SEC risk-based regime comes under fire

WASHINGTON, DC – Although the Securities and Exchange Commission (SEC) has introduced a new risk-based examination approach to the supervision of mutual funds, the agency’s oversight of the industry remains inadequate, according to the US Government Accountability Office (GAO).

In a report on the SEC’s revised approach for examining mutual funds, the GAO calls into question the SEC’s shift away from routine investigations to targeted exams that focus on funds deemed high risk. The GAO says this approach may limit the agency’s capacity to examine funds considered lower risk and to identify which funds pose higher risks and effectively target them for routine examination.

Under its new risk-based procedures, the SEC uses targeted examinations that focus on specific risks