Walter Stachnik said the SEC is having "a significant problem" controlling when it waives legal judgments that require defendants to return, or "disgorge," ill-gotten gains.
"We found that improvements could be made to the waiver process to achieve greater assurance that waivers were justified," Stachnik said in a semiannual report to Congress that was released this week. His audit covered SEC activities from Oct. 1, 2000, to March 31, 2001.
SEC officials said they agreed with Stachnik's findings and are "taking actions to improve the disgorgement waiver process." The agency has issued written procedures for granting waivers, hired a firm to improve databases dealing with disgorgements and hired a contractor to recommend new procedures, the agency staff said in its 14-page response.
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