US - The Securities and Exchange Commission (SEC) Division of Enforcement should ensure its personnel is specialised in specific areas to better tackle future investigations, a report by the SEC's Office of the Inspector General (OIG) said.
The report - which comes after allegations the SEC could have acted to prevent the Madoff fraud but failed to do so during the last ten years - formulated a total of 21 recommendations to improve the effectiveness of the SEC, which range from training staff to implementing a number of review processes.
The report also said the Division of Enforcement told the OIG it planned to introduce the creation of national specialized units, including one on Municipal Securities and Public Pension.
These units will be dedicated to highly specialized and complex areas of securities laws.
The report said an intended outcome of these units was "to allow staff to ‘get smart' about certain products, markets, regulatory regimes, practices and transactions".
The other four specialized units will be on: Asset Management, Market Abuse, Structured and New Products, and Foreign Corrupt Practices Act.
These units will receive specialized and advanced training and will hire individuals with practical market experience and other expertise, whether from private industry, other SEC Divisions, or elsewhere, will be hired into these units.
The report said once the Division of Enforcement introduces these specialized units, it needs "to ensure that they train staff on what resources and information is available and when and how assistance from these units should be requested".
It added the Division should also periodically evaluate the operations of these units to ensure their efficiency and effectiveness.
Other recommendations include establishing a formal guidance for evaluating various types of complaints - such as Ponzi schemes, putting in place procedures to ensure investigations are assigned to teams with "specific and sufficient" knowledge of the subject matter and conduct periodic internal reviews on a range of matters.
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