On Friday, September 9, the Office of the Chief Operating Officer of the SEC issued its Report on the Implementation of SEC Organizational Reform Recommendations, which was mandated by Section 967 of the Dodd-Frank Act. The 25-page report was prepared to address the recommendations made in March 2011 by the Boston Consulting Group ("BCG"), who submitted a Report to Congress examining the internal operations, structure and need for reform at the SEC (as discussed here). Friday’s report noted the budgetary issues the SEC faces and reported on the largely organizational steps the agency has taken to begin the multi-year task of implementing the recommendations. In short, the SEC summarized that that "[w]hile the agency has made progress, the path forward is still long."

The new report states that in the six months since the BCG Report was issued, "the SEC has developed the necessary program management and oversight infrastructure to address the next step in the agency’s on-going multi-year change initiative: conducting a thorough analysis of each recommendation and designing appropriate approaches for those recommendations selected for implementation."

The SEC noted that a "critical challenge" it faces "is determining how to best implement the study recommendations in the current resource-constrained environment, especially when substantial additional work is dictated by Dodd-Frank Act deadlines." The BCG Report estimated that between $42 million and $55 million will be necessary over a two year period to implement the recommended changes and acknowledged that the SEC may not be able implement all of those recommendations unless Congress relaxed funding constraints or the SEC relied more heavily on self-regulatory organizations to fill regulatory needs.

Since the BCG Report was issued, the SEC has "focused on putting the right people, infrastructure and processes into place to support an effort that has the potential to re-shape how the SEC executes its mission through redefined processes, roles and responsibilities." These efforts have included

• designating the Office of the Chief Operating Officer as the BCG Study Executive Sponsor;

• dividing up the BCG Report recommendations into separate "workstreams" in order to permit further analysis;

• creating an Executive Steering Committee;

• establishing a Program Management Office;

• developing of a "Mission Advancement Program," which will focus on four major "Management Agenda" items: (1) prioritizing activities and structure organizational operating units to align to the SEC’s strategic direction; (2) strengthening capabilities; (3) developing internal mechanisms to locate cost savings, gather data and clarify or streamline processes; and (4) enhancing the workforce.

The SEC stated it "intends to report to Congress on a regular basis on the actions taken in response to the study."