SEC Performance Budget for 2007 

In accordance with Section 220 of Office of Management and Budget Circular A11, the SEC has crafted the following Performance Budget for Fiscal Year 2007. This 

document aligns the goals and measures developed for the SEC’s Strategic Plan for 

Fiscal 2004-2009 with the SEC’s budget request. It aims to improve the linkages 

between the SEC’s resource needs, effectiveness, and outcomes, and is submitted in lieu 

of the agency’s Government Performance and Results Act Annual Performance Plan, as 

permitted by OMB. Separately, the SEC has had its Office of Compliance Inspections 

and Examinations scored by OMB’s Performance Assessment and Rating Tool (PART). 

The results of these assessments will be included in the President’s budget request for 

fiscal year 2007. 

Goals and Outcomes

As established in the SEC’s strategic plan, the agency’s four goals are to: 

• Enforce compliance with federal securities laws; 

• Promote healthy capital markets through an effective and flexible 

regulatory environment; 

• Foster informed investment decision making; and 

• Maximize the use of SEC resources. 

The SEC works to meet these goals by, among other things, detecting violations 

and potential problems or issues in the securities markets and ensuring that the violations 

are addressed; crafting regulations that strengthen corporate and fund governance; 

providing investors with timely access to accurate, adequate, and useful disclosure 

materials that can be easily understood and analyzed across companies, industries, or 

funds; and ensuring that the agency’s human capital strategies, information technology 

initiatives, and resources are appropriately aligned to achieve the agency’s mission, goals, 

and outcomes. 

Like other federal regulatory and law enforcement agencies, the SEC has found it 

challenging to develop measures that accurately depict the outcomes of the agency’s 

activities. In many instances the effects of the agency’s efforts can only be indirectly 

assessed. The SEC intends to continue refining its work in this area as it gains more 

experience in integrating its budget and performance functions. As part of this effort, the 

SEC is in the process of implementing a performance-based budgeting and activity-based 

costing system to help monitor operating costs, better allocate costs across business 

functions, and achieve greater cost efficiency. The agency will continue to assess 

alternatives for measuring outcomes that help the public gauge the SEC’s progress in 

achieving its mission, as well as assist program officials in meeting their objectives. 

At the end of this chapter are several indicators that are useful in understanding 

the SEC’s activities, but should not be considered performance measures and do not 

include targets that the agency will strive to reach in future years. In most cases, the SEC 

GPRA - 1 
chose not to include targets for these indicators because they gauge the number of 

violations or “significant” deficiencies uncovered, and it would be inappropriate for the 

agency to conduct these activities with an eye towards hitting predetermined numerical 

targets rather than evaluating the evidence as presented. 

GPRA - 2 
Goal One: Enforce Compliance with Federal Securities Laws 

Performance Measure 1 

Percentage of First Enforcement Cases Filed Within Two Years. 

Description: This measure identifies the percentage of first enforcement actions filed within two years of 

opening an investigation or inquiry. In conducting investigations, the Division of Enforcement continually 

strives to balance the need for complete, effective, and fair investigations with the need to file enforcement 

actions in as timely a manner as possible.

FY 2003 FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

62% 69% 54% 65% 66% 66% 

FY 2007 Request: The Division anticipates that there will be an increase in the number of first enforcement 

cases filed within two years of opening investigation or inquiry. However, the figures in this chart are 

dependent on the types of cases brought or emphasized in a specific year, as well as competing staff priorities 

such as litigating actions already filed and bringing additional enforcement actions.

Performance Measure 2 

Enforcement Cases Successfully Resolved. 

Description: A case is considered “successfully resolved” if it results in a favorable judgment for the SEC, a 

settlement, or the issuance of a default judgment. In general, the SEC strives to successfully resolve as many 

cases as possible but, at the same time, aims to file large, difficult, or precedent-setting cases when 

appropriate, even if success is not assured.

FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

98% 85% 99% 85% 85% 

FY 2007 Request: A continued high success ratio depends on numerous factors, including the complexity of 

cases, the extent to which parties contest actions, and the availability of litigation and investigation resources.

GPRA - 3 
Performance Measure 3 

Number of Requests To and By Foreign Regulators for Enforcement Assistance. 

Description: Each year, the SEC makes hundreds of requests for enforcement assistance to foreign 

regulators, while responding to hundreds of other such requests from other nations. To facilitate this type of 

assistance, and encourage other countries to enact laws necessary to allow regulators to cooperate with their 

foreign counterparts, the SEC has entered into more than 30 bilateral information-sharing agreements, as well 

as the Multilateral Memorandum of Understanding, the information-sharing arrangement negotiated through 

the International Organization of Securities Commissions (IOSCO). These agreements create a framework 

for information sharing and expedite international cooperation among regulators.

FY 

2002 

FY 

2003 

FY 

2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Requests To 

Foreign Regulators 448 309 380 420 438 460 480 

Requests From 

Foreign Regulators 353 344 372 410 315 330 340 

FY 2007 Request: The number of requests between regulators is expected to rise gradually through fiscal 

year 2007.

Performance Measure 4 

Investment Advisers and Investment Companies Examined. 

Description: To conduct oversight of investment companies and advisers, the staff conducts routine 

examinations, inspections to follow up on tips and complaints, and special inspections to probe emerging risk 

areas. The growth in the industry, coupled with compliance problems associated with market timing and late 

trading, caused changes in the SEC’s oversight of investment companies and advisers.

FY 

2002 

FY 

2003 

FY 

2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Investment Advisers 

Examined 1,570 1,556 1,543 1,400 1,530 1,500 1,500 

Investment Companies 

Examined 304 318 783 500 582 350 350 

FY 2007 Request: The SEC will conduct routine exams of advisers with higher risk profiles on a three-year 

cycle and of randomly-selected firms with lower risk profiles. Cause inspections will be conducted as 

needed. To follow up on emerging and resurgent risks, special exams will be conducted as needed. 

GPRA - 4 
Performance Measure 5 

Distribution of Cases Across Core Enforcement Areas 

Description: Effective deterrence of securities fraud requires that the cases filed by the SEC have adequate 

reach across all core enforcement program areas. The mix and types of cases change from year to year based 

upon the conditions of the markets and the changes in financial instruments being used. The SEC’s 

enforcement program seeks to maintain a presence and depth so that no single area dominates its case mix, 

nor is underrepresented. This measure evaluates whether the Commission maintains an effective distribution 

of cases so that no category exceeds 40% of the total.

Percentage of Cases 

FY 

2003 

FY 

2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Core Enforcement 

Program Areas

Financial Disclosure 5% 6% <40% 7% <40% <40% 

Investment Advisers and 

Investment Companies 7% 7% <40% 8% <40% <40% 

Broker-Dealers 29% 28% <40% 29% <40% <40% 

Securities Offerings 11% 14% <40% 16% <40% <40% 

Insider Trading 20% 22% <40% 15% <40% <40% 

Market Manipulation 16% 15% <40% 9% <40% <40% 

Other 12% 8% <40% 16% <40% <40% 

Total 100% 100% 100% 100% 100% 100% 

FY 2007 Request: The agency will continue to maintain a presence in all program areas with no category 

exceeding 40% of the total amount of cases brought in any one year. The exact percentage may vary 

depending on the circumstances and priorities unique to that year.

GPRA - 5 
Goal Two: Promote Healthy Capital Markets Through an Effective and 

Flexible Regulatory Environment 

Performance Measure 1 

Milestones for Significant Rulemakings 

The Commission and staff engaged in extensive rulemaking to address issues of corporate and fund 

governance and to address provisions of the Sarbanes-Oxley Act. New standards for the governance policies 

and practices of SROs and participants in the investment management industry will have significant effects 

for years to come. 

Rulemaking FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

Investment 

Management 

Redemption Fees for 

Mutual Funds Final Action Adopted Implement 

Hedge Fund Adviser 

Registration Final Action Adopted Implement 

Broker-Dealer 

Exemption Final Action Adopted Implement Implement 

Address Mutual Fund 

Late Trading Final Action No Action Taken Final Action Implement 

Reform Fund Disclosure 

Regime Propose No Action Taken Propose Final Action 

Changes to Adviser 

Disclosure Regime Final Action No Action Taken Re-Propose Final Action 

Changes to Rule 12b-1 Evaluate No Action Taken 

Corporation Finance 

Securities Offering 

Reform Final Action Adopted Implement 

Asset-Backed Securities Final Action Adopted Implement 

Shell Companies Final Action Adopted Implement 

Shareholder Nomination 

Process Final Action No Action Taken 

Disclosures of Executive 

Compensation & Related 

Party Transactions 

Propose No Action Taken Propose Final Action 

Communications with 

Beneficial Owners of 

Securities 

Propose/Concept 

Release No Action Taken No Action Taken 

Interactive Data-XBRL 

Adopt Voluntary 

Rules and 

Concept Release 

Voluntary Rules 

Adopted/ Concept 

Release Issued 

Decide Whether to 

Propose Mandatory 

Rules 

GPRA - 6 
Transition to IFRS 

Accounting Standards Final Action Adopted Implement 

Deregistration of 

Foreign Private Issuers Propose Final Action 

Tender Offer Rule 

Changes Propose Final Action 

Electronic Proxy 

Statement Delivery Propose Final Action 

Market Regulation 

National Market System 

(Regulation NMS) Final Action Adopted Implement Evaluate 

Short Sale Regulation 

(Regulation SHO) Implement Pilot Adopted Propose Final Action 

SRO Governance Rules Final Action/ 

Concept Release

Proposed/Concept 

Release Issued Final Action Implement 

Soft Dollars (interpretive 

release and disclosure 

rules) 

Propose 

Interpretive 

Release 

No Action Taken 

Propose and Take 

Final Action on 

Interpretive 

Release/Propose 

Disclosure Rules 

Implement 

Interpretive 

Release/Final 

Action on 

Disclosure Rules 

Point-of-sale 

Disclosure/Confirmation 

Requirements 

Final Action Reopened 

Comment Period Re-Propose Final Action 

Regulation B Final Action No Action Taken Final Action Implement 

Net Capital Rule 

Revisions Propose No Action Taken Propose and Final Action Implement 

Nationally Recognized 

Statistical Rating 

Organization (NRSRO) 

Propose Proposed Final Action Implement 

Transfer Agent Rules Propose Final Action 

FY 2007 Request: The SEC is planning a full regulatory agenda for 2007 that includes revisions to the fund 

disclosure regime, electronic proxy statement delivery, and the implementation of rule revisions related to 

point-of-sale requirements and the net capital rule.

GPRA - 7 
Performance Measure 2 

Percentage of Responses to Exemptive, No-Action Letter, and Interpretive Requests Issued Within Six 

Months 

Description: The SEC staff responds to inquiries from individuals or companies about whether an activity 

undertaken in a specified manner would violate the securities laws. The inquiries take the form of written 

requests that the staff not recommend enforcement or other action to the Commission if the activity is 

completed as specified. The originators of “no-action” requests submit their inquiries privately, but the SEC 

publicly releases both the request and its response upon completion. The staff also responds to requests to 

interpret specific provisions of the securities rules and reviews applications for exemptions from the securities 

laws.

FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

84% 85% 89% 85% 85% 

FY 2007 Request: The SEC will continue striving to meet or exceed the goal of completing 85% of these 

requests within six months. However, the agency’s success in achieving this goal is somewhat dependent 

upon the complexity of the requests received in a given year.

Performance Measure 3 

Percentage of SRO Rule Filings Closed in Less Than 60 Days 

Description: SRO rule changes are reviewed for consistency with investor protection and market operation 

and structure rules that govern the operation of registered national securities exchanges, clearing agencies, the 

NASD, and the Municipal Securities Rulemaking Board. The figures below represent the percentage of 

proposed SRO rules changes reviewed (i.e., approved or disapproved) within 60 days from receipt of the last 

amendment filed by the SRO.

FY 2003 FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

74% 78% 75% 80% 75% 75% 

FY 2007 Request: The Division of Market Regulation anticipates responding to 75% of SRO rule filings in 

less than 60 days.

Performance Measure 4 

Global Access to U.S. Markets: Number of New Foreign Private Issuers Registering Securities with the 

SEC and the Dollar Amount of Securities Registered by Foreign Private Issuers 

Description: The number of foreign companies registering stocks in the United States and the amount of 

money they bring to the public markets can be viewed as an indicator of the integrity, liquidity, and fairness 

of the U.S. markets.

FY 

2002 

FY 

2003 

FY 

2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Companies 70 50 63 60 74 50 50 

Dollar Value (in billions) $147 $163 $146 $145 $250 $250 $250 

FY 2007 Request: Public offerings filed with the Commission are expected to total more than $2.7 trillion, 

including securities registered for sale by foreign issuers in excess of $250 billion. Approximately 50 foreign 

companies from 17 countries will enter the U.S. securities markets for the first time, and the agency 

anticipates that more than 1,200 foreign companies from over 50 countries will be filing periodic reports with 

the Commission.

GPRA - 8 
Performance Measure 5 

Milestones for International Regulatory Cooperation. 

Description: In order to sustain an effective and flexible regulatory environment in the face of increasingly 

global financial markets, the SEC works with many securities regulators and international organizations, 

including the IOSCO, to improve global transparency and disclosure, strengthen the supervision of global 

firms and markets, reinforce regulatory standards, and enhance cross-border enforcement cooperation. SEC 

staff has also engaged in bilateral regulatory dialogues with foreign regulators in order to explore common 

approaches for regulating market participants operating on a cross-border basis.

Initiative FY 2005 FY 2006 FY 2007 

Eliminating GAAP 

reconciliation requirement 

for foreign issuers using 

IFRS 

“Road map” published by 

SEC staff 

Begin reviewing the 

consistency of 

foreign private 

issuers’ 2005 IFRS 

financial statements 

and accompanying 

reconciliations 

Discuss implications of 

review with public 

constituencies; 

continue reviewing the 

faithfulness and 

consistency of foreign 

private issuers’ IFRS 

financial statements 

and accompanying 

reconciliations; identify 

changes to SEC rules 

that will be necessary 

upon elimination of 

reconciliation 

requirements 

Bilateral regulatory 

dialogues 

Launch dialogues with the 

China Securities Regulatory 

Commission and Japan’s 

Financial Services 

Authority; ongoing 

dialogues with the European 

Commission and Council of 

European Securities 

Regulations 

Ongoing Ongoing 

GPRA - 9 
Initiative FY 2005 FY 2006 FY 2007 

All IOSCO jurisdictions to 

be accepted as signatories 

or to express a commitment 

to seek legal authority to 

become signatories to the 

Multilateral Memorandum 

of Understanding on 

Enforcement Cooperation 

and Information-Sharing 

Total of 28 jurisdictions 

accepted as signatories; 

agreed on target date of 

2010 for 80 more 

jurisdictions 

Additional 

jurisdictions 

accepted, with 

progress towards goal 

of adding 80 more 

jurisdictions by 2010 

Additional jurisdictions 

accepted, with progress 

towards goal of adding 

80 more jurisdictions 

by 2010 

IOSCO initiative on 

preservation and 

repatriation of property in 

cross-border cases 

Analyze powers available to 

regulators and other 

authorities within 

jurisdictions to freeze and 

repatriate assets 

To be considered 

during 2006 IOSCO 

meetings 

To be determined 

Proposed and approved; 

advanced work in several 

areas, including: 

• Establishing a dialogue 

with regulators in 

priority jurisdictions to 

develop a mutual 

understanding of their 

willingness and ability to 

share information; 

To be determined 

upon receipt and 

analysis of 

commitments from 

priority jurisdictions 

To be determined upon 

receipt and analysis of 

commitments from 

priority jurisdictions 

• Initiating work to 

identify trends with 

regard to recent audit 

failures; 

Contribute to a report 

on trends with regard 

to recent audit 

failures 

Continue implementation of report’s 

recommendations and 

consider further work, 

as appropriate 

IOSCO action plan to 

strengthen global capital 

markets against financial 

fraud 

• Undertaking a study of 

issuer internal control 

requirements in specified 

jurisdictions; 

Contribute to a factfinding report Continue 

implementation of 

GPRA - 10 
regarding issuer 

internal control 

requirements in 

specified jurisdictions 

report’s 

recommendations and 

consider further work, 

as appropriate 

• Identifying best practices 

for improving bond 

market transparency; and

Contribute to a report 

on best practices for 

improving bond 

market transparency 

Continue implementation of report’s 

recommendations and 

consider further work, 

as appropriate 

• Reviewing the role 

played by market 

intermediaries in recent 

financial scandals. 

Complete review and, 

if necessary, 

contribute to 

developing a set of 

best practices for 

addressing conflicts 

of interest 

Continue 

implementation of a set 

of best practices for 

addressing conflicts of 

interest and consider 

further work, as 

appropriate 

FY 2007 Request: The Commission and staff are pursuing a number of far-reaching objectives with other 

regulators designed to improve investor protection and strengthen global capital markets. For fiscal year 

2005, this included developing a voluntary code of conduct for credit rating agencies; encouraging IOSCO 

members to develop mechanisms to assist foreign counterparts in freezing assets derived from illegal activity; 

and reaching an agreement that, by fiscal year 2010, all IOSCO members either will have been accepted as 

signatories to the IOSCO Multilateral Memorandum of Understanding (an international information-sharing 

arrangement for enforcement matters) or will have expressed a commitment to seek legal authority to become 

signatories. Continued progress is expected to be made in fiscal years 2006 and 2007 by the 80 IOSCO 

members that agreed to complete this process by fiscal year 2010.

GPRA - 11 
Goal Three: Foster Informed Investment Decision Making 

Performance Measure 1 

Percentage of Reporting Corporations and Investment Companies with Disclosures Reviewed by the 

SEC 

Description: The Sarbanes-Oxley Act requires that the SEC review the disclosures of all reporting 

companies and investment company portfolios at least once every three years. These reviews help improve 

the information available to investors and can uncover serious violations of the securities laws.

FY 2003 FY 2004

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Corporations 23% 22% 36% 50% 47% 44% 

Investment Company 

Portfolios 10% 54% 45% 37% 33% 33% 

FY 2007 Request: The Division of Corporation Finance will review 44% of total reporting issuers during 

the year, although an estimated one-quarter of those issuers already will have been reviewed in fiscal 2005 or 

2006. The 44% reporting company review level will deter fraud in public securities transactions, will help 

ensure that investors receive material information about emerging and novel issues, and will satisfy the 

review requirements of the Sarbanes-Oxley Act. Also, the Division of Investment Management anticipates 

that it will successfully comply with the Sarbanes-Oxley Act, by reviewing one-third of investment company 

portfolios in FY 2007.

Performance Measure 2 

Percentage of Investment Adviser and Investment Company Transactional Reviews Completed Within 

Timeliness Goals 

Description: For initial registration statements, the SEC’s goal is to comment within 30 days after they are 

filed (60 days for registration statements of insurance product separate accounts). The SEC also aims to 

comment on post-effective amendments within 45 days and preliminary proxy statements within 10 days after 

they are filed.

FY 2003 FY 2004

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Initial Registration 

Statements 81% 88% 85% 90% 85% 85% 

Post-Effective 

Amendments 86% 98% 90% 97% 90% 90% 

Preliminary Proxy 

Statements 100% 100% 99% 100% 99% 99% 

FY 2007 Request: As a benchmark, the staff aims under normal circumstances to provide comments within 

timeliness goals for at least 85% of registration statements, 90% of post-effective amendments, and 99% of 

preliminary proxy statements.

GPRA - 12 
Performance Measure 3 

Average Time to Issue Initial Comments on Securities Act Filings. 

Description: The target of 30 days has become a de facto industry standard for the maximum time to receive 

SEC comments. Companies often build this timeframe into their plans. The 30-day timeframe is considered 

aggressive given the other mandatory reviews the agency conducts and the fluctuation in filing volume that 

impacts workload plans.

FY 2003 FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

27.7 days 27.8 days <30 days 26.1 days <30 days <30 days 

FY 2007 Request: The Division of Corporation Finance will continue to issue initial comments on 1933 and 

1934 Act registration statements and transactional filings within 30 days of filing. The Division also will 

continue to monitor the average time from when it receives responses to its initial comments on annual 

reports, registration statements, and other transactional filings until final resolution, and the staff will work to 

decrease the amount of time attributable to staff review.

Performance Measure 4 

Annual Number of On-Line Searches for EDGAR Filings 

Description: Greater availability of market-sensitive information through the SEC’s EDGAR system 

provides investors with the ability to make better-informed investment decisions. This measure gauges the 

demand for EDGAR data through the SEC’s website (in millions).

FY 2002 FY 2003 FY 2004 FY 2005 Plan

FY 2005 

Actual FY 2006 FY 2007 

96.9 141.5 288.9 425 379 480 600 

FY 2007 Request: The SEC anticipates that demand for the disclosure data from EDGAR will continue to 

increase as EDGAR ticker and full-text search capabilities and the agency’s initiative on interactive data are 

implemented.

GPRA - 13 
Performance Measure 5 

Percentage of Forms and Submissions Filed Electronically and in a Structured Format 

Description: The SEC is continuing to emphasize electronic filing to make information available to the 

public in a format that can be easily obtained and analyzed. The SEC currently has over 100 forms that must 

be filed with the agency, which annually generate hundreds of thousands of filings with the agency. This 

measure identifies the percentage of forms that are in electronic format and the percentage of resulting filings 

that are received electronically by the SEC. In addition, the agency is redesigning its form filing capabilities 

to rely on more structured formats (e.g., information is captured in a comma delimited, XML, XBRL, or other 

format). This measure also gauges the percentage of forms that are available to be filed in a structured format 

and the percentage of resulting filings that are received in the structured format. 

FY 

2003 

FY 

2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Electronic Filings 

Percentage of forms in 

electronic format 71.8% 71.8% 71.8% 71.8% 73% 74% 

Percentage of filings 

received electronically 76.3% 88.1% 88.6% 88.6% 90% 90% 

Structured Filings 

Percentage of forms in 

structured format 3.9% 3.9% 5.3% 5.4% 7% 8% 

Percentage of filings 

received in structured 

format 

20.8% 35.6% 34.2% 35.0% 36% 37% 

FY 2007 Request: The percentage of forms and submissions filed electronically and in a structured format 

will continue to increase with the introduction of “interactive data” into EDGAR.

GPRA - 14 
Performance Measure 6 

Number and Percentage of Investor Complaints, Questions, and Requests Completed by the Office of 

Investor Education (OIEA) Within Seven Calendar Days 

Description: OIEA serves the tens of thousands of investors who contact the SEC each year with 

investment-related complaints and questions. A substantial portion of the complaints received require input 

from the entities involved and cannot be resolved in less than 30 to 60 days. Nevertheless, the staff aims to 

close out as many new matters as possible within seven calendar days.

FY 2002 FY 2003 FY 2004

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Contacts Received 82,337 70,574 73,481 72,000 76,221 76,000 76,000 

Unique Files 

Opened 81,748 71,373 73,415 72,000 71,737 71,000 71,000 

Unique Files 

Closed n/a n/a n/a n/a 71,879 71,000 71,000 

Closed within 

seven calendar days 64,818 58,133 60,688 60,000 58,443 58,000 59,000 

Percentage 79% 81% 83% 83% 81% 82% 83% 

FY 2007 Request: During FY 2005, OIEA began to transition to a new correspondence management system 

that no longer records each investor contact as a unique file. As a result, the number of new unique files fell 

despite a 1% increase in the volume of investor contacts. The SEC anticipates that the number of new matters 

created each year will increase slightly in FY 2006 and FY 2007, and that proposed enhancements to the new 

system will increase staff efficiency.

Performance Measure 7 

OIEA Publications Distributed by the GSA 

Description: OIEA has developed an extensive collection of free information to help investors understand 

the basics of investing, the risks and rewards of various products and strategies, the importance of 

diversification, how to check out brokers and advisers, and where to find information about companies. In 

addition to posting these materials on the SEC’s website, OIEA publishes a dozen hard-copy educational 

brochures. The General Services Administration’s Federal Consumer Information Center (FCIC) serves as 

one of the most important distribution channels for the SEC’s most popular English and Spanish publications. 

FY 2002 FY 2003 FY 2004 FY 2005 Plan

FY 2005 

Actual FY 2006 FY 2007 

81,917 89,095 300,530 250,000 476,095 325,000 350,000 

FY 2007 Request: OIEA will continue to see increased demand for the SEC’s educational materials and will 

work closely with GSA’s FCIC to distribute these materials to targeted audiences at lower costs. The agency 

aims to continue increasing its distribution volumes in the coming years and has revised its FY 2006 and FY 

2007 estimates accordingly.

GPRA - 15 
Goal Four: Maximize Use of SEC Resources 

Performance Measure 1 

Staff Turnover Rate 

Description: This measure is determined by dividing the number of employees that leave the agency during 

the fiscal year by the total number of permanent and term employees on board at the beginning of the year.

FY 2002 FY 2003 FY 2004 FY 2005 Plan FY 2005 FY 2006 FY 2007 

5.8% 5.9% 6.3% <7% 7.5% 8% <7% 

FY 2007 Request: The SEC will continue striving to keep its turnover rate at or below 7%, despite the 

expected increase in turnover in fiscal years 2005 and 2006. The higher rates in these two years are due in 

part to a high number of retirements. The SEC is monitoring this increase very closely and will evaluate 

whether additional steps must be taken to keep turnover rates in check.

Performance Measure 2 

Milestones Achieved on Major Human Capital Initiatives 

Description: The SEC implemented eight human capital initiatives related to training, recruitment, retention, 

and work-life programs.

FY 2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

SEC University Implemented Expand Expanded Evaluate and 

Expand Expand 

New Employee 

Orientation Implemented Evaluate Evaluated and Expanded Revise Evaluate and Revise 

Expanded Management 

Training Implemented Evaluate Evaluated and Expanded 

Evaluate and 

Expand 

Evaluate and 

Expand 

AVUE Digital Services Implemented Evaluate Evaluated Evaluate Evaluate 

New Recruitment Program 

(Nationwide Recruitment 

with Executive Recruiting 

Firms) 

Implemented Evaluate Implemented Evaluate and 

Revise Implement 

Pay and Benefit Revisions 

(e.g., Vision and Dental 

Coverage) 

Implemented Evaluate Evaluated Expand Evaluate 

Negotiate a New 

Collective Bargaining 

Agreement 

Negotiate and 

Implement 

Implement & 

Evaluate 

Pay for Performance and 

Performance Improvement 

Planning 

Implemented Evaluate Evaluated and 

Expanded 

Evaluate, 

Revise, and 

Expand 

Expand and 

Evaluate 

Enterprise Telework 

Program Implemented Evaluate Evaluated Expand Evaluate 

FY 2007 Request: The Commission will continue to evaluate and expand its human capital initiatives in 

fiscal year 2007, building on performance and evaluation results from fiscal years 2005 and 2006 to refine the 

programs and services as needed.

GPRA - 16 
Performance Measure 3 

Percentage of IT Projects That Adhere to the SEC’s Capital Planning and Investment Committee 

(CPIC) Process 

Description: The SEC has information technology capital planning committees designed to ensure that IT 

projects are appropriately evaluated and considered. A corresponding CPIC process is being refined to ensure 

that IT projects are effectively managed, completed on time, and within budget. This measure identifies the 

percentage of IT projects that adhere to the agency’s CPIC process.

FY 2004 FY 2005 Plan FY 2005 Actual FY 2006 FY 2007 

100% 100% 90% 100% 100% 

FY 2007 Request: All IT projects will continue to conform to the agency’s required CPIC process.

Performance Measure 4 

Milestones achieved on major IT projects. 

Description: The SEC is focusing its IT investments in five primary areas to enhance program effectiveness 

and operational efficiencies. A variety of projects are being planned or implemented in these areas that range 

in complexity and duration (e.g., some may be completed in a single fiscal year while others span multiple 

fiscal years). This measure identifies the range of initiatives and the project’s major milestones.

FY 2005 Plan

FY 2005 

Actual FY 2006 FY 2007 

EDGAR/Disclosure 

Modify EDGAR to accommodate 

interactive data in XBRL format for 

financial reports 

Initiate Initiated Implement Complete 

Transition EDGAR system management to 

new contract Initiate Initiated Complete 

Enhance SEC.gov to improve EDGAR data 

searches and accessibility for investors Initiate Initiated Implement Complete 

Enforcement/Examination Activities 

Image backlog of paper-based discovery 

documents Complete In Progress Complete 

Provide fully automated processing of 

options trade records in support of 

enforcement investigations 

Initiate In Progress Complete 

Redesign the enforcement case management 

system to improve management of fines and 

disgorgements 

Initiate Initiated Implement Implement 

Upgrade analytical tools available to 

examiners Initiate Initiated Implement Complete 

Internal Productivity 

Implement new systems to support 

expansion of telework Initiate In Progress Complete 

GPRA - 17 
Upgrade telecommunications systems in 

Washington metro area Complete Completed Implement (In Phases) Complete 

Security/Disaster Recovery 

Migrate to alternate data center Complete Completed 

Certify and accredit major systems for 

information security risk Initiate In Progress Complete 

Institute awareness training and incident 

response programs Implement Completed 

Implement Homeland Security Presidential 

Directive 12 for personnel identity 

verification and access control 

Initiate Initiated Implement Implement 

E-Gov/Enterprise Architecture and 

Capital Planning Investment Control 

(CPIC) 

Redesign organizational structure of IT 

function Complete Completed 

Redesign capital planning and project 

management processes Implement In Progress Complete 

Institute enterprise architecture (EA) 

program Implement In Progress Initiate Complete 

Implement new procurement and 

budgeting/performance management 

systems 

Initiate Initiated 

Participate in cross-agency E-Travel project Initiate Initiated Complete 

FY 2007 Request: The SEC expects to make progress in all five areas to enhance program effectiveness and 

operational efficiencies.

Performance Measure 5 

Receive an Unqualified Audit Opinion on the SEC’s Audited Financial Statements With No Material 

Weaknesses Noted in Internal Controls over Financial Reporting 

Description: Under the Accountability of Taxpayer Dollars Act of 2002, the Commission is required to meet 

all proprietary accounting guidelines for federal agencies and to undergo annual audits. The SEC completed its 

first two audits in 2004 and 2005, conducted by the U.S. Government Accountability Office (GAO).

FY 2004 

FY 2005 

Plan 

FY 2005 

Actual FY 2006 FY 2007 

Unqualified Opinion Yes Yes Yes Yes Yes 

Material Weaknesses 3 3 4 0 0 

FY 2007 Request: In both the 2004 and 2005 audits, GAO gave the SEC unqualified opinions on its financial 

statements, but found three material weaknesses in its internal controls related to financial reporting, 

disgorgements and penalties, and information technology security. The SEC is working aggressively to resolve 

these three material weaknesses by the end of fiscal 2006. In addition, in 2005 the SEC reported a weakness in 

controls over budget planning. This weakness will be fully resolved in fiscal 2006.

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Other Indicators Related to SEC Activities 

Indicator 1 

Number and Percentage of Examinations Finding “Significant” Deficiencies 

Description: Examiners find a wide range of deficiencies during examinations. Some of these deficiencies 

are more technical in nature, such as failing to include all information that is required to be in a record. Other 

deficiencies may have caused harm to customers or clients of a firm, had a high potential to cause harm, or 

reflect recidivist misconduct. These latter deficiencies are among those categorized as “significant.” This 

measure was first implemented in FY 2005 and data is not available for prior years. The staff expects to 

continue to refine the factors that are used to measure the significance of examination findings.

FY 2005 

Fund/Adviser Exams 

 Number 769 

 Percent 37% 

Broker/Dealer Exams 

 Number 351 

 Percent 47% 

Discussion: Because this indicator is new, the fiscal year 2005 results cannot be compared with recent trends. 

However, based on anecdotal evidence, it appears that the fiscal year 2005 levels are considerably higher than 

those of a few years ago.

Indicator 2 

Referrals to the Division of Enforcement From the Office of Compliance Inspections and Examinations 

or the Division of Corporation Finance 

Description: The SEC’s Division of Enforcement receives referrals from a variety of sources. For example, 

the examination staff and the Division of Corporation Finance’s disclosure review program strive to uncover 

serious potential violations of the federal securities laws, among other objectives. When possible violations 

are found, they are referred to the Division of Enforcement for further investigation. This indicator measures 

the number of enforcement referrals from the examination staff and the Division of Corporation Finance 

within each fiscal year.

FY 2003 FY 2004 FY 2005 

Examination Staff 171 482 399 

Corporation Finance 231 415 640 

Discussion: Referrals to the Division of Enforcement remained at high levels relative to the pattern before 

2003. This continuing trend is due mainly to the examination staff’s continuing efforts to focus on the most 

salient risks to investors and to the Division of Corporation Finance’s ongoing initiative to identify delinquent 

filers. Results are not projected for this indicator.

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Indicator 3 

Monetary Disgorgement and Penalties Ordered and the Amounts and Percentage Collected by the SEC

Description: In addition to other types of relief, the Commission may seek orders requiring parties to 

disgorge any money obtained through wrongdoing. The Commission also is empowered to seek civil 

penalties for violations of the securities laws. Where appropriate, the Commission has sought to return 

disgorged funds to harmed investors and, as a result of the “fair funds” provision of the Sarbanes-Oxley Act, 

to use amounts paid as penalties to reduce losses to injured parties. Funds not returned to investors are sent to 

the U.S. Treasury; neither disgorgement nor penalties go to the SEC. This chart lists disgorgement and 

penalties ordered as a result of SEC cases and the amounts collected by the agency.

FY 2003 FY 2004 FY 2005 

Ordered $313 million $1.3 billion $3.1 billion 

Collected $141 million $924 million $2.3 billion 

Percentage 45% 71% 72% 

Discussion: The amount of disgorgements and fines may vary widely year to year, and collection success 

rates depend on numerous variables, including the financial status and size of the parties sued.

Indicator 4 (New Indicator) 

Assets Frozen Abroad as a Result of SEC Coordination with Foreign Regulators 

Description: In order to effectively enforce compliance with federal securities laws and in support of 

enforcement cases filed domestically, the SEC works closely with foreign regulators, law enforcement 

agencies, and courts to locate ill-gotten proceeds that have been transferred overseas and freeze the accounts 

in which they are located. Violators are detected and their assets are seized so that they cannot benefit from 

this activity.

FY 2005 

Assets Frozen Abroad $15.3 million 

Discussion: The SEC cannot identify a trend for this indicator because only one year of data is currently 

available.

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Indicator 5 

Percentage of Households Owning Mutual Funds 

Description: Near record numbers of Americans continue to invest in the U.S. securities markets through the 

purchase and sale of stocks, bonds, and mutual funds. In particular, the number and percentage of U.S. 

households that own mutual funds grew dramatically during the 1990s as stock and bond mutual funds 

became a key repository for U.S. savings dollars. These data are derived from a survey of approximately 

three thousand households conducted by the Investment Company Institute. Results have a standard error of 

+/- 1.8% at the 95% confidence level. The sample is weighted to match the age distribution of the U.S. 

population. The number of U.S. households is based on the most recent estimate by the U.S. Bureau of the 

Census.

FY 2002 FY 2003 FY 2004 FY 2005 

49.6% 47.9% 48.1% 47.5% 

Discussion: The proportion of households owning mutual funds held steady in fiscal year 2005, relative to 

the previous two years.

Indicator 6 

Number of Corporate Disclosure Filings “Significantly” Improved By Staff Comments, and Number of 

“Significant” Actions Taken By Disclosure Review Staff to Protect Investment Company Shareholders 

Description: For corporate filings, comments are issued to elicit better compliance with applicable 

disclosure requirements and improve the information available to investors. In many instances, amendments 

involve financial restatements. The determination of “significance” stems from the nature of the change (e.g., 

restating positive income as a loss) or the size of the company. With respect to investment company filings, 

the staff takes actions to elicit better compliance with applicable disclosure requirements, improve the 

information available to investors, and ensure that fund investment, marketing, and operational activities as 

described in disclosure documents are conducted in accordance with federal law.

FY 2005 

Corporate Filings 

Investment Company Filings 

Data not available 

Discussion: The Divisions of Corporation Finance and Investment Management continued to work toward 

establishing a means for accurately tracking data on comments that result in significant enhancements in 

financial and other disclosures or other significant actions to protect shareholders. The divisions will provide 

data for this measure once such tracking methods are in place.

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