U.S. securities regulator reviewing internal ‘control deficiency’

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) on Tuesday said it has identified a “control deficiency” that gave enforcement staff access to certain adjudicatory memoranda meant for commission decision-making.

The SEC conducted a review into the deficiency and found that, as it relates to two adjudicatory matters currently in litigation in federal court, agency enforcement staff had access to certain adjudicatory memoranda they should not have had. The SEC chair immediately notified the other commissioners and started a review, the SEC said in a statement.

The access did not impact the staff investigating and prosecuting the cases or the commission’s decision-making in the matters, the review found.

The agency’s enforcement and investigative staff tasked with a matter going through agency adjudication proceedings are generally not allowed to participate in the commission’s decision-making in the matter. At issue are proceedings heard by an administrative law judge at the agency.

It was not immediately clear from the agency’s statement when the deficiency was first noticed, but the agency noted a control deficiency in a financial report published in November. A review to assess the scope and full impact of the deficiency is still ongoing.

(Reporting by Chris Prentice; Editing by Bernard Orr)