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Consultant Report Details Vision of a New SEC

March 10, 2011

Image by bglasgow. Some rights reserved.

For those who live with their finger on the pulse of SEC actions, or are signed up for knowledgemosaic Regulation Alerts, today’s announcement from the SEC providing the Boston Consulting Group’s independent analysis and report was old news.

For everyone else, here’s a bit of background. As part of the seemingly constantly-referenced Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC was directed to engage an independent consultant to examine the internal operations, structure, and need for reform at the SEC. The Boston Consulting Group was selected to conduct this study, and their 263 page report has been released for anyone possessing the Vulcan-like focus or cost-prohibitive caffeine resources to review it.

The paper focuses largely on four matters identified in the Statement of Work:

  • Organization structure – While the SEC has worked to improve its organizational efficiencies, it will have to make fundamental decisions regarding how it operates. This means addressing the structure of its operating divisions, increasing its focus on operational management and efficiency, formulating designs for a regional model, and reviewing interactions between the Commission and staff.
  • Personnel and resources – The agency must be supported by a high-functioning, service-oriented and well-staffed HR team to enable it to attract and keep the talent necessary to effectively achieve its mission.
  • Technology and resources – The agency under-leverages technology in its operations. With the organization’s expanding responsibilities and markets it oversees, it is imperative that existing gaps be filled and the SEC continue its efforts to enhance its technology infrastructure.
  • Relationships with self-regulatory organizations (SROs) – The relationships between the SEC and SROs have become strained in terms of structure, competencies and processes. The agency needs to continue to work with SROs to more effectively oversee and partner with these organizations.

While the report doesn’t provide a total cost estimate of implementing its suggestions, it does provide some figures throughout. The most notable of these is a one-time expenditure of between $21 and $28 million, and ongoing costs of between $5 to $7 million, to develop data and knowledge management systems and enhance the agency’s existing systems. The report also seems to suggest that the agency could save money by seeking Congressional protection from complying with Freedom of Information Act (FOIA) requests, which the report says cost the SEC $6.5 million in 2010.

The full report can be viewed here.

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