The Securities and Exchange Commission is failing to meet its regulatory oversight responsibilities involving registered investment advisors, including bringing timely enforcement actions as well as exam coverage, according to the securities regulator’s internal watchdog.
The Inspector General’s recently released report to SEC Chairman Jay Clayton highlights management and performance challenges the agency faces as fiscal year 2020 begins.
In fiscal 2018, the percentage of first enforcement actions filed within two years of the opening of the matter under inquiry or investigation was 49%, falling below the annual target of 65%, the SEC Inspector General said in a recent statement.
Also, in fiscal 2018, the IG reported, the average number of months between opening a matter under inquiry or investigation and commencing an enforcement action was 25 months, failing to meet the target of 20 months.
To address the issue of timeliness in investigations, the agency’s enforcement division “has again reported ‘taking measures that include emphasizing expediency in quarterly case reviews, promoting best practices regarding efficiencies in various phases of the investigative process, leveraging data analytics capabilities, and conducting training on tools that expedite investigations,’” the IG report states.
The IG office also stated that since 2014, it has “reported as a challenge” the need for ensuring sufficient exam coverage of RIAs by the Office of Compliance Inspections and Examinations.