Compliance September 17, 2007

GAO: SEC Enforcement Unit Still Has Remaining Management Woes

September 17, 2007 (PLANSPONSOR.com) - While the enforcement division of the U.S. Securities and Exchange Commission (SEC) has instituted management improvements in recent years, it has a ways to go to reach its greatest level of effectiveness, according to a new government study.
Reported by

The Government Accountability Office (GAO) study, Securities and Exchange Commission: Additional Actions Needed to Ensure Planned Improvements Address Limitations in Enforcement Division Operations, asserted that the enforcement unit still has particular problems in the way it manages investigations and the pace at which funds generated from its investigations are returned to harmed investors.

“While Enforcement has demonstrated considerable success in carrying out its law enforcement mission, some significant limitations in the division’s management processes and information systems have hampered its capacity to operate at maximum effectiveness and use limited resources efficiently,” the report asserted. “One key reason for these limitations appears to have been Enforcement’s management approach, which emphasized a broad delegation of key functions with limited centralized management review and oversight, particularly in the approval and review of new investigations and the administration of the Fair Fund (shareholder reimbursement) program.”

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The report continued: “Delegation of authority is an important management principle that can foster creativity at the local level and, in the case of Enforcement, likely had some benefits for the investigative process and the administration of the Fair Fund program. However, without well-defined management processes to exercise some control over delegated functions, inefficient program implementation and resource allocation can also occur.”

Regarding the agency’s effort to repay affected investors from funds raised through its enforcement efforts – the “Fair Fund program – the GAO said management issues may have delayed getting those funds to their intended destination. In large measure, the agency said, that was because of the lack of necessary tracking data.  

For example, of the 115 Fair Funds currently tracked by Enforcement (which were created by federal courts or through SEC administrative proceedings), only about $1.8 billion (21%) of the $8.4 billion ordered since the program’s 2002 inception had been distributed to harmed investors as of June 2007, according to SEC data, the GAO said.

Other problems pinpointed by the GAO included:

  • Enforcement has not developed written procedures and criteria for reviewing and approving new investigations.
  • Enforcement has not developed written controls to help ensure the timely and consistent entry of investigative data in the Hub information system, which could increase the risk of misleading or inaccurate management reports being generated by the system.
  • Enforcement’s potentially large backlog of investigations for which closing memoranda and other required administrative procedures have not been completed requires division management’s attention.
  • SEC has not yet staffed or defined the roles and responsibilities of the new office that is being established to administer the Fair Fund program.

The GAO report is at    http://www.gao.gov/new.items/d07830.pdf .

Benefits September 14, 2007

So You Want to Be a Rock Star?

September 14, 2007 (PLANSPONSOR.com) - While it may not be the kind of conclusion that demands actuarial acumen, a new study concludes that rock stars do indeed live fast and die young.
Reported by

Researchers at Liverpool John Moores University, whose report appeared in the Journal of Epidemiology and Community Health, studied a sample of North American and British rock and pop stars and, according to Reuters, concluded they are more than twice as likely to die a premature death as ordinary citizens of the same age.

Get more!  Sign up for PLANSPONSOR newsletters.

The team looked across a wide variety of genres – considering 1,064 stars from the rock, punk, rap, R&B, electronic and new age genres in the “All Time Top 1,000” albums published in 2000, comparing each artist’s age at death with that of European and U.S. citizens of similar backgrounds, sex and ethnicity.

The report found that, between two and 25 years after the onset of fame, the risk of death was two to three times higher for music stars than for members of the general population matched for age, sex, nationality and ethnic background.

First Years Most Dangerous

The average age of death was 42 for North American stars (which included the likes of Elvis Presley, Kurt Cobain, and Jimi Hendrix) and 35 for European stars. In all, 100 of the stars considered had passed on – 7.3% of women and 9.6% of men. The first years of success were found to be the most dangerous – with both British and American musicians three times more likely to die than the average person during that time. Long-term drug or alcohol problems accounted for more than one in four of the deaths.

However, the elder statesmen of the genre – such as Paul McCartney and Mick Jagger – can take heart. The study found that after 25 years of fame, stars’ death rates began to return to normal – at least in Europe. A European star still living 25 years after achieving fame faces a similar mortality rate to the European public.

However, U.S. artists continue to die in greater numbers – a difference that the study said “might be explained by differences in longer-term experience of fame, with more performing in later years … continued media interest and associated stress and substance use in North American pop stars.”

«