The SEC has promised to react faster and more efficiently to information provided by self-regulating organizations concerning insider trading. The promise follows a critical report of the SEC conducted by the Government Accountability Office, the investigative arm of Congress.
For over 70 years the SEC has shared its investigative powers regarding securities trading irregularities with self-regulating organizations such as FINRA (formerly NASD) and NYSE Regulation). These SROs enforce their own rules against market participants and tip off the SEC when they believe federal law has been violated. According to the GAO, however, the SEC has been slow to react to such tips. The biggest criticism in the GAO report is that the SEC does not have electronic access to the referrals from the SROs and therefore cannot electronically search referral information.
