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SEC Accomplishments

May 12, 2017

April 2013 — October 2016

Protecting Investors and Our Markets Through Rigorous Oversight, Robust Enforcement, and Transformative Rulemaking

“It is always important to reflect periodically on the very impressive work that our extraordinary staff has done in furtherance of our mission. Since I have had the privilege to serve as Chair of the SEC, the agency has advanced more than 50 significant rulemaking initiatives, worked to root out illegal practices through record-setting enforcement efforts, enhanced investor protections, and advanced programs to better protect investors and to make our markets stronger and more sustainable. We have been focused on enhancing equity market oversight, promoting a strong and effective disclosure regime, facilitating small business capital formation, and strengthening asset management regulation. I am very proud to work alongside the dedicated women and men of this great agency who made all of these accomplishments possible.”

— Chair Mary Jo White

ENHANCING THE STRENGTH AND RESILIENCE OF OUR MARKETS THROUGH STRONG AND EFFECTIVE RULEMAKING

Since April 2013, the Commission has proposed or adopted more than 50 significant packages of rules, including critical reforms to protect investors and markets from the products and practices that contributed directly to the financial crisis. These reforms address, among other areas, money market funds, credit rating agencies, asset-backed securities, proprietary trading, executive compensation, systemically important clearing agencies, security-based swaps, and investment advice to municipalities. The Commission has also made major strides in improving critical market structure. The Commission’s efforts in this area include the adoption of comprehensive new controls to strengthen key technological systems at securities exchanges, clearinghouses and other market infrastructures and a proposal to enhance oversight of alternative trading systems. In addition, the Commission has completed rules to promote capital formation through its rule allowing crowdfunding, by lifting the prohibition on general solicitation for certain private offerings to accredited investors and by increasing the options available for smaller companies seeking to offer and sell securities.

Strengthening Regulation of Asset Management

  • Adopted rules to fundamentally change the way money market funds operate to address risks of investor runs, as experienced during the financial crisis
  • Adopted rules to require sweeping enhancements to liquidity risk management by open-end funds, including mutual funds and exchange-traded funds (ETFs)
  • Adopted rules to transform, modernize and enhance the reporting and disclosure of information by registered investment companies
  • Adopted rules to improve the quality and accessibility of information reported and disclosed by investment advisers
  • Adopted rules to permit swing pricing by investment companies as an additional tool to manage liquidity risk and mitigate potential shareholder dilution
  • Proposed rules to modernize and enhance the regulation of the use of derivatives by mutual funds and other registered investment companies
  • Proposed rules to require registered investment advisers to adopt and implement written business continuity and transition plans and provided guidance to investment companies on business continuity planning

Enhancing Equity Market Structure

  • Adopted Regulation Systems Compliance and Integrity (Regulation SCI), which mandates comprehensive new controls to strengthen key technological systems, promoting greater transparency, resiliency, and accountability
  • Proposed rules to enhance transparency and oversight of alternative trading systems (ATSs) that trade national market system stocks, including “dark pools”
  • Proposed rules that for the first time would require broker-dealers to disclose the handling of institutional orders to customers, as well as expand the information included in existing retail order disclosures
  • Proposed rule to require broker-dealers trading in off-exchange venues to become members of a national securities association
  • Published a request for comment on the listing and trading of exchange-traded products on exchanges and sales of these products by broker-dealers
  • Approved a national market system (NMS) plan to create a single, comprehensive database known as the consolidated audit trail (CAT) that will enable regulators to more efficiently and thoroughly track all trading activity in the U.S. equity and options markets

Strengthening Investor Safeguards at Key Market Intermediaries

  • Adopted the Volcker Rule in coordination with banking regulators and the CFTC, which restricts banking entities, including bank-affiliated, SEC-registered broker-dealers, security-based swap dealers, and investment advisers, from engaging in proprietary trading, sponsoring hedge funds and private equity funds, or investing in such funds [DFA]
  • Adopted rules for additional safeguards with respect to custody of customer securities and cash by broker-dealers
  • Adopted rules amending the financial responsibility framework for broker-dealers to enhance protections for customer assets, firm capital requirements, and risk management controls
  • Adopted rules to protect municipalities and investors from conflicted advice and unregulated advisors by requiring municipal advisors to register with the Commission and to comply with the rules of the Municipal Securities Rulemaking Board [DFA]
  • Adopted rules requiring broker-dealers, mutual funds and investment advisers to adopt programs to detect red flags and prevent identity theft [DFA]
  • Proposed jointly with the FDIC rules under Section 205(h) of Dodd-Frank governing the orderly liquidation of certain large broker-dealers [DFA]

Setting High New Standards for Credit Rating Agencies and Clearinghouses

Building a New Regulatory Regime for Security-Based Swaps

Providing Transparency through Comprehensive Transaction Reporting

  • Adopted rules for the registration, duties, and core principles of security-based swap data repositories [DFA]
  • Adopted rules for reporting security-based swap transactions to security-based swap data repositories and the public dissemination of information about such transactions, including subsequent amendments to improve their effectiveness [DFA]
  • Adopted rules to require security-based swap data repositories to make data available to regulators and other authorities, allowing them to share information and more effectively oversee the security-based swap market [DFA]
  • Proposed rules establishing the form and manner with which security-based swap data repositories must make security-based swap data available to the Commission [DFA]

Protecting Investors through Strong Regulation of Dealers and Major Participants

Improving the Effectiveness of Disclosure for Investors and Issuers

Enhancing Transparency and Aligning Incentives for Asset-Backed Securities

  • Adopted wide-ranging rules to enhance transparency and better protect investors in the asset-backed securities market [DFA]
  • Adopted rules for credit risk retention, which require securitizers of asset-backed securities to keep “skin in the game” for the securities they package and sell, as part of a joint rulemaking with five other federal agencies [DFA]

Increasing Disclosure and Oversight of Executive Compensation

Facilitating Capital Formation Supported by Strong Investor Protections

  • Adopted rules to increase access to capital for smaller companies by enhancing the Regulation A exemption to enable companies to offer and sell up to $50 million of securities each year [JOBS]
  • Adopted rules to permit companies to offer and sell securities through crowdfunding and to create a regulatory framework for broker-dealers and funding portals that facilitate crowdfunding transactions and protect investors [JOBS]
  • Adopted rules to allow general solicitation for certain offers and sales made under Rule 506 and proposed rules to enhance the Commission’s ability to assess the development of market practices in Rule 506 offerings [JOBS]
  • Adopted rules to disqualify certain felons and other “bad actors” from participating in securities offerings made under Rule 506 [DFA]
  • Adopted rules revising the thresholds for registration, termination of registration and suspension of reporting under Section 12(g) of the Exchange Act [JOBS] [FAST]
  • Adopted rules that would amend existing Securities Act requirements to facilitate intrastate and regional securities offerings
  • Proposed amendments that would increase the financial thresholds in the “smaller reporting company” definition

Promoting a Stronger Future for Investors

  • Adopted amendments to the Commission’s rules of practice regarding, among other things, the timing of hearings in administrative proceedings, depositions, summary disposition, and the contents of an answer
  • Proposed amendments to the proxy rules to require parties in a contested election to use universal proxy cards that would include the names of all board of director nominees. The proposal gives shareholders the ability to vote by proxy for their preferred combination of board candidates, similar to voting in person

[DFA] = Under the Dodd-Frank Wall Street Reform and Accountability Act
[JOBS] = Under the Jumpstart Our Business Startups Act
[FAST] = Under the Fixing America’s Surface Transportation Act

PROTECTING AMERICA’S INVESTORS AND OUR MARKETS BY HOLDING WRONGDOERS ACCOUNTABLE

The Commission has focused its enforcement efforts on key areas of growing concern such as financial reporting and accounting fraud, improper conduct by key market participants, and illegal practices by broker-dealers and investment advisers. The Commission has also continued to bring important cases involving other enforcement priorities, including insider trading, Foreign Corrupt Practices Act violations, and misconduct related to complex financial instruments.

Bringing a Record Number of Enforcement Actions

  • From April 2013 through September 2016, brought more than 2,800 enforcement actions, over 1,650 of which were independent or standalone actions
  • In fiscal year 2016 alone, the Commission brought 548 standalone actions, a record number, plus 320 additional follow-on and delinquent filing actions. The Commission also obtained orders for disgorgement and penalties of more than $4 billion

Enhancing the Effectiveness of Enforcement

  • Implemented a new policy under which the Commission requires admissions of wrongdoing from securities law violators in certain cases where heightened public accountability and acceptance of responsibility is required
  • Maintained a strong litigation record in both federal courts and administrative proceedings, including jury verdicts against Fabrice Tourre; Samuel and Charles Wyly; BankAtlantic Bancorp and its CEO Alan Levan; Ralph J. Pirtle and Morando Berrettini; and Daryl Payton and Benjamin Durant for insider trading; and Stephen Ferrone for misleading investors; and a first-of-its-kind federal jury trial verdict against a municipality and one of its officers for violations of the federal securities laws
  • Created dedicated groups and task forces focused on developing financial fraud investigations, detecting misconduct by broker-dealers, identifying abuses in the microcap markets, uncovering pyramid schemes, and using data analytics to identify areas of investigative focus
  • Awarded more than $100 million to whistleblowers who provided key original information that led to successful enforcement actions
  • Developed financial models and data analytic techniques to aid in identifying and proving misconduct

Ensuring Exchanges, Traders, and Other Market Participants Operate Fairly

Combatting Financial Fraud and Holding Gatekeepers Accountable

Rooting Out Improper Trading and Foreign Corrupt Practices

Cracking Down on Misconduct Involving Complex Financial Instruments

Stopping Misconduct by Investment Advisers and Investment Companies

  • Brought a wide range of actions against investment advisers and investment companies, including cases involving fraud, actions to ensure the safety of client assets, first-of-their kind actions enforcing the investment adviser pay-to-play rules, and actions arising from the use of proactive risk identification initiatives
  • Brought 11 enforcement actions related to private equity fund advisers’ allocation of expenses, hidden fees, failure to disclose conflicts of interests, and marketing and valuation issues, including the Commission’s actions against KKR – the first case against a private equity fund adviser – for misallocating broken deal expenses; three private equity fund advisers within The Blackstone Group for failing to fully inform investors about benefits the advisers obtained from accelerated monitoring fees and discounts on legal fees; and Fenway Partners LLC and four of its principals for failing to disclose conflicts of interest to a fund client and investors when fund and portfolio company assets were used for payments to former firm employees and an affiliated entity
  • Additional actions including cases against: J.P. Morgan for failing to disclose conflicts of interest to clients; First Eagle Management for improperly using mutual fund assets, the first case arising out of the Commission’s Distribution-in-Guise Initiative; the investment management firm F-Squared Investments and its former CEO for defrauding investors through false performance advertising about its flagship product and actions against 13 investment advisory firms for repeating the false claims of F-Squared Investments without obtaining sufficient documentation to support them; BlackRock Advisors’ failure to disclose a conflict of interest created by outside business activity by a top-performing portfolio manager; three AIG affiliates for steering mutual fund clients toward more expensive share classes so the firms could collect more fees; and the Commission’s first action against a political intelligence firm

Protecting Investors and Issuers in Public Finance Matters

Maintaining the Integrity of the Whistleblower Process

  • The SEC’s whistleblower program has now awarded more than $100 million to 34 whistleblowers since the program’s inception in 2011. In August 2016, the program issued its second-largest award of more than $22 million to a whistleblower whose detailed tip and extensive assistance helped the agency halt a well-hidden fraud at the company where the whistleblower worked
  • Brought the first-ever action applying the Dodd-Frank Act whistleblower anti-retaliation authority against a firm for retaliating against a whistleblower who reported a possible securities violation to the Commission and brought the first stand-alone action for retaliation against a whistleblower
  • Brought the first-ever action against a company — KBR Inc. — for using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process
  • Brought additional actions against Anheuser-Busch InBev and Merrill Lynch for using language in agreements that operated to impede employees from voluntarily providing information to the Commission; BlueLinx Holdings, Inc. for using severance agreements that required outgoing employees to waive their rights to monetary recovery should they file a charge or complaint with the Commission or other federal agencies, and Health Net Inc. for illegally using severance agreements requiring outgoing employees to waive their ability to obtain monetary awards from the Commission’s whistleblower program

PROMOTING AND IMPROVING INDUSTRY COMPLIANCE

  • During fiscal 2016, Commission staff conducted over 2,400 examinations, which was a more than 20% increase over fiscal 2015. These examinations resulted in the return of over $60 million to investors
  • During fiscal 2015, the Commission staff conducted nearly 2,000 examinations – an increase over each of the prior five fiscal years. These examinations resulted in the return of approximately $120 million to investors. In fiscal 2014, the Commission staff conducted more than 1,850 examinations, through which more than $40 million was voluntarily returned to investors. In addition, more than $300 million in fines, penalties, and disgorgement was assessed as a result of enforcement actions concluded in fiscal 2014 that involved an enforcement referral from an exam
  • Commission staff continues to publish an annual statement of examination priorities (every year since 2013) to inform investors and registrants about areas of heightened risk, which encourages broader and better compliance across our registrant populations. In addition, Commission staff continued to publish Risk Alerts to highlight risks and compliance concerns identified during examinations of registrants

Enhancing Asset Manager Oversight

  • By the end of fiscal 2016, completed a reallocation of resources within the examination program that, along with focused hiring, resulted in increasing the size of the investment adviser and investment company examination staff by over 20% as compared to the prior year
  • Launched the “Never-Before Examined” Initiative to engage with the investment advisers that have been registered for three years or more but have never been examined and investment company complexes that have never been examined
  • Launched multiple initiatives to assess liquidity risk management practices of asset managers, to improve compliance and inform policy-making in related areas
  • Launched an initiative to assess whether investment advisers are fulfilling their fiduciary and contractual obligations to clients in wrap fee programs
  • Completed the Presence Exam Initiative in which the staff conducted approximately 400 exams of hedge fund and private equity fund advisers over a two-year period
  • Initiated a securities lending arrangements initiative to examine the use of affiliated bank securities lending agents and to evaluate whether these investment advisers are satisfying their fiduciary duty to clients
  • Increased and expanded monitoring of the largest asset managers to better assess risks and the impact of market developments

Enhancing FINRA Oversight

  • Enhanced our oversight of FINRA by establishing an office within the National Exam Program dedicated to conducting inspections of FINRA’s operations and regulatory programs and assessing the quality of FINRA’s examinations of individual broker-dealers

Identifying New and Emerging Risks

  • Started an exam program focused on newly-registered municipal advisors to assess whether they are operating in a manner consistent with federal securities laws
  • Launched the Retirement-Targeted Industry Reviews and Examinations Initiative to focus on risks associated with retirement accounts and potential harm to retail investors
  • Expanded and enhanced the use of targeted examinations as a technique to identify and address higher-risk activities focusing on such areas as: the potential misuse by mutual funds of payments to intermediaries as payment for distribution; the use of purported “alternative” investment strategies by registered investment companies; and cyber-security practices of broker-dealers and investment advisers
  • Launched a multi-phase Cybersecurity Exam Initiative, examining more than 100 registered broker-dealers and investment advisers to understand how these entities are addressing their cybersecurity needs
  • Coordinated efforts to increase coverage in important areas affecting some of the nation’s largest broker-dealers, such as operational risk, technology governance, automated trading and controls, liquidity risk management, tri-party repo reform, and effectiveness of control functions
  • Established an inter-divisional exchange-traded investment product (ETP) task force to, among other things, monitor how ETPs are functioning in the marketplace and develop potential regulatory responses
  • Launched an initiative on exchange-traded funds (ETFs) to examine for compliance with applicable exemptive relief granted under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and examine sales strategies, trading practices, and disclosures involving ETFs, particularly niche or leveraged/inverse ETFs
  • Launched an initiative to examine broker-dealer and investment adviser branch offices, focusing on registrants’ supervision of representatives located outside the home offices and utilizing our improved capabilities with data analytics to identify issues
  • Launched an initiative to examine firms that provide investment advice through automated or semi-automated means, focusing on disclosures, compliance programs and internal controls, data protection and cybersecurity controls, marketing materials, and portfolio management practices, among other areas

Developing Technology and Data Analytics

  • The National Exam Analytics Tool (NEAT), which enables Office of Compliance Inspections and Examinations (OCIE) examiners to access and systematically analyze years of trading data much more efficiently than in the past, has been expanded to support blotter data validations, anti-money laundering, options, and reviews of broker-dealer information. Leveraging technology and built upon analytic capabilities through the Risk Analysis Examination Group (RAE) of OCIE, the SEC has used specialized skills and examination experience to conduct examinations of some of the nation’s largest broker-dealers

ENHANCING MARKET STABILITY AND PROMOTING FAIRNESS FOR ALL INVESTORS

Protecting Critical Securities Market Infrastructure

  • Established a CyberWatch program to provide oversight and analysis of technological disruptions, intrusions, or compliance issues for the market participants subject to Regulation SCI
  • Worked with FINRA and the securities exchanges to improve the reliability and resilience of the securities information processors that disseminate critical public information about the markets, including through enhanced back-up operations
  • Worked with FINRA and the securities exchanges to approve additional rules designed to enhance the robustness and resilience of critical market infrastructure for the equity and options markets, including better trade break processes and procedures and kill switches and other risk mitigation mechanisms Launched the Technology Controls Program to provide surveillance and examination oversight of market technology
  • Worked with NYSE and Nasdaq to approve rules enhancing closing contingency procedures for determining the official closing price of the securities they list, thereby mitigating circumstances in which a listing exchange is unable to hold a closing auction for its listed securities and cannot determine an official closing price
  • Conducted examinations of systemically important clearing agencies to assess: the financial and operational risks borne and presented by them to financial institutions, critical markets, and the financial system; their resources and capabilities to monitor and control such risks; and their compliance with the Exchange Act, and the rules and regulations promulgated under the Exchange Act and the Dodd-Frank Act
  • For the first time, named a cybersecurity policy advisor to the Chair. This new role is responsible for coordinating efforts across the agency to address cybersecurity policy, engaging with external stakeholders, and further enhancing the SEC’s mechanisms for assessing broad-based market risk

Optimizing Equity Market Structure through Data-driven Review and Action

  • Implemented the Market Information Data Analytics System (MIDAS) and launched a new website dedicated to equity market structure, presenting data and analytics regularly used by market participants as well as the SEC itself to inform critical market structure policy issues. Data from the market structure website is downloaded more than 12,000 times per month
  • Formed the Market Structure Advisory Committee to focus on the structure and operations of the U.S. equity markets and provide a valuable mechanism for the Commission to receive input and advice concerning market structure issues as it does its comprehensive review

Building Stronger Fixed Income and OTC Derivatives Markets

  • Approved several MSRB rules prescribing the core regulatory framework for municipal advisors, including establishing the standards of conduct and duties of municipal advisors and providing context for the federal fiduciary duty; extending restrictions on gift giving to municipal advisors; establishing new supervisory and compliance obligations and new professional qualification standards for municipal advisors; consolidating existing fair-pricing rules and interpretive guidance for broker-dealers and municipal securities dealers transacting in municipal securities; requiring broker-dealers and municipal securities dealers to seek best execution of customer transactions in municipal securities; and establishing an academic data product to enhance research on municipal securities trading
  • Published staff guidance to assist market participants in determining whether interests in certain accounts offered through the Achieving a Better Life Experience (ABLE) Act program, a new type of tax-advantaged savings program, are municipal securities under the Exchange Act
  • Approved proposed rule changes by FINRA and the MSRB that would require, for the first time, markup and markdown disclosures to retail customers for certain principal transactions in corporate bonds and municipal securities

FACILITATING SMALL BUSINESS CAPITAL FORMATION

  • Issued a staff report on the review of the definition of “accredited investor”
  • Renewed the Advisory Committee on Small and Emerging Companies to provide the Commission with advice on capital formation and reporting requirements for smaller issuers
  • Approved a Tick Size Pilot NMS plan that will widen the quoting and trading increments for certain small capitalization stocks. This pilot will generate data that will allow the Commission and public to evaluate whether a widened tick size improves market quality for smaller capitalization companies
  • In partnership with the U.S. Small Business Administration, hosted events to inform small business owners and entrepreneurs about new options for capital raising under the JOBS Act
  • During fiscal year 2015, the Division of Corporation Finance’s Office of Small Business Policy responded to approximately 1,700 small business-related inquiries

PROMOTING EFFECTIVE DISCLOSURE AND STRENGTHENING FINANCIAL REPORTING STANDARDS

  • During fiscal year 2016, the Division of Corporation Finance reviewed the filings of over 4,800 public companies, including the registration statements for approximately 400 initial public offerings. The Division of Investment Management’s Disclosure Office also reviewed and commented on disclosures in more than 4,800 filings relating to more than 12,000 registered investment companies, business development companies, and insurance contracts in FY 2016
  • During fiscal year 2015, the Division of Corporation Finance staff reviewed the annual and periodic reports of more than 4,400 companies and, in addition to other selective reviews of transactional filings, registration statements for approximately 600 initial public offerings. The Division of Investment Management’s Disclosure Office also reviewed filings that covered more than 12,000 registered investment company portfolios in both fiscal year 2015 and fiscal year 2016
  • Launched an ongoing initiative to identify ways to make disclosure rules more effective through a comprehensive review designed to result in recommendations on how to update rules to facilitate timely, material, and more meaningful disclosure by companies to their shareholders
  • Published significant interpretive guidance to assist companies in improving their disclosures, such as updates to Corporation Finance’s Financial Reporting Manual, the release of numerous Corporation Finance staff compliance and disclosure interpretations, including those relating to non-GAAP financial measures, and the issuance of Investment Management staff guidance updates on fund disclosures
  • Published staff guidance to assist mutual funds in improving disclosures through providing clear and concise disclosure at the beginning of a mutual fund prospectus, avoiding the improper use of fund names suggesting safety or protection from loss, and providing full and accurate disclosure that reflects risks that arise as a result of changing market conditions
  • Published various staff observations and alerts on the quality of eXtensible Business Reporting Language (XBRL) exhibits containing financial statement information submitted by issuers
  • Issued an order to allow companies to voluntarily file structured financial statement data in a format known as Inline XBRL. The initiative represents another step in the SEC’s continuing efforts to modernize and enhance requirements to facilitate transparency of, and access to, companies’ disclosures
  • Worked closely with the Financial Accounting Standards Board (FASB) to monitor the FASB’s adoption and the accounting profession’s implementation activities related to the new revenue recognition, leasing, financial instruments, and credit impairment of financial instruments standards
  • Worked closely with the Public Company Accounting Oversight Board (PCAOB) on its efforts to promote improvements to audits of internal control over financial reporting. Also worked closely with the PCAOB as they advanced standard setting and rulemaking projects, including a proposal on the supervision of other auditors, a re-proposal on the auditor’s reporting model, and a concept release on potential audit quality indicators. In addition, the Commission approved PCAOB rules on auditor transparency, an auditing standard on related parties, the reorganization of PCAOB auditing standards, an auditing standard on supplemental information, and attestation standards for broker-dealer engagements. The Commission has also provided support to the PCAOB in its successful negotiations to obtain cooperative agreements necessary to conduct inspections in non-U.S. jurisdictions

STRENGTHENING OVERSIGHT OF CREDIT RATING AGENCIES

  • Completed annual examinations of each NRSRO and published summary reports in 2013, 2014 and 2015 of those examinations
  • Issued annual reports in 2013, 2014 and 2015 on NRSROs, including information about competition, transparency and conflicts of interest
  • Completed a comprehensive staff study on the independence of NRSROs and how such independence affects ratings issued by the NRSROs

PROMOTING CROSS-BORDER ENFORCEMENT AND REGULATORY COOPERATION

  • Coordinated more than 3,300 requests for international assistance in connection with enforcement investigations and processed more than 1,900 foreign requests for SEC assistance in enforcement matters
  • Provided training on enforcement, examinations, and market development related issues to approximately 5,500 regulatory and law enforcement counterparts through the Commission’s international technical assistance program

DEPLOYING ROBUST ECONOMIC ANALYSES AND CUTTING-EDGE DATA ANALYTICS TO SUPPORT THE SEC MISSION

Performing Novel and Complex Economic Analyses

  • Deployed financial economists and market experts throughout the Commission’s rulemaking process, including by using market data to provide novel analyses on rules involving security-based swaps, securities offerings, and mutual funds
  • In support of Commission rulemaking, publicly released novel and data-driven analyses on the Use of Derivatives by Registered Investment Companies, Liquidity and Flows of U.S. Mutual Funds, and Capital Raising in the U.S. (2009-2014). Continued to produce staff papers and studies on significant economic issues
  • Launched a behavioral and retail working group to bring insights and approaches from behavioral economics to bear on policymaking, including seeking to account for investor behaviors that are outside the assumption of perfect rational processing of information

Identifying Potential Misconduct with Advanced Analytical Tools

  • Created a new Office of Risk Assessment (ORA) within the Division of Economic and Risk Analysis (DERA) to centralize DERA’s ongoing work in risk assessment activities, reflecting the Commission’s broader commitment to identifying market risks and leveraging scarce resources to focus on the areas of greatest risk. Developed data-driven analytical tools, including: (1) the Corporate Issuer Risk Assessment dashboard, which assists in identifying anomalous patterns in financial reporting that may warrant further inquiry; (2) the Broker-Dealer Risk Assessment tool, which identifies outlier behavior that allows OCIE to prioritize inspections and focus the attention of examiners where they are most likely to detect inappropriate risk or fraudulent activity; and (3) the Investment Company Risk Assessment tool, which seeks to detect anomalous investment company characteristics and activities

Enhancing the Quality and Usability of Large and Complex Datasets

  • Enhanced the public availability of financial market data by providing access to data sets in a useable form, including financial statement data sets. Facilitated increased transparency into the public’s access of financial filings by providing downloadable data on internet search traffic for EDGAR filings
  • Developed the Quantitative Research and Analytical Data Support (QRADS) program to allow Commission staff across the agency to easily access data to assist in identifying market issues, including the build-up of risk in certain areas of the financial market and how certain asset flows work
  • Division of Investment Management’s Risk and Examinations Office published quarterly reports for the fourth quarter of 2014 through the first quarter of 2016 providing a summary of recent private fund industry statistics and trends reflecting data collected through Form PF and Form ADV filings

PROTECTING INVESTORS THROUGH OUTREACH AND EDUCATION

PROMOTING DIVERSITY IN THE COMMISSION’S REGULATED ENTITIES

  • The SEC, the Federal Deposit Insurance Corporation, National Credit Union Administration, Federal Reserve Board, Bureau of Consumer Financial Protection, and the Office of the Comptroller of the Currency issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate. The final standards provide a framework for regulated entities to create and strengthen their diversity policies and practices—including their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion within the entities’ U.S. operations

MAKING THE COMMISSION’S WORKFORCE AND TECHNOLOGY MORE DYNAMIC AND EFFICIENT

Improving Diversity and Inclusion in SEC’s Workforce

  • Launched new initiatives to augment existing strategies for attracting and retaining a technically proficient and diverse workforce. The Office of Minority and Women Inclusion (OMWI) established new relationships with minority and women professional associations and educational organizations to enhance efforts to attract diverse talent pools for employment. OMWI developed additional metrics for measuring the impact of the SEC’s workforce diversity initiatives.
    • Overall, the hiring of women and minorities increased in FY 2016. Of the 444 new employees hired, women comprised 44.6 percent and minorities comprised 38.5 percent. In particular, new hires rates both for Asians and Black or African Americans experienced increases
    • Since FY 2012, the SEC has improved the gender diversity of its Senior Officers by 5 percent. Representation of women at the Senior Officer level has increased from 31.3 percent (40 women Senior Officers) in FY 2012 to 36.3 percent (53 women Senior Officers) at the end of FY 2016. By comparison, 35.1 percent of Senior Executives in the Federal workforce were women as of FY 2014
    • Minorities and women in supervisory and managerial positions also increased in FY 2016. Of the 911 supervisors and managers at the SEC, 213 were minorities (23.4 percent) and 349 were women (38.3 percent) in FY 2016

Improving Employee Engagement

  • According to the 2016 Federal Employee Viewpoint Survey (FEVS), the SEC ranks third of 37 in global satisfaction among the large federal agencies. The SEC was the most improved large agency in 2016 with a nine percent increase in global satisfaction over 2015 results, which were a 3 percent increase over 2014 results. Per FEVS data, since 2013, employee satisfaction at the Commission has risen 17 percent
  • Continued upward trend in the Partnership for Public Service’s “Best Places to Work in the Federal Government” rankings as a result of, among other things, supporting the formation of local labor management forums and creating the “All Invested” employee engagement initiative. In 2015, the SEC ranked 10th out of 24 mid-size federal agencies; the SEC placed within the top 10 of a number of different categories identified by the Partnership, including Work-Life Balance (6th), Training and Development (7th), Effective Leadership – Senior Leaders (8th), and Strategic Management (8th)

Advancing Diversity and Inclusion in the SEC’s Business Activities

  • More than one-third of eligible SEC contract dollars awarded in fiscal year 2016 went to minority-owned and women-owned businesses. During the same period, 11% of eligible contracts dollars went to Veteran Owned Small Business, 9% reported to Service-Disabled Veteran Owned Small Businesses, and 3.1% to Historically Underutilized Business Zones. Overall, 60% of the SEC’s eligible contract dollars were successfully awarded to small U.S. businesses in the last year
  • Implemented a new contract standard that requires the contractor to confirm that it will ensure, to the maximum extent possible and consistent with applicable law, fair inclusion of minorities and women in its own workforce
  • Established and executed procedures for conducting post-award reviews to determine contractor compliance with the requirements of the contract standard

Building a More Effective Technology Infrastructure

  • Implemented a Technology Transformation Plan to ensure that the SEC’s business processes are reducing costs and increasing efficiencies, delivering better services to both employees and the public and providing greater accountability, transparency, and security
  • Enhanced the Enterprise Data Warehouse — which combines different sources of data, including information from electronic filings, exam reports, and investigations into a centralized database allowing for enhanced analytical capabilities — to help the SEC discover suspicious trading patterns and possible wrongdoing by reducing processing time for billions of trading records from days to hours and performing complex queries in seconds
  • Improved public access to EDGAR search tools, which provide free access to more than 20 million corporate filings. Improved search engine indexing helped drive significant increases downloads and page views in the past year
  • Enhanced the Commission’s operational security capabilities though the development of an Information Security Continuous Monitoring Program and the continued investment and implementation of security controls and detection mechanisms as well as numerous application and database security tools

Improvements in Financial Controls and Reporting

  • The SEC has significantly improved the internal controls over its operations and finances. In FY 2015, the SEC achieved its best-ever result in its annual financial audit, with the Government Accountability Office (GAO) finding no significant internal control issues
  • In 2016, the SEC’s annual report won the coveted Certificate of Excellence in Accountability Reporting (CEAR) award for the 10th year in a row

Improving Transparency in Commission Actions

  • Improved the public access to, and timeliness of, disclosure of the final votes of SEC Commissioners on the Commission’s decisions, orders, rules and similar actions, by posting those votes on the Commission’s Website
  • Improved the public access to information related to the Commission’s administrative proceedings by posting to the Commission’s website the principal pleadings, orders, and decisions in current Commission administrative proceedings
  • Improved public transparency of the Commission’s rulemakings by developing a new database on the Commission’s website that allows tracking of not just final rules, but also the development of the Commission’s policies through concept, proposal, additional requests for comment, and any necessary interim measures
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