The U.S. Securities and Exchange Commission needs to improve oversight of firms exempt from certain regulations, the agency's watchdog said, citing "numerous" cases in which companies violated conditions of the waivers.

SEC staff have "no formalized process" to track whether firms are complying with the conditions of their exemptions, Inspector General H. David Kotz said in a report posted today on the SEC's website. That may pose "substantial" risks "because exemptive orders and no-action letters allow industry participants to conduct activities that, without the relief, could violate the securities laws and regulations," Kotz said.

The SEC can issue exemptive orders and so-called no-action letters to allow transactions that may not have been contemplated when the securities laws were written. Those transactions may otherwise violate rules, so the exemptions are often conditional on the firm's compliance with certain standards, Kotz said. A no-action letter states that the staff will not pursue an enforcement action in response to the proposed activity.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.