Republicans question report on SEC operations

Reuters News
Posted: Mar 21, 2011 3:44 PM
Republicans question report on SEC operations

By Sarah N. Lynch

WASHINGTON (Reuters) - Two House Republicans have raised questions about the integrity of a report that found the Securities and Exchange Commission needs more resources to implement the Dodd-Frank Wall Street reform law.

The 263-page report by the Boston Consulting Group was released last week and examined such things as the SEC's internal operations, structure and funding. The report cost the agency about $4.8 million and was made to fulfill a requirement in Dodd-Frank calling for a study of SEC operations.

In a letter, House Financial Services Chairman Spencer Bachus and House Financial Services oversight subcommittee chairman Randy Neugebauer ask the SEC to disclose "what editorial input, if any, the SEC had on the contents" of the report. They also ask for copies of earlier drafts.

According to a committee staffer, the lawmakers are inquiring about the report because they have concerns about its integrity and accuracy as well as the timing of its release.

The report was technically due to Congress by March 14, but it was released a few days early, on the same day that SEC Chairman Mary Schapiro made two appearances on Capitol Hill to pitch Congress for more funding.

"We seek assurances that BCG enjoyed complete independence in its work and that the final report was not subjected to substantive editorial review, deletions or insertions by the SEC," the lawmakers wrote.

SEC spokesman John Nester declined to comment on the letter in advance of the agency's response to the lawmakers.

The authors of the Boston Consulting Group study were not immediately available for comment on Wednesday evening.

The Boston Consulting Group's study found that the SEC can still find ways to optimize its available resources. It also said Congress should either "relax funding constraints" to allow the agency to fulfill its regulatory role or require the SEC to adapt its role to conform with its budget.

Last week, Schapiro endorsed the report's findings. The report came out at as the SEC fights to secure more funding to help it implement dozens of new rules in the Dodd-Frank law and upgrade its outdated technology systems. The agency is asking Congress to approve $1.407 billion for its fiscal 2012.

Bachus and Neugebauer asked the SEC to respond to its inquiry by March 21.

(Reporting by Sarah N. Lynch; Editing by Gary Hill)