SEC Organizational Reforms

The Dodd–Frank Act directed the U.S. Securities and Exchange Commission (SEC) to engage an independent consultant to conduct a broad and independent assessment of the SEC’s internal operations, structure, funding, and the agency’s relationship with Self-Regulating Organizations (SROs). Issued in March 2011, the consultant’s study provided 16 optimization initiative recommendations designed to increase the SEC’s efficiency and effectiveness. In the six months since the study was issued, the SEC has developed the necessary program management and oversight infrastructure to address the next step in the agency’s on-going multi-year change initiative: conducting a thorough analysis of each recommendation and designing appropriate approaches for those recommendations selected for implementation. Over the next six months, significant work will have been done within each workstream to analyze the Boston Consulting Group’s (BCG) recommendations and recommend what, if any, actions should be taken. See Report on the Implementation of SEC Organizational Reform Recommendations.

One section I’m particularly concerned with is the Dodd-Frank requirement to create four new offices that report directly to the Chairman, including the Office of Municipal Securities (OMS), the Office of Credit Ratings (OCR), the Office of the Investor Advocate (OIAD), and the Office of Minority and Women Inclusion (OMWI).

As described in the BCG study, the creation of these offices and their proximity to the Office of the Chairman was primarily intended to increase the visibility of the functions that they contain, enhancing the degree of focus and resources accorded to them. The BCG study recommended that the SEC seek the flexibility from Congress to design its organization structure in a manner consistent with the activities required to be performed by the Dodd-Frank-mandated offices, while avoiding unnecessary duplication. Doing so would allow the SEC to reduce organizational complexity, maximize flexibility in organizational redesign efforts, improve operational performance, and locate efficiencies.

Flexibility is fine, as long as it is not code for undue delay or non-implementation. I know the SEC has an enormous amount of work on its plate but I certainly hope these offices don’t drop off the map, since the intent was to give them not only greater visibility but greater priority.

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