SEC eyes inspection review; part of 5-yr draft plan

October 9, 2009

Booking mug shot of Bernard Madoff released to Reuters on March 17, 2009. Madoff pleaded guilty March 12, 2009, to orchestrating the biggest investment fraud in Wall Street history and was jailed to await a sentence that could keep him in prison for the rest of his life.  NO SALES   EDITORIAL USE ONLY    REUTERS/UNITED STATES MARSHALS SERVICE/FOIA/Handout   (UNITED STATES)    Oct 9 (Reuters) – The U.S. Securities and Exchange Commission has released a draft five-year strategic plan which includes an overhaul of the way it inspects investment advisors in the wake of the Bernard Madoff Ponzi scheme scandal.
   In the plan, released on Thursday, the security regulator said it would, “conduct a top-to-bottom review of the effectiveness of its examination process, in response to systemic failures identified by the SEC’s Office of Inspector General.”
   The regulator has come under criticism for its failure to follow up on clues that could have uncovered Madoff’s $65 billion Ponzi scheme earlier.
   A report by SEC Inspector General David Kotz last month, found that the agency missed numerous red flags, did not properly follow up on leads and dismissed tips and complaints that might have uncovered Madoff’s investment sham. [ID:nN10407916]
   According to the plan, which provides goals through to 2015, the regulator also plans to revise its rules to ensure improved registration and enhanced disclosure requirements for asset-backed securities.
   It may consider changes requiring brokerages to be more transparent in disclosing information relating to their compensation and conflicts of interest.
   The SEC said it is in discussions to shift to a self-funding structure, instead of depending on the government for its budget.
   “While during the last several years SEC budgets have not always been sufficient to maintain staffing levels and make important technology investments, the demands on SEC resources have continued to grow.”
   The House of Representatives draft released earlier in the month is expected to give the regulator more ammunition by doubling its budget over five years and giving it authority to reward whistle-blowers. [ID:nN01136756]
   The agency is seeking public comment on the plan. (Reporting by Biswarup Gooptu in Bangalore; editing by Simon Jessop) ((; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:
 Keywords: SEC/REVIEW
Friday, 09 October 2009 08:43:23RTRS [nBNG329637] {C}ENDS

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