. The ban was liftedafter the new budget was instituted.Some regulators were also paying for their own travel. When Mr. Gensler, a formerGoldman Sachs executive, headed to Brussels to help the European Parliament createnew derivatives rules, he paid out of his own pocket.Another commissioner from the commodities agency who attended a conference in BocaRaton, Fla., paid for a night at the Sheraton using his family's promotional points. Mr.Gensler attended via a videoconference.

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EXHIBITB


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tudy Calls For SEC Overhaul http://www.businessinsider.comlstudy-caIls- for-sec-overhaul

BUSINESScluslrNck;dbQ)lioR"

Study Calls For SEC OverhaulBrad Allen, Inside Investor Relations I 1\l1ar. 2011, '12:04 PM 212 I

Share 4 14 Like i\AA

The US Congress should either ramp up funding for the SEC to meetthe demands of new markets, trading technologies and expandedresponsibilities or scale back the agency's role more in line withavailable resources.

Brad AllenBrad Allen is a reporter forInside Investor Relations

That's the conclusion of an independent consultancy study, mandatedby the Dodd-Frank Act and released to Congress last week by theBoston Consulting Group (BCG).

Recent PostsSEC Mul ls Short Sale Disclosure

URi . . Laur a Gagnon Takes T h e Reins AtMosaicTalk Over NYSE A cqu lsi ti on HE AT S UPA he ad Of Sh areho lde r Mee tingongress should consider those two very different choices after the

SEC implements a series of 'no regrets' optimization steps, says thereport, which include delegating some activity to self regulatoryorganizations, streamlining the agency's management structure andinvesting in technology and human resources.

Goldman f in ed a fter hud dle probeP DC br in gs in IRv eteranRel ig ar " hi res an other UBS ba nke rThe 263-page report was issued as the SEC comes under fire for

internal ethical missteps and having been accused of failing toprevent everything from the Madoff debacle to the financial meltdown.Meanwhile, Congress is debating a proposal to boost SEC funding for 2012 to $1.4 bn, which would allow the agency toadd more than 600 full-time staffers, according to media reports.The BCG study says Congress should 'relax funding constraints to allow the SEC to better fulfill its current role orchange the SEC's role to fit available funding'.In addition to the gap between authorizations and available resources, the BCG authors also point out 'disconnects'between stakeholder expectations and the agency's legal authorizations, and between the 'dynamism of the markets andrigidit ies' arising from organizational constraints and the SEC's culture.Under Dodd-Frank, the SEC is called upon to create five new offices within the agency: Office of Municipal Securities,Office of Credit Rating Agencies, Office of Investor Advocate, Office of Minority and Women Inclusion, and theWhistleblower Office.New oversight responsibilities mandated for the agency under Dodd-Frank include private funds, which are now requiredto register with the SEC, derivatives and swaps (split between the SEC and the Commodity Futures TradingCommission), credit rating agencies, and asset backed securities. The agency also has new rule making authority oncorporate governance issues, especially concerning executive compensation.In a statement, SEC head Mary Shapiro says 'the independent consultant's report offers valuable recommendations thatI

ill help us improve SEC operations and market oversight'. She adds that the agency is creating a series of workinggroups to address the report's recommendations and report back to Congress.

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tudy Calls For SEC Overhaul http://www.businessinsider.comlstudy-calls- for-sec-overhaul-

'These are significant steps, but they will not be our last,' she continues. 'In the coming months we will report back toCongress on the other steps we will be taking to effectively and efficiently fulfill our market oversight and investorprotection mission.'Please follow Clusterstock on Twitter and Facebook.

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SEC Blackboard Home Edit ThisSummaryThe U. S. Securit ies and Exchange Commission (frequently abbreviated SEC) is a federal agency which holds primary responsibil ity for enforcingthe federa l secur it ies laws and regu la ting the secur it ies industry , the nation 's . . More ) }Recent Posts About SEC

The 15 Most Inf luen tial Women i ll F inanceSenator Grass ley Is NOT Investigat ing SAC Capi ta l, Actual ly He's Investiga ting The SECGreen Mountain Cof fee Roasters Selectively Spi ll s The Beans And I ts Numbers Sti ll Don' t Add Up

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udit_ SEC staffing too small to fulfill law I The Journal Gazette http://www.journalgazette.netJapps/pbcs.dll/article?AID=/20 11

Published: March 14, 2011 3:00 a.m.

Audit: SECstaffing too small to fulfilllawRobert Schmidt and Jesse Hamilton I Bloomberg NewsWASHINGTON- The Securities and ExchangeCommission is about 400 employees short of what it needs tomanage its current workload, according to a consultant's four-month internal review mandated by theDodd-Frank Act.The preliminary findings by Boston Consulting Group reinforce arguments by SECofficials that the agency isunderfunded and understaffed as it takes on oversight of derivatives, credit-rating firms and municipal bonds,according to a draft copy of the report obtained by Bloomberg News."Without sufficient human resources, the agency will be unable to complete the requirements of Dodd-Frankwhile maintaining its current actlvltles," the draft said.The study said staffing levels had declined since 2005 and that SECemployees interviewed conslstentlycomplained their departments were understaffed.The "capacity gap" of 375 to 425 employees identified in the report could be partly offset by shiftingmanagers down to front-line or support roles, it suggested. The SECcould also resort to a large influx oftemporary workers, the report said.SECChairman Mary Schapiro said in Feb. 17 testimony to the Senate Banking Committee that her agency hasbeen "fully engaged" with the consultants.She said she expected its report, which is due today, to "identify additional efficiencies for SECoperations."The chairman has said her agency needs a larger budget and eventually 800 more workers to implement theregulatory demands of Dodd-Frank, the law signed by President Obama in July.HouseRepublicans have proposed cutting federal spending back to 2008 levels for the rest of the currentfiscal year to help reduce the nation's budget deficit.A major spending increase for the SEC"would further the mindset that our nation's problems can be solvedwith more spending, not more efflclencv," Rep. Scott Garrett, R-NJ., chairman of the House subcommitteethat oversees the SEC, said in a January statement.The Boston Consulting study said every SECdivision is failing to get to some "potentially high-impactactivities" because of budget constraints.

Copyright 2011 The Journal Gazette. All rights reserved. This materialmay not be published. broadcast. rewritten or redistributed

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port on SEC Referrals to Enforcement I Compliance Building http://www.compliancebuilding.com!20 11/04 /07 Ireport-on-sec-

liance Buildincompliance and business ethicsfor private equity real estate

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Report on SEC Referrals to Enforcementon A pril 7 , 2011 in S~ CN ~W $

a registered investment adviser, it 's okay to have the SEC's Office of ComplianceInspections and Examinations visit you. It's a big problem if the enforcement division visit . OCIE will issue a deficiency letterasking you to fix any deficiencies it finds. Ifyour noncompliance is serious or the examiners think investor funds are at risk,OCIE can refer the case to the enforcement division.We get to see how well this referral process works as part of a recent Inspector General Report: ocm Regional Offices'RefelTals to Enforcement (.pdf)This report was triggered by the fallout from the Stanford ease. "The OIG found that the SEC's Fort Worth regional office hadbeen aware since 1997 that Robert Allen Stanford was likely operating a Ponzi scheme. The investigation also discovered thatafter a series of OCIE examinations of Stanford Group Company (Stanford's registered investment advisor) in which eachexamination concluded that the likelihood of a Ponzi scheme or similar fraud existed, the SEC's Fort Worth Enforcement unitdid not take significant action to investigate or stop such expected fraud until late 2005." The allegation against the Fort Worthenforcement office is that they were being judged on the number of cases they won. They wanted to stay away from Stanfordbecause is would consume lots of resources and had an uncertain outcome. The OIG claims there was perception that they onlywanted "quick-hot" or "slam-dunk"cases.

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port on SEC Referrals to Enforcement I Compliance Building http://www.compliancebuilding.coml20 11/04 /07 /report-on-sec-ref

The OIG report's objective was to determine "whether and to what extent OClE examiners were frustrated in matters otherthan Stanford where Enforcement did not pursue cases identified by examiners in the SEC regional offices."One highlight was that the OClE staff identified thetbSJ;;(:'$/\fittlYlllll.No comments yet.Leave a Reply

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AboutCompliance Building is published by P9IJgC:;Qw?li\!, focusing on compliance and ethical issues for private equity real estate
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