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Compliance October 26, 2010
SEC Working to Improve Complaint Handling
The Securities and Exchange Commission is working to have new
technology to handle tips and complaints in place by the end of the
year.
Reported by Rebecca Moore
The Wall Street Journal reports that Robert Khuzami, director of enforcement, said the system will be installed in two phases. The first will improve the agency’s ability to track and search the information it receives, and the second will improve its ability to analyze the data. The SEC is aiming to have it completed some time in 2011.
The system being installed uses a tool that prompts a person making a complaint online to answer certain questions depending on the allegation, according to the news report. Staff who receive telephone complaints will use a similar program that will prompt them to ask callers the same questions. SEC employees will key in handwritten complaints using the same format. This will standardize the information available to all SEC staff.
The technology also will help the SEC to prioritize information, so officials know what to act on first. Knowing that a particular law firm is suspect, for example, can help the SEC prioritize the next complaint in which that same law firm is involved, Khuzami told the WSJ.
The news report noted that a better system for sharing tips could have helped the SEC uncover Bernard Madoff’s multibillion-dollar Ponzi scheme. Two SEC offices, in at least one instance, separately looked into Madoff’s operation and were unaware of the other’s efforts. They began their investigations after receiving complaints from different sources. The SEC also received, and discounted, numerous tips and documents about Madoff from Harry Markopolos, an independent fraud investigator, for nearly 10 years.