The SEC's lnspector General's Office has posted its final report, detailing the results of the OIG's audit on the Division of Trading and Market's (TM) Broker-Dealer Risk Assessment program. This audit was conducted pursuant to a Congressional request from Ranking Member Charles E. Grassley of the United States Senate Committee on Finance.
The report makes ten findings and recommendations to the SEC's Divison of Trading and Markets summarized in the report as follows:
This report reasserts an OIG recommendation made in 2002, that TM [the Division of Trading and Markets] should update and finalize temporary rules 17h-1T and 17h-2T, which govern the Broker Dealer Risk Assessment program and enforce broker-dealer compliance with these rules. It is also critical for TM to determine whether the broker-dealers associated with Bear Stearns are required to file Form 17-H with the Commission in light of the significant amount of customer accounts carried by these broker dealers. We also recommend that TM process all 17(h) filings in a timely manner, ensure that firms required to file Form 17-H actually file, and maintain documentation to identify all of the broker-dealers that are exempt from filing Form 17-H. We further recommend that TM aggressively encourage firms to file electronically with the Commission, and resolve the technical problems that have been identified with the BDRA filing system. A detailed list of our recommendations can be found in Appendix V.
TM concurred with 9 of the report's 10 recommendations and the Office of Information Technology (OIT) concurred with the two recommendations that pertained to OIT. Management's responses to the report are included in its entirety in Appendix VI. OIG's response to Management's comments is included in Appendix VII.
The full text of the report, including details of the ten recommendations can be found at: