In response to a senator’s inquiry, the Government Accountability Office will review the operations of the Securities and Exchange Commission’s enforcement division and compliance department.
Sen. Chuck Grassley, R-Iowa, the chairman of the Senate Finance Committee requested a review of the SEC’s management and methods for policing the financial markets, in a Sept. 19 letter to GAO Comptroller General David Walker.
“Based upon allegations I have received over the past few months, I have become increasingly concerned regarding the operations of the SEC, and whether the SEC is faithfully adhering to its mission to protect investors,” Grassley wrote.
Grassley’s request also questioned whether the SEC had given special treatment to Morgan Stanley chief executive John Mack in a trading probe and whether the commission was doing enough to regulate the New York Stock Exchange and NASD.
SEC Chairman Christopher Cox had publicly reprimanded enforcement chief Linda Thomsen in March, after Thomsen approved the issuance of subpoenas to two business reporters in connection with an investigation out of the SEC’s San Francisco office. She was named to the post in March 2005, after having served as deputy enforcement director since January 2002.
Lori Richards has served as the director of the SEC's Office of Compliance Inspections and Examinations since May 1995.
It’s far from the first time the GAO has commented on SEC policies and procedures. In April, the GAO offered 14 recommendations to improve the internal controls of the commission, specifically addressing weaknesses within the SEC's accounting and financial reporting procedures. And earlier this year, a GAO report suggested that the commission could do a better job of recruiting and retaining staff for its dozen offices.
