NEW YORK - Breaking up the investigative logjam at the Securities and Exchange Commission's  Office of Compliance Inspections and Examinations may take dismantling the office itself, said SEC Commissioner Paul S. Atkins Wednesday.

"It is incumbent upon us to constantly reexamine our own structure," said Atkins, who delivered the keynote address at the Practising Law Institute's "Coping with Broker/Dealer Regulation and Enforcement" seminar.

The office was created in 1995 to end the division between those examiners who focused on Investment Advisor Act oversight, and those who helped ensure companies follow provisions of the Investment Company Act by bringing them into one office, and encouraging cooperation and communication.

In some ways, he said, the office may be a victim of its own success.

The 800-person division has opened a record number of cases, Atkins said. The problem is that there is no filter to determine which exams get filed, and which are referred to the Division of Enforcement. The result is an overwhelming backlog and a lack of priority status that can result in too much attention being paid to minor cases, while more damaging transgressions continue without enforcement, he said.

"The main goal of the compliance exam should be an opportunity for the registrant to improve their compliance program," Atkins said.  But financial companies tend to treat every exam brought by the 11-year-old office like a potential criminal lawsuit, rather than potentially useful lesson.

Companies treat all inquiries from the Office of Compliance as subpoenas, and Atkins questioned whether that might be a misuse of the SEC's resources. He gave the example of one inquiry, requesting that a financial services company list all of the business opportunities it chose not to pursue because they were deemed unwise, inappropriate, unethical or potentially illegal, and the reasons why the company passed. The company was also asked to provide back-up documentation to support each case.

"To me a requirement like this will chill the open communication among businesspeople," he said.

Atkins applauded pending legislation introduced by U.S. Congressmen Vito Fossella (R-N.Y.) and Michael N. Castle (R-Del.) that calls for the office to be split. "The bill is a call and a challenge," he said. However, reshuffling the SEC structure does not require legislation, and can happen at anytime, Atkins acknowledged. "The Chairman [Christopher Cox] sets the agenda," he said.

Atkins said he would continue to encourage Cox to include dividing the office on the upcoming year's agenda, perhaps reverting to inspectors being divided again between the Divisions of Investment Management and Enforcement. Whatever the final form, Atkins said he would encourage the Commission to look at other companies, and even the banking industry, for examples of how an efficient oversight office might work.

"We wan to step up the open debate between companies' own businesses and legal departments," he said, and allow the SEC to take a supervisory role. "We want to encourage firms to bring their problems to us, and have the examiner answer questions, rather than [foster an] adversarial relationship," he said.

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