Business Compliance Partners Reviews the SEC’s Organizational Reforms

Share Article

The Securities and Exchange Commission (“SEC”) has issued a progress report titled “Third Report on the Implementation of SEC Organizational Reform Recommendations” to provide an update on its organizational reforms. Business Compliance Partners explores the changes outlined in the report.

According to the report the SEC will increase the number of personnel and technological resources dedicated to risk analysis. The recently formed Office of Quantitative Research (“OQR”) is tasked with developing customized analytics for deployment across all divisions of the SEC. The OQR has already developed an analytical model that uses performance data to identify hedge fund advisers that warrant additional review.

The SEC plans to add industry professionals to the Office of Risk Assessment in order to gain an industry perspective and to provide better coordination between market participants and the SEC. The Office of Quantitative Risk Analysis will also add analytical professionals with expertise regarding industry risk management practices.

Additionally OQR staff will develop an Accounting Quality Model (“AQM”) to mine financial data to assess risks and performance relative to peers, detect anomalies, create risk profiles for firms and allocate investigative resources.

The SEC has created and acquired systems to analyze data from various sources to identify patterns and relationships and evaluate trades and quotes that are disseminated by public equity and equity options exchanges.

The Report contains a recommendation that the SEC evaluates and reprioritize its mission critical activities and realign resources accordingly. As a result, the SEC has been identifying activities that can be reduced, stopped or delegated, and high-priority activities that should be increased.

The report suggested that the SEC improve its relationships with self regulatory organizations (“SROs”) by having a centralized and coordinated approach to interactions; and strengthen oversight, coordination and collaboration.

The SEC will assess the proposed changes to evaluate the risks or opportunities that they represent, along with potential savings or expenditures, as well as projected impact internally and externally.

In Business Compliance Partner’s opinion these initiatives will potentially lessen the regulatory burden on investment advisers and broker-dealers with business models that are comparatively less complex and offer lower potential risk than their peers. If the reforms work the result will be a more efficient and effective SEC.

The SEC is currently responsible for overseeing 11,144 investment advisers, about 4,500 broker-dealers (with over 160,000 branch offices), 9,700 mutual and exchange traded funds, approximately 450 transfer agents, 16 national securities exchanges, the Public Company Accounting Oversight Board (“PCAOB”), various SROs, and the Securities Investor Protection Corporation (“SIPC”). More than 9,100 companies also report to and file tens of thousands of disclosure documents with the SEC each year. Additionally the financial markets in general fall under the jurisdiction of the SEC.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Paul Cox

Chris Kosifas
Visit website