GAO report recommends measures to strengthen SEC’s oversight of FINRA

On Behalf of | Dec 21, 2021 | FINRA Compliance

A report by a government watchdog agency analyzed the Securities and Exchange Commission’s oversight of the Financial Industry Regulatory Authority, according to Investment News.

The Government Accountability Office released its report last week that examined 69 SEC reviews of FINRA over the past three fiscal years in areas such as governance, funding and transparency. The GAO summarized its analysis by saying that the SEC could take further actions that will help achieve its FINRA oversight goals. It said the commission’s current performance measures are task-oriented, such as conducting meetings, but do not reflect leading practices that are outcome-oriented or provide useful information for decision-making.

The report added, “SEC’s program for overseeing FINRA also does not have documented policies and procedures for determining which findings and any associated corrective actions to track, or for identifying and communicating the significance of findings from its oversight of FINRA to internal stakeholders and to FINRA.”

The GAO said establishing such procedures would enable the SEC to better monitor and assess the impact of its reviews of FINRA, and better evaluate the authority’s responses. In the report, the GAO said the SEC generally agreed with these recommendations.

The agency’s report is required every three years under section 964 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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