Staff members at the Securities and Exchange Commission have had difficulties managing resources due to the increase in the agency's rule-making activities, according to a report from the SEC's office of the inspector general.
"Although no one we met with identified errors that had been made, some believed that the more aggressive agenda — particularly as it relates to high-profile rules that significantly impact external stakeholders — potentially (1) limits the time available for staff research and analysis, and (2) increases litigation risk," the report dated Oct. 13 said.
The SEC currently has more than 50 rule proposals on its agenda. Taken as a whole, the proposals, if enacted, would reshape large segments of the nation's financial markets and the information public companies and private fund managers publicly disclose.
Industry groups have voiced concerned that the SEC's pace of rule-making under Chairman Gary Gensler is too fast and the agency is not providing sufficient time for the public to offer comments.
Karen L. Barr, president and CEO of the Investment Adviser Association, an organization for fiduciary investment advisers, in a discussion with Mr. Gensler last month brought up the pace of the SEC's agenda.
Mr. Gensler noted that his predecessor at the SEC, Jay Clayton, finalized 64 rules over a four-year period. "You're just off the starting block faster," Ms. Barr responded, followed by Mr. Gensler explaining that the issues before the SEC are important and much work is needed to fortify markets.
The SEC's office of the inspector general met with managers from the SEC's divisions of trading and markets, investment management, corporation finance, and economic and risk analysis, "some of whom raised concerns about increased risks and difficulties managing resources and other mission-related work because of the increase in the SEC's rule-making activities," according to the report.
Some managers reported an overall increase in attrition and difficulties hiring individuals with rule-making experience. "Others told us that they may have not received as much feedback during the rule-making process, either as a result of shortened timelines during the drafting process or because of shortened public comment periods," the report said.
Additionally, "some managers noted that fewer resources have been available to complete other mission-related work, as rule-making teams have borrowed staff from other organizational areas to assist with rule-making activities."
