Congress and GAO Call on SEC to Investigate Complaints Better

A study by the General Accountability Office for Congress criticizes the SEC for poor management of investigations of investor complaints and also calls on the commission to be more efficient at returning money received in complaint settlements to injured investors. On the second point, GAO found that only $1.8 of settlements since 2002, less than a quarter, have been sent on to investors. More unsettling was a GAO probe for Charles Grassley (R-IA) and Arlen Specter (R-PA) last year found that some investigations had been all but tabled by the enforcement division while some in the SEC claimed the investigations to be active.

On the overall, I have been satisfied with Chairman Cox. The GAO, however, has found legitimate concerns. While it is encouraging that the SEC is taking the GAO complaints seriously, the SEC is far from out of the woods on both the distribution of settlement funds issue and the vigor of enforcement issue.