WASHINGTON — A report on the Securities and Exchange Commission filed with Congress Thursday questioned the wisdom of creating an independent municipal securities office that would report directly to the chairman.
The report, prepared by the Boston Consulting Group, said such an office would require additional overhead, increase organizational complexity, further fragment the agency and “impede collaboration across offices that perform similar regulatory functions.”
It also recommended the SEC “institute clearer processes” for reviewing rule proposals by self-regulatory organizations, such as the Municipal Securities Rulemaking Board, which now regulates muni advisers as well as broker-dealers.
The consultants told lawmakers they should either increase funding for the SEC or reduce the commission’s role to reflect available funding.
The report was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted last year, which required the SEC to hire an outside expert to scrutinize the agency’s internal operations, structure and need for reform.
During a six-month study that was just completed, the consultant focused on four areas at the SEC: organizational structure, personnel, technology, and the commission’s relationship with self-regulatory organizations.
Noting the SEC has “significant opportunity to further optimize its available resources,” the report offered Congress two choices: “relax funding constraints to allow the SEC to better fulfill its current role,” or “change the SEC’s role to fit available funding.”
In a statement, SEC chairman Mary Schapiro said she welcomes the report and that it confirms her concerns that the commission lacks adequate resources.
“I believe that investors need an SEC with added staff and better technology to properly police Wall Street,” she said.
Still, the report contained some cautionary language about how the agency complies with its increased oversight authority under Dodd-Frank.
The report also said the SEC should seek flexibility from Congress to comply with Dodd-Frank, “while avoiding unnecessary duplication.”
