The Securities and Exchange Commission’s investigations into market manipulation and insider trading are thwarted by the fact it fails to make use of exchanges’ internal audits and searches through investigative referrals from exchanges cannot be handled easily on its computer systems, according to a report from the Government Accountability Office. Sen. Charles Grassley (R-Iowa), the ranking Republican on the Senate Finance Committee, requested the report following an investigation his office conducted last year into a foiled up SEC investigation into possible insider trading at Pequot Capital Management.
“It’s a no-brainer that the Commission ought to be at least looking at this information and have a computer system that can spot trends and let investigators to review the data as effectively and efficiently as possible,” Grassley said. “If investigators can’t search the data, it’s like working with one hand tied behind their backs. And it was kind of shocking to know that the SEC doesn’t review the exchanges’ internal audits. That’s inefficiency, and there is no excuse for it.”