Priority Open Recommendations: Securities and Exchange Commission
Fast Facts
Each year, we make more than 1,000 recommendations to help the federal government save money, address issues on our High Risk List, and significantly improve government operations.
This letter to the Securities and Exchange Commission outlines one open recommendation that it should prioritize. For example, recent bankruptcies and fraud involving blockchain-related products and services—e.g., cryptocurrencies—raised concerns about consumer risk. SEC and the other financial regulators should coordinate how they identify and address such risk.
We regularly update priority recommendations here.
Highlights
What GAO Found
In June 2022, GAO identified three priority recommendations for the Securities and Exchange Commission (SEC), which related to SEC's oversight of the Financial Industry Regulatory Authority, Inc. (FINRA). Since then, SEC has implemented all three priority recommendations. Specifically, SEC has adopted performance measures to help assess the effectiveness of its oversight of FINRA as well as policies and procedures to identify, communicate, and monitor significant findings from its inspections and examinations of FINRA.
As of June 2023, GAO identified one new priority recommendation for SEC, which calls for developing a coordination mechanism with the other federal financial regulators for identifying and addressing blockchain risks. A formal mechanism with established processes and time frames could help the federal financial regulators collectively identify blockchain risks and develop timely and appropriate responses.
SEC's continued attention to this issue could improve protections for investors and mitigate illicit finance and threats to financial stability.
Why GAO Did This Study
Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015, GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations.
For more information, contact Daniel Garcia-Diaz at (202) 512-8678 or GarciaDiazD@gao.gov.