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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: bonnuss_in_austin who wrote (1871)	3/6/2002 11:54:43 AM
From: stockman_scott	Respond to of 3602

SEC Needs More Staff To Police Markets, GAO Report Says By: Judith Burns, Of DOW JONES NEWSWIRES Tuesday March 5, 4:19 pm Eastern Time WASHINGTON -(Dow Jones)- The job of policing U.S. markets has outpaced the number of cops on the beat at the Securities and Exchange Commission, according to a new General Accounting Office report. Comptroller General David Walker told lawmakers Tuesday "there's clearly a mismatch" between the SEC's workload and resources. He said the agency needs considerably more employees to keep pace with markets, detect problems in corporate reports and discipline wrongdoers. Complaints and inquiries to the SEC have risen 100% since 1990, while the number of SEC employees investigating them rose just 16%, the GAO found. The GAO said the number of SEC staffers reviewing corporate reports has risen 30% since 1990, while the number of reports being filed jumped 60%. The gap was even more dramatic for mutual funds, where the SEC expanded staff by 9% to cope with a 108% surge in filings. As a result, the SEC is taking longer to review and process filings, including filings for initial public offerings, which undergo full review. The SEC now takes four to seven weeks to process IPOs, and Wall Street executives told the GAO they see no reason why reviews should take that long. Long delays could spell trouble for companies looking to tap markets quickly and could force them offshore, Wall Street executives told the GAO. In some cases, the SEC is doing less. Last year, it reviewed 16% of the corporate reports it received, half of its goal of 30%-35%. The GAO said the situation could deprive investors of protection against accounting scandals. Another Trouble Spot Enforcement is another trouble spot. Although the GAO found the SEC is opening more cases, it can take longer to resolve them and has far more pending now than in the past decade. SEC officials said the rise in open cases is partly due to high turnover, which can slow work as new attorneys take on work done by departing lawyers. Turnover at the SEC declined somewhat last year, but is twice the rate at other federal agencies, the GAO noted. "SEC officials said that they could do more if they had more staff, but all cited the SEC's high turnover rate as a major challenge in managing its caseload," the GAO stated in its report. By 1999, SEC attorneys quit after an average of 2.5 years on the job, almost a full year sooner than in 1992, the GAO said. Since the SEC estimates it takes about two years for employees to hit peak productivity, it is eager to retain them for as long as possible afterward. Higher pay might help, but the GAO noted the SEC has been unsuccessful so far in getting funds for "pay parity" to put SEC employees on par with counterparts at federal banking agencies. Congress approved raises for SEC employees last year, but has yet to authorize the spending. President Bush didn't include more funds for the SEC in his 2003 budget, after signing the SEC "pay parity" bill. Increasing pay and employees at the SEC won't solve the problem, Walker cautioned. He told lawmakers the agency will never have enough employees to manually review each filing and must make better use of technology to flag filings that warrant closer examination. He also urged the SEC to develop a " strategic plan" to deploy resources efficiently. -By Judith Burns, Dow Jones Newswires; 202-862-6692; judith.burns@dowjones.com (This story was originally published by Dow Jones Newswires)