CFTC/SEC Enforcement Programs:
Status and Potential Impact of a Merger
T-GGD-96-36, Oct 25, 1995
Pursuant to a congressional request, GAO: (1) discussed the effectiveness of the Commodity Futures Trading Commission (CFTC) enforcement program; (2) compared the CFTC enforcement program to the Securities and Exchange Commission's (SEC) enforcement program; and (3) described the potential effects of a merger on CFTC enforcement activities. GAO noted that: (1) it is premature to judge the effectiveness of CFTC enforcement program initiatives, since they depend on the availability of resources, the quality of staff and training, and the nature of trading activities and markets; (2) SEC has a larger enforcement program than CFTC in terms of budget, staffing, and enforcement activity; (3) it could not compare the programs' overall effectiveness, since CFTC and SEC law enforcement, and regulatory responsibilities differ; (4) many market observers believe that CFTC enforcement is less effective than SEC enforcement; (5) the merger of CFTC and SEC could enhance intermarket surveillance and enforcement activities, increase opportunities for training, provide additional resources for the pursuit of futures related violations, and eliminate agency ambiguity concerning enforcement responsibility over derivative products; and (6) if CFTC and SEC do not merge, there will still be a need for attorneys and investigators with knowledge of futures and securities laws.