AGENCY

FINANCIAL

REPORT

FISCAL YEAR 2023
Certificate of Excellence in 

Accountability Reporting

The U.S. Securities and Exchange Commission’s 

(SEC) fiscal year (FY) 2022 Agency Financial 

Report (AFR) received the Certificate of 

Excellence in Accountability Reporting from the 

AGA for the 17th consecutive year. This award 

is presented to federal government agencies 

whose annual reports achieve the highest 

standards in demonstrating accountability 

and communicating results.

Certificate of Excellence in

Accountability Reporting®

in recognition of outstanding effort in preparing the 

Agency Financial Report for fiscal year 2022

presented to the

Ann M. Ebberts, MS, PMP

Chief Executive Officer, AGA

Andrew Lewis, CGFM, CPA

Chair, CEAR Board

U.S. Securities and 

Exchange Commission
 i

OUR MISSION

To protect investors, 

maintain fair, orderly, 

and efficient markets, 

and facilitate capital 

formation.

MESSAGE FROM 

THE CHAIR

It is a privilege to work with the remarkable staff of the U.S. Securities 

and Exchange Commission (SEC) executing our three-part mission to 

protect investors, maintain fair, orderly, and efficient markets, and facilitate 

capital formation.

For 90 years, the federal securities laws and our work to oversee them have 

played a crucial role for the public both in good times and in times of stress. 

The core principles of U.S. securities markets regulation have contributed to 

America’s economic success and geopolitical standing.

At this remarkable agency, we serve investors building for a better future and 

issuers raising money to fund innovation, while overseeing the $110 trillion 

capital markets where they meet. The essence of this is captured in our work 

on behalf of investors, issuers, and the markets connecting them.

The SEC is the cop on the beat watching out for the investing and issuing 

public. The dedicated staff of this agency does extraordinary work with limited 

resources. In the face of significant growth in registrants, more involvement 

in our markets from individual investors, and increased complexity, the SEC’s 

headcount actually shrank from FY 2016 through FY 2022. In FY 2023, we 

were approximately three percent larger than we were in FY 2016.

America is blessed with the largest, most sophisticated, and most innovative 

capital markets in the world. But we cannot take this for granted. Even a gold 

medalist must keep training.

That’s why we’re updating our rules for the technology and business models 

of the 2020s. We’re updating our rules to promote the efficiency, integrity, 

and resiliency of the markets. We do so with an eye toward investors and 

issuers alike, to ensure the markets work for them and not the other way 

around. Further, we do so to help ensure the capital markets are worthy of 

the public’s trust.
ii 

In the FY 2023 Agency Financial Report (AFR), you 

will learn more about these efforts—and the remarkable 

SEC staff who carry them out. 

Our annual AFR also includes the results of an 

independent audit of our FY 2023 financial statements. 

The financial and performance data in this report are 

complete and accurate under the Office of Management 

and Budget guidance.

I think readers will continue to find that the SEC does a 

lot with limited resources. Our responsibility is vast. In 

addition to overseeing approximately 40,000 entities—

including more than 17,000 registered funds, 15,000 

investment advisers, 24 national securities exchanges, 

99 alternative trading systems, 50 securities-based swap 

dealers, 3,500 broker-dealers, and seven active registered 

clearing agencies—the SEC also oversees credit rating 

agencies, the Public Company Accounting Oversight 

Board, the Financial Industry Regulatory Authority, the 

Municipal Securities Rulemaking Board, the Securities 

Investor Protection Corporation, and the Financial 

Accounting Standards Board. We also review the 

disclosures and financial statements of more than 

7,800 reporting companies.

I am grateful to work alongside the more than 4,600 

remarkable people at the SEC to promote the efficiency, 

integrity, and resiliency of the markets. On behalf of the 

Commission, I am honored to present this report.

GARY GENSLER

Chair

November 9, 2023 
CONTENTS

Introduction...........................................................................................................................................................................................1

Management’s Discussion and Analysis......................................................................................................................................3

Our Mission, Our Vision, Our Values.................................................................................................................................. 4

Strategic Goals and Strategic Initiatives ..........................................................................................................................5

History and Purpose................................................................................................................................................................ 6

Organizational Structure and Resources ........................................................................................................................7

Our Year in Review and the Year Ahead ........................................................................................................................13

Financial Highlights ............................................................................................................................................................... 27

Performance Highlights .......................................................................................................................................................35

Management Assurances and Compliance with Laws.............................................................................................43

Annual Assurance Statement..................................................................................................................................................44

Management’s Assessment of Internal Control .............................................................................................................. 45

Enterprise Risk Management ................................................................................................................................................. 50

Other Reviews ............................................................................................................................................................................... 50

Financial Management System Conformance ...................................................................................................................51

Federal Information Security Modernization Act (FISMA) ..........................................................................................52

Financial Section..............................................................................................................................................................................55

Message from the Chief Financial Officer..................................................................................................................... 57

Report of Independent Auditors......................................................................................................................................58

Enclosure I: Management’s Response to Audit Opinion .........................................................................................66

SEC Financial Statements ...................................................................................................................................................67

Notes to the Financial Statements .................................................................................................................................. 73

Investor Protection Fund Financial Statements .........................................................................................................116

Notes to the Investor Protection Fund Financial Statements...............................................................................118

Other Information...........................................................................................................................................................................129

Inspector General’s Statement on Management and Performance Challenges...........................................130

Management’s Response to Inspector General’s Statement ................................................................................156

Summary of Financial Statement Audit and Management Assurances............................................................161

Payment Integrity Reporting Details .............................................................................................................................162

Civil Monetary Penalty Adjustment for Inflation...................................................................................................... 164

Appendices.......................................................................................................................................................................................165

Appendix A: Chair and Commissioner Biographies.................................................................................................167

Appendix B: Divisions and Offices..................................................................................................................................172

Appendix C: Glossary of Selected Terms ....................................................................................................................174

Appendix D: Acronyms and Abbreviations ...............................................................................................................190
At the SEC, we work together 

to make a positive impact on 

the U.S. economy, our capital 

markets, and people’s lives.

Our mission requires tireless 

commitment and unique expertise 

from our staff of dedicated 

public servants who care deeply 

about protecting the investing 

public and others who rely on 

our markets to secure their 

financial futures.

SEC.GOV/ABOUT/MISSION

“

“
INTRODUCTION | 1

Management’s Discussion and Analysis

Provides a high-level overview of the SEC—its 

history, mission, and organizational structure—and 

the agency’s FY 2023 overall performance as related 

to its strategic goals and initiatives. This section also 

includes management’s assurances on internal controls; 

an analysis of the SEC’s financial position and operations; and the agency’s FY 2024 outlook. 

Financial Section

Contains audited financial statements and accompanying notes for the SEC and the SEC's Investor Protection 

Fund, required supplementary information, independent 

auditor’s report on these statements, and management’s 

response to that report. 

INTRODUCTION

Other Information

Details the agency’s compliance with, and commitment 

to, specific regulations. Included in this section are 

performance and management challenges identified by 

the Office of Inspector General, and the SEC’s response 

to that information in accordance with the Reports 

Consolidation Act of 2000; a detailed explanation of 

any significant erroneous payments and overpayments 

recaptured as required by the Payment Integrity 

Information Act of 2019; and recent inflationary adjustments made to civil monetary penalties in accordance 

with the Federal Civil Penalties Inflation Adjustment 

Act of 1990, as amended.

Appendices

Offers additional resources related to the agency and this 

report: a glossary of selected terms, frequently 

used acronyms and abbreviations, biographies, and 

contact information. 

The SEC’s FY 2023 AFR provides detailed financial and performance information that enables the 

President, Congress, and the public to assess the agency’s accomplishments and understand its 

financial and operational picture. In lieu of a combined Performance and Accountability Report, the 

SEC will also publish an Annual Performance Report (APR) to provide a more in-depth review of 

strategic goals and performance results. The APR will be included in the FY 2025 Congressional 

Budget Justification Report available in 2024. 

The FY 2023 AFR satisfies the requirements contained in the Office of Management and Budget 

(OMB) Circular A-136, Financial Reporting Requirements, and contains three main sections and 

supplemental appendices.

Electronic copies of this AFR and prior year budget 

reports are available at SEC.gov/reports.
se·cu·ri·ties

si-'kyu'r-ə-tēz

Fungible and tradable financial instruments 

used to raise capital in public and private 

markets. There are primarily three types of 

securities: equity—which provides ownership 

rights to holders; debt—essentially loans repaid 

with periodic payments; and hybrids—which 

combine aspects of debt and equity.

ex·​chang·​es

iks-'chānj-ēz

A place (physical or virtual) where 

securities traders come together to decide 

on the price of securities.

se·cu·ri·ties ex•change act of 1934

si-'kyu'r-ə-tēz iks-'chānj 'akt

A law governing the secondary trading of 

securities (stocks, bonds, and debentures) 

in the United States. It was this piece of 

legislation that established the SEC.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 3

MANAGEMENT’S 

DISCUSSION AND 

ANALYSIS

Mission, Vision, Values, and Goals

Explains the SEC’s mission, vision, values, and 

three strategic goals, as set forth in the agency’s 

Strategic Plan.

History and Purpose

Provides background on the SEC and its responsibility 

to oversee the nation’s securities markets and certain 

primary participants. 

Organizational Structure and Resources 

Lists the SEC’s office locations, organizational 

structure, and employment statistics, and summarizes 

the 10 major programs by responsible divisions 

and offices.

Our Year in Review and the Year Ahead

Summarizes efforts made by the SEC in pursuit 

of its strategic goals in FY 2023, and details specific 

areas that the SEC will continue to focus on as part of 

its regulatory and oversight responsibilities. 

This section provides a high-level overview of the agency, its FY 2023 program and financial 

performance, and its FY 2024 outlook.

Financial Highlights

Provides an overview of the SEC’s financial information, 

including an analysis of the financial data presented in 

the audited financial statements, the limitations of the 

financial statements, and the sources and uses of the 

SEC’s funds.

Performance Highlights

Discusses the SEC’s strategic and performance planning 

framework; the process used to verify and validate the 

performance results; the FY 2023 performance results by 

strategic goal; and key performance accomplishments.

Management Assurances and 

Compliance with Other Laws

Provides management’s assessment and assurances on 

the SEC’s internal controls under the Federal Managers’ 

Financial Integrity Act of 1982, and on the compliance 

of the SEC’s financial systems with federal requirements 

under the Federal Financial Management Improvement 

Act of 1996. It also addresses the SEC’s compliance with 

the Federal Information Security Modernization Act of 

2014 and other laws and regulations. 
Our Mission 

To protect investors, maintain fair, orderly, and 

efficient markets, and facilitate capital formation.

Our Vision 

To promote capital markets that inspire public 

confidence and provide a diverse array of financial opportunities to retail and institutional 

investors, entrepreneurs, public companies 

and other market participants.

Our Values

INTEGRITY

We inspire public confidence and trust by 

adhering to the highest ethical standards.

EXCELLENCE

We are committed to excellence in pursuit of 

our mission on behalf of the American public.

ACCOUNTABILITY

We embrace our responsibilities and hold ourselves 

accountable to the American public.

TEAMWORK

We recognize that success depends on a skilled, 

diverse, coordinated team committed to the 

highest standards of trust, hard work, cooperation, and communication.

FAIRNESS

We treat investors, market participants, and others 

fairly and in accordance with the law.

EFFECTIVENESS

We strive for innovative, flexible, and pragmatic 

regulatory approaches that achieve our goals 

and recognize the ever-changing nature of our 

capital markets. 

THE CORE PRINCIPLES THE AGENCY has 

applied since its establishment are timeless: 

• Requiring issuers raising capital to make full and 

fair disclosures to investors on a regular basis; 

• Placing heightened responsibilities on key 

market participants; and

• Using SEC examination and enforcement 

resources to bolster those requirements 

and protect investors. 

 The SEC’s Long-Standing Three-Part 

Mission RemainsitsTouchstone
MANAGEMENT’S DISCUSSION AND ANALYSIS | 5

STRATEGIC GOAL 3 

Support a skilled workforce that 

is diverse, equitable, and inclusive 

and is fully equipped to advance 

agency objectives

Strategic Initiative 3.1: Focus on the workforce to 

increase capabilities, leverage shared commitment to 

investors, and promote diversity, equity, inclusion, 

accessibility, and equality of opportunity.

Strategic Initiative 3.2: Promote collaboration within 

and across SEC offices, including through rotation and 

detail programs, and maximize telework opportunities.

Strategic Initiative 3.3: Enhance the agency’s internal 

control and risk management capabilities, including 

by the development of a robust and resilient program 

for dealing with threats to the security, integrity, and 

availability of the SEC’s systems and sensitive data.

Strategic Initiative 3.4: Modernize the SEC’s technology 

to enable the mission in a cost-effective, secure, and 

resilient manner.

STRATEGIC GOAL 1 

Protect the investing public

against fraud, manipulation, 

and misconduct

Strategic Initiative 1.1: Pursue enforcement and examination initiatives focused on identifying and addressing 

risks and misconduct that affects individual investors.

Strategic Initiative 1.2: Enhance the use of market 

and industry data, particularly to prevent, detect, 

and enforce against improper behavior.

Strategic Initiative 1.3: Modernize design, delivery, 

and content of disclosures so investors, including 

in particular retail investors, can access consistent, 

comparable, and material information to make 

informed investment decisions.

STRATEGIC GOAL 2

Develop and implement a robust 

regulatory framework that keeps 

pace with evolving markets, 

business models, and technologies

Strategic Initiative 2.1: Update existing SEC rules and 

approaches to reflect evolving technologies, business 

models, and capital markets.

Strategic Initiative 2.2: Examine strategies to address 

systemic and infrastructure risks faced by our capital 

markets and our market participants.

Strategic Initiative 2.3: Recognize significant developments and trends in our evolving capital markets and 

adjust our activities accordingly.

Strategic Goals and Strategic Initiatives
6 | 2023 SEC AGENCY FINANCIAL REPORT

1 More information about the Securities Act of 1933 can be found at SEC.gov/about/about-securities-laws#secact1933.

2 More information about the Securities Exchange Act of 1934 can be found at SEC.gov/about/about-securities-laws#secexact1934. 

3 More information about the Dodd-Frank Act can be found at SEC.gov/about/about-securities-laws#df2010.

History and Purpose

Prior to the Great Crash of 1929, there was little 

support for federal regulation of the securities markets. 

This was particularly obvious during the post-World 

War I surge of securities activity. Proposals that 

the federal government require financial disclosure 

and prevent the fraudulent sale of stock were never 

seriously pursued.

Tempted by promises of “rags to riches” transformations and easy credit, most investors gave little thought 

to the systemic risk that arose from widespread abuse 

of margin financing and unreliable information about 

the securities in which they were investing. During the 

1920s, approximately 20 million shareholders took 

advantage of post-war prosperity and set out to make 

their fortunes in the stock market. It is estimated that 

one-half of the $50 billion in new securities offered 

during this period became worthless.

When the stock market crashed in October 1929, public 

confidence in the markets plummeted. Investors and 

banks lost great sums of money in the ensuing Great 

Depression, and restoring faith in the capital markets 

was essential to economic recovery. Congress held 

hearings to identify problems and search for solutions.

Based on those hearings, Congress passed the Securities 

Act of 19331 (Securities Act)—the first federal law to 

regulate the issuance of securities—followed by the 

Securities Exchange Act of 19342 (Exchange Act). 

The SEC was established to regulate and enforce 

this legislation. 

These laws aim to provide investors and the markets 

with reliable information, clear rules for honest dealing, 

and specifically ensure the following:

• A company that publicly offers securities for investment dollars is forthcoming and transparent about 

its business, the securities it is selling, and the risks 

involved with investing; and

• A person who sells and trades securities does so in 

a fair and honest manner.

The SEC is responsible for overseeing the nation’s 

securities markets and certain primary participants, 

including broker-dealers, investment companies, 

investment advisers, clearing agencies, transfer agents, 

credit rating agencies, and securities exchanges, as 

well as organizations such as the Financial Industry 

Regulatory Authority, Municipal Securities Rulemaking 

Board, and the Public Company Accounting Oversight 

Board. In addition, the SEC is responsible for reviewing 

the disclosures and financial statements of all public 

companies in the United States. Under the Dodd-Frank 

Wall Street Reform and Consumer Protection Act of 

20103 (Dodd-Frank Act), the agency’s jurisdiction 

was expanded to include certain participants in 

the derivatives markets, private fund advisers, and 

municipal advisors. 

Each year, the SEC brings hundreds of civil enforcement 

actions against individuals and companies for violation 

of securities laws. Examples of infractions are insider 

trading, accounting fraud, market manipulation, and 

providing false or misleading information about securities and/or the issuing companies. 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 7

Commissioner Commissioner Chair Commissioner Commissioner

Office of the Chair

Divisions

Corporation

Finance

Economic and

Risk Analysis Enforcement Examinations InvestmentManagement

Trading and

Markets

Inspector

General

Offices

Advocate for

Small Business

Capital

Formation

Chief

Accountant

Chief Operating

Officer

Credit

Ratings

Equal

Employment

Opportunity

Ethics

Counsel

General

Counsel

International

Affairs

Investor

Education and

Advocacy

Legislative and

Intergovernmental

Affairs

Minority and

Women

Inclusion

Municipal

Securities

Public

Affairs Secretary

Acquisitions EDGAR

Business Office

Financial

Management

Human

Resources

Information

Technology

Support

Operations

Regional Offices

Atlanta

Regional Office

Boston

Regional Office

Chicago

Regional Office

Denver

Regional Office

Fort Worth

Regional Office

Los Angeles

Regional Office

Miami

Regional Office

New York

Regional Office

Philadelphia

Regional Office

Salt Lake

Regional Office

San Francisco

Regional Office

Administrative

Law Judges

Investor

Advocate

Strategic Hub

for Innovation

and Financial 

Technology

Report directly to the Commission Independent office Report directly to the Chair

The SEC is an independent federal agency led by a 

bipartisan, five-member Commission—one of whom is 

designated as the Chair—with staggered five-year terms.

Each member of the Commission is appointed by 

the President and confirmed by the Senate (see 

Appendix A: Chair and Commissioner Biographies).

The Chair serves as the chief executive and, by law, no 

more than three of the Commissioners may belong to the 

same political party. 

The Commission convenes on a regular basis, and 

meetings are open to the public and the news media unless 

the discussion pertains to a confidential subject, such as a 

recommendation regarding an enforcement investigation.

Organizational Structure and Resources 

The agency’s functional responsibilities are organized into 6 divisions, 25 offices, and 11 regional offices. 

In FY 2023, the SEC employed 4,606 permanent full-time equivalents.

The following chart is accurate as of September 30, 2023.

Chart 1.1 | Organization Chart
8 | 2023 SEC AGENCY FINANCIAL REPORT

Los Angeles 

Regional Office

Southern California,* Arizona, 

Guam, Hawaii, Nevada

SEC Headquarters San Francisco 

Regional Office

Northern California,* 

Alaska, Idaho, Montana, 

Oregon, Washington 

Salt Lake 

Regional Office

Utah

Denver 

Regional Office

Colorado, Kansas 

(Exam Program), 

Nebraska, New Mexico, 

North Dakota, South 

Dakota, Wyoming

Fort Worth 

Regional Office

Texas, Arkansas, 

Kansas, Oklahoma

Chicago 

Regional Office

Illinois, Indiana, Iowa, 

Kentucky, Michigan, 

Minnesota, Missouri, 

Ohio, Wisconsin

Boston Regional Office

Massachusetts, Connecticut, 

Maine, New Hampshire, 

Rhode Island, Vermont 

Atlanta Regional Office

Georgia, Alabama, North Carolina, 

South Carolina, Tennessee

Miami Regional Office

Florida, Louisiana, Mississippi, 

Puerto Rico, U.S. Virgin Islands 

New York 

Regional Office

New York, New Jersey

Philadelphia 

Regional Office

Pennsylvania, Delaware, 

District of Columbia, Maryland, 

Virginia, West Virginia

* Northern California includes ZIP codes 93600 and above, and 93200–93299;

 Southern California includes ZIP codes 93599 and below, except 93200–93299

Chart 1.2 | Headquarters and Regional Office Locations

Office Locations 

The SEC’s headquarters are in Washington, DC. The 

agency's regional offices, which are responsible for 

investigating and litigating potential violations of the 

securities laws, are located throughout the country and 

have examination staff to inspect regulated entities 

such as investment advisers, investment companies, 

and broker-dealers. The following chart illustrates 

the location of each regional office and their areas 

of jurisdiction.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 9

Programs

The SEC organizes its divisions and offices within the 10 major programs outlined below, which aligns with 

how the SEC presents its costs of operations by programs in the Statements of Net Cost on page 68. This is 

also consistent with the presentation used by the agency in submitting its budget requests.

Table 1.1 | SEC Programs and Program Descriptions

ENFORCEMENT

Division of Enforcement Investigates and brings civil charges in federal district court or in administrative proceedings 

based on violations of the federal securities laws. An integral part of this program’s function is 

seeking penalties and the disgorgement of ill-gotten gains in order to return funds to harmed 

investors. Also within this program is the Office of the Whistleblower, which rewards individuals who provide the agency with tips that lead to successful enforcement actions. 

EXAMINATIONS

Division of Examinations Conducts examinations of registrants such as investment advisers, investment companies, 

broker-dealers, self-regulatory organizations (SRO), transfer agents, and clearing agencies.

CORPORATION FINANCE

Division of Corporation Finance Helps investors gain access to materially complete and accurate information about companies and the securities they offer and sell, to facilitate capital formation and to deter fraud and 

misrepresentation in the public offering, trading, voting, and tendering of securities.

TRADING AND MARKETS

Division of Trading and Markets Supervises major market participants and conducts activities to maintain fair, orderly, and 

efficient standards that foster investor protection and confidence in the markets.

INVESTMENT MANAGEMENT

Division of Investment Management Administers the Investment Company Act of 19401

 and Investment Advisers Act of 1940,2

which includes developing regulatory policy for investment companies and for investment 

advisers, monitoring for risks and trends, reviewing regulatory and financial disclosures for 

compliance with regulatory requirements, and providing guidance to relevant market participants.

ECONOMIC AND RISK ANALYSIS

Division of Economic and 

Risk Analysis

Provides economic analyses as part of the Commission’s rulemaking process and assists 

its rule review, examination, and enforcement programs with data-driven, risk-based 

analytical methods.

GENERAL COUNSEL

Office of the General Counsel Serves as the chief legal officer of the Commission and provides independent legal analysis 

and advice to the Chair, Commissioners, and operating divisions on all aspects of 

Commission activities. This office also defends the Commission in federal district courts. 

1 More information about the Investment Company Act of 1940 can be found at SEC.gov/about/about-securities-laws#invcoact1940.

2 More information about the Investment Advisers Act of 1940 can be found at SEC.gov/about/about-securities-laws#invadvact1940.
10 | 2023 SEC AGENCY FINANCIAL REPORT

Table 1.1 | Continued from previous page

OTHER PROGRAM OFFICES

Office of Administrative 

Law Judges 

Conducts public hearings throughout the United States in a manner similar to non-jury trials in the 

federal district courts. As independent adjudicators, administrative law judges issue initial decisions 

on allegations set out in Commission Orders Instituting Proceedings, issue subpoenas, hold 

prehearing conferences, and rule on motions and the admissibility of evidence.

Office of the Advocate for 

Small Business Capital 

Formation 

Works with small businesses and their investors to understand their capital formation issues 

through education and outreach; analyzes the potential impact of proposed SEC and SRO rules 

and regulations likely to significantly affect small businesses and their investors; and helps small 

businesses and their investors resolve issues with the SEC and SROs by recommending policy 

changes to Congress and the Commission. 

Office of the Chief Accountant Establishes accounting and auditing policies, and works to improve the professional performance 

of public company auditors to ensure that financial statements used for investment decisions are 

presented fairly and have credibility. 

Office of Credit Ratings Administers the rules of the Commission with respect to the practices of nationally recognized 

statistical rating organizations (NRSRO) in determining ratings; protects the users of credit ratings; 

promotes accuracy in credit ratings issued by NRSROs; and ensures that such ratings are not unduly 

influenced by conflicts of interest.

Office of International Affairs Advances international regulatory, supervisory, and enforcement cooperation; promotes 

converged high regulatory standards worldwide; and facilitates technical assistance programs 

in foreign countries.

Office of the Investor Advocate Helps investors resolve significant problems with the SEC or with SROs, and identifies areas in which 

investors would benefit from changes to federal laws or to SEC regulations or SRO rules.

Office of Investor Education 

and Advocacy 

Serves investors who complain to the SEC about investment fraud or the mishandling of their investments by securities professionals; ensures the views of retail investors inform the Commission’s 

regulatory policies and disclosure programs; and works to improve investors’ financial literacy.

Office of Municipal Securities Oversees the municipal securities market and administers the agency’s rules pertaining to municipal 

securities brokers and dealers, advisors, investors, and issuers. This office also coordinates with the 

Municipal Securities Rulemaking Board on rulemaking and enforcement actions.

Strategic Hub for Innovation 

and Financial Technology

Identifies and analyzes emerging financial technologies that impact the future of the securities 

industry and its regulation; engages market participants in discussions around technological 

developments; and cultivates relationships with industry innovators.

AGENCY DIRECTION AND ADMINISTRATIVE SUPPORT

EDGAR Business Office Provides direct executive-level oversight for the ongoing transformation of specific functions and 

programs to include business ownership of the Electronic Data Gathering, Analysis, and Retrieval 

System (EDGAR) and the EDGAR modernization program initiative.

Office of Acquisitions Provides advice on acquisition planning, development, and sourcing; awarding contracts and

interagency agreements; and ensures contract terms and conditions are met through timely 

contract closeouts and de-obligation of funds.

Office of the Chair Oversees all aspects of agency operations. The Chair and Commissioners are responsible for reviewing and approving enforcement cases as well as overseeing the development, consideration, and 

execution of policies and rules. 

Office of the Chief Operating 

Officer 

Provides strategic leadership and operational oversight of the SEC’s core mission support activities 

and compliance with administrative requirements from Congress and the Executive Branch.

Office of Equal Employment 

Opportunity 

Strives to enhance access to employment opportunities for the best and brightest talent, and to 

foster a fair and equitable work environment in compliance with federal laws and SEC standards.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 11

AGENCY DIRECTION AND ADMINISTRATIVE SUPPORT (CONTINUED)

Office of the Ethics Counsel Administers the Commission’s Ethics Program, and interprets the SEC’s Supplemental Ethics Rules 

as well as government-wide ethics laws, rules, and regulations.

Office of Financial 

Management 

Oversees the agency’s financial systems and internal controls over financial reporting; prepares 

financial statements and reports; manages the formulation and execution of the SEC’s annual 

budget; and coordinates the agency’s performance and cost reporting.

Office of Human Resources Assists with recruitment, staffing, organizational development, leadership and employee development, compensation and benefits administration, position classification, workforce planning, and 

labor relations.

Office of Information 

Technology 

Maintains responsibility for the Commission’s infrastructure operations and engineering; user 

support; program management; capital planning; cybersecurity; and enterprise architecture.

Office of Legislative and 

Intergovernmental Affairs

Serves as the liaison between the SEC and Congress, and is responsible for responding to 

requests from Congress for information related to agency programs and legislation affecting the 

SEC or its mission. 

Office of Minority and Women 

Inclusion 

Develops standards for all agency matters relating to diversity in management, employment, and 

business activities.

Office of Public Affairs Assists the Commission in making the work of the SEC is accessible to the public, understandable 

to investors, and accountable to taxpayers. 

Office of the Secretary Reviews all documents issued by the Commission; schedules and coordinates Commission 

meetings; prepares and maintains records of Commission actions; and receives and tracks filings 

in administrative proceedings.

Office of Support Operations Processes requests under the Freedom of Information Act and the Privacy Act; maintains all 

agency records in accordance with the Federal Records Act; oversees the security and safety 

of SEC facilities; and manages property, equipment, and overall building operations.

INSPECTOR GENERAL

Office of Inspector General Conducts audits of the SEC’s programs and operations, and investigates allegations of misconduct 

by staff or contractors. This is an independent office whose mission is to detect fraud, waste, and 

abuse, and promote integrity, economy, efficiency, and effectiveness throughout the agency’s 

programs and overall operations. 

Table 1.1 | Continued from previous page
Fostering SEC's

Supportive, Inclusive, 

 and Fair Work 

Environment

THE SEC RECOGNIZES THAT PEOPLE ARE THE 

AGENCY’S MOST IMPORTANT ASSET. Building and 

maintaining a workforce that reflects a diversity of 

backgrounds and experiences, as well as the diversity 

of the investors and market participants it serves, is 

essential to the SEC’s success in protecting the public 

and fulfilling its mission. 

Employee Affinity Groups (EAG) are one example 

of how the SEC promotes effective interaction and 

collaboration throughout the agency and within our 

communities. EAGs focus on broadening employees’ 

collective appreciation for the diverse world in 

which we live and work by championing workforce 

diversity, and endeavor to improve communication, 

opportunity, and understanding through education, 

training, and dialogue. 

Group leaders 

and members:

• plan educational and 

cultural programs for 

SEC staff; 

• participate in annual 

celebrations of history 

and heritage marked by 

national observances;

• host lunch-and-learn 

seminars; 

• provide employee 

mentoring and 

development; and

• sponsor networking, 

outreach, and community 

service projects.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 13

OUR YEAR IN REVIEW AND THE YEAR AHEAD

During FY 2023, the SEC advanced its three-part 

mission to protect investors, maintain fair, orderly, and 

efficient markets, and facilitate capital formation. The 

following pages provide an overview of enforcement 

and examinations regimes; discuss policy initiatives; 

describe ongoing investor education and other outreach 

activities; and provide an overview of data and operations at the agency.

Division of Investment Management

The Division of Investment Management (IM) oversees 

the funds and advisers that steward nest eggs for 

millions of Americans. It oversees more than 30,000 

entities—including more than 17,000 registered funds 

and 15,000 investment advisers. Overall, the combined 

assets managed by registered investment companies, 

private funds, and separately managed accounts the 

division oversees has surpassed $100 trillion.

To advance its work, IM’s core activities include 

reviewing fund filings, providing rulemaking recommendations to the Commission, monitoring risks in 

the asset management industry, and consulting on 

enforcement matters.

With respect to filing review, IM staff in FY 2023 

reviewed more than 1,900 filings related to more than 

4,400 funds and insurance products. In addition, staff 

also reviewed annual reports—including financial 

statements—from more than 4,200 funds.

The division’s rulemaking activity in FY 2023 

was extensive. 

IM made several rulemaking recommendations 

to enhance efficiency and competition in the asset 

management space. As one example, the Commission 

adopted final rules to require private fund advisers 

registered with the Commission to provide detailed 

disclosure to investors regarding fees, expenses, and 

performance. The final rules also addressed certain 

sales practices, conflicts, and compensation schemes 

of advisers to private funds. 

Several of IM’s rulemaking recommendations related 

to market integrity and disclosure. As one example, 

the Commission proposed an enhanced safeguarding 

rule for registered investment advisers. Congress in 

the Dodd-Frank Wall Street Reform and Consumer 

Protection Act of 2010 (Dodd-Frank Act) gave the 

SEC updated authorities to require investment advisers 

to safeguard all client assets over which they have 

custody—not just funds or securities. Thus, in FY 2023, 

the Commission proposed to expand and enhance the 

role of qualified custodians when registered investment 

advisers maintain custody of assets on behalf of their 

investors. IM continues to review public comment on 

the proposal.
14 | 2023 SEC AGENCY FINANCIAL REPORT

Further related to integrity and disclosure, the Commission proposed rules to require firms to analyze conflicts 

of interest that may emerge when using predictive data 

analytics to interact with investors. The proposed rules 

would require firms to identify any such conflicts that 

result in an investor interaction that places the firm’s 

interests ahead of investors’ interests. Firms then would 

need to eliminate or neutralize the effects of those 

conflicts. Alongside the Division of Trading and Markets 

(TM), IM continues to review public comment on the 

proposal. In addition, the Commission proposed to 

update the offering process and disclosure requirements 

for financial products offered by the insurance industry 

called registered index-linked annuities, which, if 

adopted, would fulfill a mandate from Congress.

IM also made rulemaking recommendations to enhance 

the resiliency in the financial system. In FY 2023, the 

Commission adopted final rules to enhance money 

market funds’ liquidity and investor protection. The 

• Self-regulatory organizations of the U.S. securities 

industry, such as the stock exchanges, submit 

their own rulemakings to the SEC for review and 

public comment.

• Those who must comply with the federal 

securities laws may seek interpretations of 

those laws by SEC staff for specific occurrences 

and circumstances.

• The SEC also issues variety of orders, notices, 

and other releases related to securities statutes, 

including notices of meetings of the advisory 

committees created by regulations such as 

the Dodd-Frank Act.

The Rulemaking Process

THE STATUTES THAT PROVIDE the framework for the SEC's oversight of the 

securities markets generally are broadly drafted, establishing basic principles 

and objectives. To ensure that the intent of Congress is carried out in specific 

circumstances—and as the securities markets evolve technologically, expand 

in size, and offer new products and services—the SEC engages in rulemaking.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 15

final rules will enhance these funds’ resiliency and 

ability to protect against dilution. As another example, 

the Commission finalized a rule amending Form PF 

to improve visibility into private funds, which will 

help protect investors and promote financial stability. 

Further, IM continues to review public comment on 

the Commission’s proposal regarding open-end fund 

liquidity, as well as the Commission’s joint proposal

with the Commodity Futures Trading Commission to 

improve the quality of the information the SEC receives 

from all Form PF filers, with a particular focus on large 

hedge fund advisers.

With respect to monitoring developments and risks in 

the asset management industry, IM staff monitored a 

wide range of market developments during FY 2023—

such as global market events and developments in the 

crypto markets.

As to crypto assets, IM staff continued to focus 

significantly on the investor protection implications 

of proposed mutual funds and exchange-traded funds 

(ETFs) seeking to invest in crypto asset-related investments. The staff continues to interact with funds seeking 

to employ blockchain technology in their operations. 

Alongside other divisions and offices within the SEC, 

IM continues to monitor crypto asset trading, lending, 

and so-called “decentralized finance” (DeFi) platforms. 

In addition, alongside other SEC staff, IM continues 

to monitor “stablecoins.” Stablecoins often are used 

either as collateral or to trade on various crypto asset 

intermediaries. Some stablecoins likely are offered or 

sold as part of an investment contract, and therefore 

implicate the federal securities laws, including those 

relating to investment companies.

Finally, IM staff support the Commission’s examination 

and enforcement efforts to help ensure compliance with 

the federal securities laws. 

Division of Trading and Markets

The Division of Trading and Markets (TM) oversees the 

securities markets that connect issuers to investors. TM 

serves the investing public through market monitoring 

and supervision, namely by overseeing exchanges, 

intermediaries, and certain gatekeepers. 

The markets and the market participants that TM 

oversees represent a significant and growing number 

of both market transactions and trading volume. The 

division oversees more than 3,500 broker-dealers, 24 

national securities exchanges, 99 alternative trading 

systems, 50 security-based swap dealers, and seven 

active registered clearing agencies, among other entities.

RULE 605

As part of Regulation National Market System 

(NMS), Rule 605 generally requires a market 

center that trades NMS stocks to make available 

to the public monthly electronic execution 

reports that include uniform statistical measures 

of execution quality. 

In FY 2023, TM made numerous rulemaking recommendations to the Commission with respect to a wide 

range of market areas. 

Several of these rulemaking recommendations were 

to enhance the efficiency and competition of market 

intermediaries. For instance, the Commission proposed 

four rulemakings in December 2022 regarding the $40 

trillion equity markets, key aspects of which haven’t 

been updated since 2005. First, the Commission 

proposed that broker-dealers meet a Commission best 

execution standard. Second, the Commission proposed

updating a 23-year-old rule, known as Rule 605, 

regarding disclosure of order execution quality. Third, 

the Commission proposed to enhance competition by 

addressing possible trading advantages that off-exchange 
16 | 2023 SEC AGENCY FINANCIAL REPORT

The Commission also issued three separate proposals 

related to cybersecurity and technology resiliency in the 

financial sector—relating to Regulation S-P (alongside 

IM), new requirements to address cybersecurity risks

for market entities, and Regulation Systems Compliance 

and Integrity (Regulation SCI). 

TM staff continue to review public feedback on a wide 

range of proposals issued in FY 2022, such as matters 

related to the efficiency and resiliency of the Treasury 

markets. Those proposals address registering and 

regulating Treasury dealers and platforms, as well as 

facilitating greater clearing of treasuries in both cash and 

funding markets. Further, building on TM’s FY 2023 

review of public feedback regarding the proposals, the 

Commission in early FY 2024 adopted final rules in 

two areas related to Dodd-Frank Act mandates. One 

adoption will bring greater transparency to regulators 

and the investing public regarding short sale-related 

data, and the other will achieve similar goals for the 

securities lending markets.

Regarding crypto assets, TM along with various 

divisions and offices, continued to monitor crypto 

asset intermediaries. Given that most crypto tokens 

are subject to the securities laws, it follows that most 

crypto asset intermediaries have to comply with 

securities laws as well. 

To help address rampant fraud, abuse, and noncompliance in the crypto asset space, TM staff provided 

assistance to the Division of Enforcement on many 

crypto asset matters and made certain rulemaking 

recommendations to the Commission. For example, the 

Commission issued a reopening release that reiterated 

the applicability of existing rules to platforms that 

trade crypto asset securities, including DeFi systems. 

This release also provided supplemental information 

for systems that would be included in a new, proposed 

exchange definition.

market centers have over national securities exchanges, 

such as through harmonizing and adjusting the 

minimum pricing increments that all trading venues 

use. Lastly, the Commission proposed to enhance 

competition for orders made by individual investors.

In addition, a number of TM’s rulemaking recommendations related to market integrity and disclosure. As one 

example, the Commission adopted final rules regarding 

fraud and manipulation in the security-based swaps 

market, which was a mandate under the Dodd-Frank 

Act. In addition, the Commission implemented another 

Dodd-Frank Act mandate when it adopted a set of final 

rules to remove references to credit ratings from Rules 

101 and 102 of Regulation M.

SHORT SALE

Any sale of a security that the seller does not 

own, or any sale that is consummated by the 

delivery of a security borrowed by, or for the 

account of, the seller.

Further, TM worked with IM on the rulemaking 

mentioned above regarding conflicts of interest that 

may emerge when firms use predictive data analytics 

to interact with investors.

Several TM rulemaking recommendations also 

addressed resiliency. For example, the Commission 

adopted a rule to shorten the settlement cycle in 

securities markets in half, which will lower risk, 

promote efficiency, and enhance liquidity. The 

Commission also finalized a rule to enhance crossmarket and off-exchange oversight for some of the 

most active participants in the capital markets. Further, 

the Commission issued a proposal with regard to 

clearinghouse resilience, risk management, use of 

service providers, and recovery and wind-down plans. 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 17

Division of Corporation Finance 

The Division of Corporation Finance (CF) works 

to ensure that investors are provided with material 

information to make informed investment or voting 

decisions. Further, CF provides interpretive assistance 

to companies—large and small, public and private—as 

they navigate the requirements of the federal securities 

laws, particularly the Securities Act of 1933 and the 

Securities Exchange Act of 1934. Taken together, CF 

works to advance all three parts of the SEC’s mission.

In FY 2023, CF made several rulemaking 

recommendations to the Commission. 

VARIABLE INTEREST 

ENTITY

An organization in which consolidation is not 

based on a majority of voting rights. 

To improve disclosure and enhance investor protection, 

the Commission adopted final rules related to how 

insiders buy and sell company stock, clawbacks of senior 

executives’ compensation when based on materially 

misstated financials, and cybersecurity disclosures by 

public companies. Further, the Commission issued for 

public comment a rule proposal related to conflicts of 

interest regarding certain securitizations. 

In addition, CF continued to evaluate public comment 

on rules proposed in FY 2022, including proposals 

focused on climate risk-related disclosures, special 

purpose acquisition companies (SPACs), and shareholder 

proposals. Over the course of FY 2023, CF developed—

and in FY 2024, the Commission adopted—a set of final 

rules to shorten the deadlines by which beneficial owners 

must inform the public of their position.

Throughout the fiscal year, CF selectively reviewed 

offering documents and periodic reports from among the 

7,800 public companies. CF also reviewed registration 

statements from companies seeking to become public. 

Due to recent initial public offering and SPAC surges, 

the number of public companies increased significantly, 

resulting in additional reviews of annual reports and 

transactional filings by newer reporting companies. 

In addition to reviewing and providing comments on 

these documents, CF issued public statements sharing 

the staff’s views on how existing rules may require 

disclosure regarding the impact of Russia’s invasion of 

Ukraine and disruptions in crypto asset markets. CF also 

reviewed disclosures made under recently implemented 

rules, such as the pay versus performance rules that 

became effective in FY 2023.

CF also continued to play an integral role in the agency’s 

efforts to implement the Holding Foreign Companies 

Accountable Act (HFCAA) and ensure that investors 

have the information they need to make informed 

investment decisions with respect to investments in 

China-based issuers. During the year, CF issued guidance 

to assist China-based issuers with their disclosure 

obligations. CF also continued to issue comments 

designed to obtain enhanced disclosure for investors 

about key China-related matters, such as variable 

interest entity structures and risks. In addition, CF led 

the agency’s efforts to identify public companies affected 

by the HFCAA and to ensure that the disclosures 

required by that statute were made by those issuers.
18 | 2023 SEC AGENCY FINANCIAL REPORT

Division of Enforcement

The Division of Enforcement (ENF) serves as a cop on 

the beat on behalf of the investing public, working to 

address fraud, manipulation, and other abuses. Through 

holding wrongdoers accountable for violating the 

federal securities laws, ENF works to help ensure the 

markets are worthy of the public’s trust.

In FY 2023, based on ENF’s investigations and recommendations, the Commission filed a wide range of 

enforcement actions to protect the investing public.

CRYPTO ASSET

A digital asset that is issued and/or transferred 

using distributed ledger or blockchain 

technology, including, but not limited to, 

so-called “virtual currencies,” “cryptocurrencies,” 

“coins,” and “tokens.” A crypto asset may or may 

not meet the definition of a “security” under the 

federal securities laws. 

ENF has continued to investigate and litigate possible 

violations of the federal securities laws in the growing 

and evolving crypto asset space. For example, the 

Commission charged the CEO and co-founder of FTX, 

alleging that he concealed the diversion of customer 

funds to a privately-held crypto hedge fund while 

raising more than $1.8 billion, including approximately 

$1.1 billion from U.S. investors. The Commission also 

charged an individual with orchestrating an attack on 

Mango Markets, alleging that he manipulated a so-called 

governance token. Further, the Commission brought 

enforcement actions alleging the unregistered offer and 

sale of securities through crypto asset lending programs, 

including a litigated action against Genesis and Gemini; 

a settled action ordering Nexo to pay a $22.5 million 

penalty; and a settled action ordering Kraken to cease its 

crypto asset staking-as-a-service programs.

To enforce compliance throughout the crypto ecosystem 

and address areas of investor risk, the SEC charged 

so-called crypto asset intermediaries, including Beaxy, 

Bittrex, Binance, and Coinbase, alleging that they 

operated as unregistered securities exchanges, brokers, 

and clearing agencies. Further, in the Binance matter, 

the SEC alleged that the firm defrauded investors about 

purported surveillance and controls over manipulative 

trading on its U.S.-based crypto asset trading platform, 

which were in fact virtually non-existent.

The SEC also brought enforcement actions against 

celebrities, athletes, and “influencers” for touting crypto 

asset securities without disclosing that they received 

compensation, including Kim Kardashian; Lindsay 

Lohan, Jake Paul, and Soulja Boy; and Paul Pierce.

Further, in FY 2023, ENF continued its evergreen focus 

on financial reporting and disclosures made to investors. 

ENF investigated and recommended several actions 

against gatekeepers responsible for preventing and 

detecting misconduct. For example, the SEC brought 

actions against multiple individuals and firms engaged 

in the critical gatekeeping function of auditing, including 

actions related to deficient audits of public companies 

and other registrants, and for more systemic issues 

in audit firms system of quality controls. In addition, 

the Commission charged a broker-dealer for violating 

recordkeeping requirements concerning its underwriting 

business and a fund administrator for missing red flags 

relating to a fraud against a private fund and its investors.

In addition, ENF investigated and recommended 

actions against investment advisers for violating 

investor protection rules. For example, the SEC filed 

actions against two related investment adviser firms 

for charging clients excessive advisory fees. In another 

matter, the SEC filed an action against an investment 

adviser for inflating the net asset values of its public 

mutual fund and private hedge fund as part of a massive 

overvaluation scheme. The SEC also brought several 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 19

first-of-their-kind cases involving investment advisers, 

including the first case enforcing the Liquidity Rule, 

which prohibits mutual funds from investing more than 

15 percent of their net assets in illiquid investments. 

Further, the SEC brought the first cases charging

violations of the amended Marketing Rule, which 

requires investment advisers advertising hypothetical 

performance to comply with requirements designed to 

prevent fraud.

The SEC’s Whistleblower Program, created to 

incentivize individuals to report accurate and timely 

information about possible violations of federal 

securities laws, had yet another successful year. Eligible 

whistleblowers are entitled to awards of between 

10 and 30 percent of monetary sanctions collected in 

SEC enforcement actions and certain related actions. 

Since the program’s inception in 2011, the SEC has 

awarded more than $1.9 billion to whistleblowers. 

In FY 2023, the Commission awarded whistleblowers 

nearly $600 million, including an award of nearly 

$279 million, the SEC’s largest ever.

To protect whistleblowers, ENF investigated, and 

the Commission charged, both public and private 

companies for violations of whistleblower protection 

rules, including when companies required employees 

to attest that they had not filed a complaint against the 

company with any federal agency or required employees 

to waive their rights to financial whistleblower awards. 

The Whistleblower Process

WHISTLEBLOWERS

1

Whistleblowers 

Submit Tips 

to SEC

2

Tip Analysis/

Investigation

3

Cases Filed/

Penalties 

Ordered

4

Notices of

Covered 

Action Posted

5

Whistleblowers

File Claims

6

Review/

Analysis of 

Claims

7

Preliminary

Determinations

Issued

8

Possible

Record and

Reconsideration

Requests

9

Additional

Analysis

10

Final Orders

Issued/

Resolution

of Appeals

$

INVESTOR

PROTECTION

FUND
20 | 2023 SEC AGENCY FINANCIAL REPORT

Division of Examinations

The Division of Examinations (EXAMS) serves on 

the front lines to help ensure market participants 

comply with the securities laws. Through its examinations, the division provides the Commission with 

valuable information to inform rulemaking, identify 

and monitor risks, improve industry practices, and 

pursue misconduct. 

During FY 2023, EXAMS continued to prioritize 

reviews of practices, products, and services that present 

heightened risks to investors or market integrity, with a 

particular focus on risks to retail investors. Among other 

priorities, EXAMS conducted examinations concerning 

how firms satisfy their obligations under Regulation Best 

Interest and the fiduciary standard under the Investment 

Advisers Act of 1940 (Advisers Act). The division also 

focused on whether advisers, including advisers to 

private funds, have complied with the Marketing Rule 

under the Advisers Act. Additional priority areas in the 

fiscal year included information security and operational 

resiliency; crypto assets and emerging financial technology; Regulation SCI; and environmental, social, and 

governance investing. 

The division also remained flexible and agile in its 

risk-based approach so that it could respond to various 

market events and challenges during the year. For 

example, EXAMS staff engaged closely with registrants 

to review operational and compliance challenges related 

to ongoing geopolitical events. Going forward, the 

division will continue to adjust examination priorities as 

appropriate to help carry out the SEC’s mission. 

In FY 2023, EXAMS published nine Risk Alerts as part 

of its continued efforts to raise awareness of critical 

compliance and industry risks, as well as to promote 

stronger industry compliance.

REAL-TIME DISCUSSION PLATFORMS AND SOCIAL 

SENTIMENT may lead you to make emotionally

driven or impulsive investment decisions.

• Know your long-term objectives. The information you 

find online about specific investments can reflect shortterm trends.

• Don’t let short-term emotions disrupt your long-term 

financial goals. Making and sticking with a financial plan 

can help.

• Use caution and take your time. Do your own independent 

research, and don’t feel pressured to invest right away.

Tips for Investing in a Social World
MANAGEMENT’S DISCUSSION AND ANALYSIS | 21

Division of Economic and Risk Analysis

The Division of Economic and Risk Analysis 

(DERA) provides critical economic analysis to 

inform Commission activities such as examinations, 

enforcement, and policymaking. In FY 2023, 

DERA economists analyzed the economic effects of 

Commission and self-regulatory organization (SRO) 

rules; provided guidance in investigations and settlement 

negotiations; assisted in determining the amounts and 

feasibility of distributions to harmed investors; and 

provided testimony in litigated cases. 

Collaborating with economists and other SEC staff, 

DERA data scientists engaged in several projects to 

enhance evidence-based decision-making within the 

Commission and to identify potential securities law 

violations by market participants.

Office of Investor Education 

and Advocacy

From participating in outreach campaigns to publishing 

Investor Alerts, Bulletins, and other new content 

on Investor.gov, the Office of Investor Education 

and Advocacy (OIEA) provides retail investors with 

knowledge and tools to help them build a secure 

financial future.

In FY 2023, OIEA and the SEC’s 11 regional offices 

participated in more than 500 investor education events. 

Importantly, these outreach efforts targeted different 

segments of the population, including students, teachers, 

older investors, military service members and veterans, 

and traditionally underserved communities.

In October 2022, the SEC staff hosted outreach 

events during World Investor Week, a global effort 

promoted by the International Organization of 

Securities Commissions. SEC staff participated in nearly 

60 outreach events. OIEA also promoted a new video

featuring Chair Gensler regarding the risks inherent 

with celebrity endorsements of investment products and 

posted new videos to teach investors how to spot and 

avoid scams.

Also in FY 2023, OIEA unveiled a public service 

campaign focused on older investors. The campaign 

highlighted how older investors can continue to learn 

about investing for retirement, spotting fraud, and 

conducting due diligence on investment professionals. 

Over the course of FY 2023, OIEA issued a variety 

of Investor Alerts and Bulletins to warn investors of 

possible fraudulent schemes and educate investors on a 

range of investing topics. For example, in March 2023, 

OIEA published an Investor Alert regarding investments 

that involve crypto asset securities (the most common 

complaint type that OIEA staff received in FY 2023 

related to crypto assets). In response to the Hawaii 

wildfires, OIEA issued an Investor Alert regarding 

investment scams related to natural disasters. In 

addition, OIEA issued an Investor Bulletin jointly with 

the Financial Industry Regulatory Authority (FINRA) to 

help educate investors on the various ways they can hold 

their securities. 

In FY 2024, OIEA will continue to prioritize engaging 

with new and inexperienced investors—particularly 

those who traditionally are underserved—on matters 

relating to crypto asset securities and beyond. OIEA also 

plans to expand its research efforts to improve retail 

investors’ experience with the agency’s online resources.
22 | 2023 SEC AGENCY FINANCIAL REPORT

Office of the Advocate for Small Business 

Capital Formation 

The Office of the Advocate for Small Business Capital 

Formation (OASB) advocates for solutions to address 

challenges faced by small businesses—from startups to 

smaller public companies—and their investors raising 

and deploying capital. A key part of OASB’s mission 

is to identify and address unique capital raising 

challenges faced by minority-owned, women-owned, 

rural, and natural disaster-area small businesses and 

their investors. To fulfill this mission, OASB engaged 

with diverse audiences and developed a number of 

accessible educational materials on capital raising. 

Throughout the year, OASB met with small businesses 

and their investors, as well as with entrepreneurial 

support organizations and other thought leaders. OASB 

did so through, among other things, 31 outreach events 

and onsite visits. Such engagement helped OASB both 

to develop its perspectives on issues facing the small 

business ecosystem as well as to share its educational 

resources with the small business community. Discussions provided insights on issues like the unique obstacles 

faced by women and minority entrepreneurs, the 

importance of building and gaining access to networks, 

and how to increase diversity among capital allocators.

In April 2023, OASB hosted the SEC’s 42nd annual 

Small Business Forum. The virtual event took place over 

four days, bringing together more than 400 attendees, 

12 speakers, and all five of the Commissioners. Many 

event attendees represented women- or minority-owned 

businesses. In September 2023, the SEC delivered a 

report to Congress summarizing the Forum, attendees’ 

20 capital raising policy recommendations, and the 

Commission’s responses to those recommendations.

Over the course of the fiscal year, viewership of the 

SEC’s Capital Raising Hub (the “Hub”) increased by 

more than 40 percent. The Hub is the SEC’s centralized 

portal for educational resources for small businesses and 

their investors. OASB continued to develop a wide range 

of new educational resources for the Hub.

Further, OASB provided administrative support to 

the SEC’s Small Business Capital Formation Advisory 

Committee, which provides advice and recommendations to the Commission on rules, regulations, and policy 

matters relating to small businesses. The Committee 

met four times in FY 2023 and put forward recommendations relating to: (1) the market for companies going 

public; (2) promoting access to capital for founders, 

particularly underrepresented founders, who are building 

businesses outside of prominent entrepreneurial hubs; 

(3) equity research; and (4) the Commission’s February 

2022 proposal related to the regulation of private fund 

advisers. The Commission later adopted final rules 

regarding private fund advisers in August 2023.

A majority of the Committee members ended their 

four-year terms in April 2023, and the Committee 

shared a Parting Perspectives Letter that highlighted 

several objectives for the Commission to consider in 

carrying out its mission.

In FY 2024, OASB will continue to engage with 

small businesses and their investors to solicit views on 

relevant capital raising issues. OASB will also provide 

educational resources regarding the SEC’s capital 

raising rules.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 23

Office of the Investor Advocate

The Office of the Investor Advocate (OIAD) has four 

core functions: to provide a voice for investors, assist 

retail investors, study investor behavior, and support 

the SEC’s Investor Advisory Committee (IAC). 

During FY 2023, OIAD hosted more than 140 

investor engagement activities, including investorfocused meetings, events, activities, and roundtables. 

In July 2023, for example, OIAD hosted a public 

roundtable jointly with the North American Securities 

Administrators Association and the Wisconsin 

Department of Financial Institutions. At the roundtable, 

investors, investigators, and regulators discussed 

identifying fraud and avoiding suspicious investments. 

The Investor Advocate appoints an Ombuds to serve 

as a liaison to assist retail investors with questions 

or concerns relating to the Commission or SROs. In 

FY 2023, the Office of the Ombuds provided tailored 

guidance to more than 2,600 individuals who voiced 

questions or concerns. The Office of the Ombuds also 

submitted to ENF numerous allegations of securities 

law violations for review and potential action. Further, 

in response to complaints relating to mandatory 

arbitration, the Office of the Ombuds led a study of 

and completed a report on mandatory arbitration 

among registered investment advisers. 

In "Office Hours with Gary Gensler," Chair Gensler 

breaks down for everyday viewers how the SEC 

works on behalf of investors, issuers, and the markets 

connecting them. Topics include crypto assets, the 

Treasury markets, celebrity endorsements, and more. 

Check out these short, informative videos by visiting the 

SEC's YouTube channel at youtube.com/c/SECViews.

Office Hours

withGary Gensler
24 | 2023 SEC AGENCY FINANCIAL REPORT

In March 2023, the Office of the Ombuds hosted its 

fourth annual Investor Advocacy Clinic Summit, where 

students and professors from law school investor 

advocacy clinics across the country engaged with SEC 

subject matter experts about issues impacting their retail 

investor clients. More than 1,800 viewers tuned in for 

the event’s live outreach portion. 

INVESTMENT ADVISER

A firm or person that, for compensation, 

engages in the business of providing investment 

advice to others about the value of, or investing 

in, securities—stocks, bonds, mutual funds, 

exchanged-traded funds, and certain other 

investment products—and/or in issuing reports 

or analyses regarding securities as part of a 

regular business. 

In FY 2023, OIAD’s Office of Investor Research (OIR) 

engaged in a number of research initiatives. Most 

significantly, collaborating with IM, OIR conducted 

extensive investor testing to inform the design of a new 

registration form for registered index-linked annuity 

products. This research fulfilled a Congressional 

directive to conduct such testing, helping ensure that a 

purchaser using the new form receives the information 

necessary to make knowledgeable decisions. OIR 

also published several Working Papers, published a 

research paper on the use of visual aids in mutual fund 

investment decisions, collaborated with other SEC 

divisions and offices, and contributed technical expertise 

to the Ombuds’ mandatory arbitration study.

In FY 2023, OIAD’s Office of the Chief Counsel 

(OCC) reviewed and analyzed the potential impact 

of approximately 38 Commission rulemakings and 

approximately 127 SRO rulemakings on investors. 

OCC also worked with various stakeholders to identify 

areas in which investors would benefit from changes in 

the regulations of the Commission.

The IAC advises and consults with the Commission 

on regulatory priorities, including initiatives to protect 

investor interests, promote investor confidence, 

and maintain market integrity. The IAC includes 

four subcommittees and one working group to help 

formulate its policies and recommendations. The 

Committee held four quarterly public meetings and 

approved six recommendations to the Commission in 

FY 2023.

In FY 2024, OIAD will continue engaging directly 

with retail investors through investor-focused meetings, 

events, activities, and roundtables. OIAD will monitor 

market events that may affect retail investors. Further, 

OIAD will continue to partner with other federal 

financial regulatory agencies and state regulatory 

agencies. Additionally, Ombuds staff will continue 

assisting retail investors regarding problems they may 

have with the Commission or with SROs. 

Reshaping SEC Operations

In FY 2023, the SEC continued to work with the 

General Services Administration (GSA) to rightsize 

the agency’s leasing footprint. In the last nine years, 

the SEC has shed 140,000 rentable square feet across 

SEC facilities. In FY 2023, the agency completed the 

closure of one of its headquarters office buildings in 

Washington, DC. As a result, the SEC will no longer pay 

rent, taxes, and operating expenses for that building, 

which totaled $14.9 million in FY 2023.

In March 2023, the SEC also began a new chapter of 

hybrid operations for the SEC with regard to in-office 

presence. The new policy has provided the SEC with the 

benefits of both in-person collaboration and telework. 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 25

Also in March, the SEC and the National Treasury 

Employees Union finalized the terms of a new Collective 

Bargaining Agreement, which covers a variety of 

topics important to SEC employees and managers, 

including telework, work schedules, leave, space, 

and employee benefits.

In FY 2024, the SEC will continue to reassess its 

nationwide space footprint. The agency currently is in 

the process of analyzing its revised space requirements 

at each of its office locations so it can make effective 

decisions for rightsizing while considering construction 

requirements and lease provisions with GSA.

IT Modernization and Security

During FY 2023, the SEC continued to enhance its new 

core cloud capability and enterprise data warehouse 

while also migrating applications and datasets into 

these new environments. Further, the agency worked to 

modernize several key systems, including applications 

supporting e-Discovery; tips, complaints, and referrals; 

and enforcement case management. 

The SEC proposed to strengthen the security of the 

Electronic Data Gathering, Analysis, and Retrieval 

(EDGAR) system by instituting multi-factor 

authentication and designating an administrator to 

manage each filer’s EDGAR account. 

In FY 2023, the Office of Information Technology (OIT) 

successfully closed 24 Office of Inspector General prioryear IT-related audit recommendations.

In FY 2023, the SEC continued to take substantive 

steps to identify, assess, and mitigate cybersecurity 

risks. These actions included pursuing a Zero Trust 

Architecture Implementation Plan. The SEC further 

expanded internal network visibility and enhanced 

internal vulnerability scanning capabilities. These 

improvements are critical components of the SEC’s 

capabilities to protect against and respond to malicious 

cyber activity. These activities will continue in FY 2024.

Data Improvements

In FY 2023, the SEC continued to develop an 

implementation plan regarding the Financial Data 

Transparency Act and the OPEN Government Data 

Act. These two statutes require the SEC to adopt data 

standards for information collection that improve the 

availability, utility, and quality of public data assets 

and to better engage public data users as a distinct 

customer base. 

The SEC also published a comprehensive Data 

Strategy in FY 2023 that will help improve the quality 

of high-value data assets, such as data related to the 

Consolidated Audit Trail (CAT), crypto assets, and 

corporate financial data. 

The implementation of the Data Strategy and the 

development of recommendations for an enterprise 

data quality program will continue in FY 2024. In 

FY 2024, the SEC will also continue to carry out its 

work to analyze CAT as well as other data assets. 

Human Capital Investments

The SEC continues to foster and advance a top-tier 

work environment for all employees. The 2022 Federal 

Employee Viewpoint Survey, released during FY 2023, 

showed that the SEC remained an employer of choice 

across the federal government. The Partnership for 

Public Service named the SEC as the third-best place to 

work among midsized federal agencies, improving upon 

the agency’s fifth-place ranking a year earlier. 

In FY 2023, the SEC leveraged best practices, including 

data analytics, to advance human capital goals, such as 

filling mission-critical and technology-related roles. With 
26 | 2023 SEC AGENCY FINANCIAL REPORT

funding provided by Congress, in FY 2023 the agency 

successfully hired 463 staff. The SEC also released a 

new strategic plan for diversity, equity, inclusion, and 

accessibility (DEIA), and SEC leadership continues to 

promote fair hiring practices as well as a diverse talent 

pipeline. 

In FY 2024, the SEC will continue striving to operate 

a model Equal Employment Opportunity program. 

The Office of Equal Employment Opportunity (OEEO) 

looks forward to reviewing the upcoming report from 

the Office of Inspector General on OEEO programs, and 

to addressing its findings and recommendations.

Office of Minority and Women Inclusion

The Office of Minority and Women Inclusion (OMWI) 

provides leadership and guidance for the SEC’s efforts to 

leverage diversity and inclusion throughout the agency 

to enhance mission performance and impact.

Through efforts led by OMWI, the SEC has continued 

to prioritize its commitment to DEIA. In FY 2023, 

OMWI led the effort to develop and finalize the SEC’s 

FY 2023 – 2026 DEIA Strategic Plan, a collaborative 

effort with input across the Commission and the staff. 

The DEIA Strategic Plan aligns with the SEC FY 2022 

– 2026 Strategic Plan’s goal for the agency to support 

a skilled workforce that is diverse, equitable, inclusive, 

and fully equipped to advance agency objectives. 

With OMWI’s guidance, the SEC continued to promote 

equity and inclusion across the agency, such as through 

attracting, hiring, developing, and retaining high-quality 

staff from a variety of backgrounds. In FY 2023, the SEC 

participated in, hosted, or supported 81 diversity-related 

outreach and recruitment events, including hosting a 

Diversity Career Fair for attorney opportunities at the 

SEC. In addition, OMWI continued to communicate 

SEC priorities and provide avenues for underrepresented 

groups to engage in SEC policy discussions.

Additionally, the SEC continued to foster a workplace 

culture in which everyone feels they can bring their 

whole selves to work, serve the public, and advance 

in their careers. As part of the SEC’s transition to a 

new chapter of hybrid operations, OMWI provided 

guidance to SEC managers and supervisors on how 

to remain mindful of bias and lead with empathy. 

Relatedly, OMWI offered two DEIA trainings regarding 

identifying and mitigating biases that may arise during 

the hiring process.

The SEC Employee Affinity Groups (EAGs) play an 

important role in the agency’s workplace culture. In 

FY 2023, EAGs helped to plan, coordinate, and conduct 

32 SEC-sponsored programs and activities to commemorate Special Observance heritage or awareness months. 

Further, OMWI continued its outreach and technical 

assistance efforts to promote minority-owned, womenowned, and veteran-owned businesses. In addition, 

OMWI revised the self-assessment tool that entities may 

use to complete and submit volunteer self-assessments 

regarding their diversity policies and procedures.

In FY 2024, OMWI will assess the DEIA Strategic 

Plan’s implementation and effectiveness, continue to 

expand its diversity initiatives such as through paid 

internship programs, and enhance the DEIA Assessment 

Program—a program intended to provide SEC 

divisions and offices with tools to advance DEIA

within their teams. OMWI will also invite SEC-regulated 

market participants to submit self-assessments of their 

diversity policies and practices through the revised 

self-assessment tool.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 27

FINANCIAL HIGHLIGHTS

This section provides an analysis of the financial 

position, results of operations, and the underlying 

causes for significant changes in balances presented 

in the SEC’s FY 2023 financial statements.

As described further below, the SEC’s finances have 

several main components:

• An annual appropriation from Congress;

• Securities transaction fees, charged in accordance 

with Section 31 of the Securities Exchange Act, which 

offset the agency’s annual appropriation;

• Securities registration, tender offer, and merger fees 

(also called filing fees), of which $50 million is deposited into the Securities and Exchange Commission 

Reserve Fund (Reserve Fund) each year. The Reserve 

Fund may provide resources up to $100 million 

each fiscal year to pay for SEC expenses, and are not 

subject to annual appropriation or apportionment;

• Disgorgement and penalties ordered and collected 

from violators of the securities laws, some of which 

are then returned to harmed investors and the 

balances are transferred to the U.S. Treasury General 

Fund; and

• The SEC Investor Protection Fund (IPF), which is 

funded through disgorgement and penalties not 

distributed to harmed investors, and which is used 

to make payments to whistleblowers who give 

tips to aid the SEC’s enforcement efforts in certain 

circumstances, as well as to cover the expenses of the 

SEC Office of Inspector General’s (OIG) Employee 

Suggestion Program.

Sequestration Order for FY 2023 

On March 1, 2013, the President issued the 

Sequestration Order. As determined by the Office 

of Management and Budget (OMB), for FY 2023, 

the Sequestration Order was applicable to mandatory 

appropriations, which included the Reserve Fund and 

the IPF, as follows:

Reserve Fund 

The budget authority of $50 million was reduced 

by 5.7 percent, or $3 million.

Investor Protection Fund

The budget authority of $660 million was reduced 

by 5.7 percent, or $38 million.
28 | 2023 SEC AGENCY FINANCIAL REPORT

Overview of Financial Position

Assets. At September 30, 2023, the SEC’s total 

assets were $13.6 billion, a decrease of $524 million, 

or 4 percent, from FY 2022.

Accounts Receivable, Net decreased by $1.4 billion 

primarily due to several large orders late in September 

of FY 2022 against several broker-dealers totaling 

$1.1 billion. As of the end of September of FY 2022, 

only $125 million was collected for this order, with 

the remainder collected during FY 2023.

Fund Balance with Treasury increased by $499 

million. This is primarily due to increases in the 

SEC’s Salaries and Expenses and IPF balances.

Investments increased by $327 million between 

FY 2022 and FY 2023. This is primarily due to 

increases in disgorgement and penalties collections 

invested, net of disbursements to fund administrators 

for planned distributions, and higher investment 

interest rates in effect during FY 2023 compared to

FY 2022.

Table 1.2 | Assets as of September 30, 2023 and 2022

(DOLLARS IN MILLIONS) 2023 2022

Fund Balance with Treasury $ 9,330 $ 8,831

Investments—Disgorgement 

and Penalties Fund 3,212 2,826

Investments—Investor 

Protection Fund 358 417

Accounts Receivable, Net 559 1,926

Property and Equipment, Net 107 92

Other Assets 11 9

Total Assets $ 13,577 $ 14,101

69%

Fund Balance 

with Treasury

24%

Investments—

Disgorgement 

and Penalties Fund

2%

Investments—

Investor 

Protection Fund

4%

Accounts 

Receivable, Net 1%

Property and 

Equipment, Net 

and Other Assets

Chart 1.3 | FY 2023 Assets by Type
MANAGEMENT’S DISCUSSION AND ANALYSIS | 29

Liabilities. At September 30, 2023, the SEC’s total 

liabilities were $5.1 billion, a decrease of $918 million, 

or 15 percent, from FY 2022.

For the assets received resulting from enforcement 

judgments, the SEC recognizes a corresponding liability, 

which is either custodial if the collections are transferred 

to the U.S. Treasury General Fund or the IPF, or governmental if the collections are held pending distribution to 

harmed investors.

Custodial liabilities decreased by $910 million due to 

several large disgorgement orders from late September 

of FY 2022 that were collected during FY 2023. The 

largest order was against several broker-dealers totaling 

$1.1 billion. As of September 30, 2022, only $125 

million had been collected for this order. The reduction 

in the liability is due to the collections for these orders 

being deposited to the U.S. Treasury General Fund.

Accounts payable increased by $300 million, mostly 

due to a $293 million increase in whistleblower awards 

payable as of September 30, 2023, compared to the 

previous year. Contingent liabilities decreased by $419 

million. This balance represents a recognized liability 

for estimated whistleblower awards where the payment 

is considered probable. The SEC recognized estimated 

awards in the amount of $112 million that were probable as of September 30, 2023, while recognizing $531 

million as of September 30, 2022. 

Ending Net Position. The SEC’s net position, 

comprised of both unexpended appropriations and 

the cumulative results of operations, increased by 

$394 million during FY 2023. 

Table 1.3 | Liabilities as of September 30, 2023 and 2022

(DOLLARS IN MILLIONS) 2023 2022

Liability for Disgorgement 

and Penalties $ 4,007 $ 3,900

Custodial Liability 244 1,154

Accrued Payroll and Benefits 167 166

Accounts Payable 510 210

Registrant Deposits 59 56

Contingent Liability 112 531

Liability for Non-Entity Assets — —

Other Liabilities 13 13

Total Liabilities $ 5,112 $ 6,030

Chart 1.4 | FY 2023 Liabilities by Type

78%

Liability for 

Disgorgement 

and Penalties

5%

Custodial Liability

3%

Accrued Payroll

and Benefits

1% Registrant 

Deposits 2%

Accounts 10% Payable

Contingent Liability

1% Other 

Liabilities
30 | 2023 SEC AGENCY FINANCIAL REPORT

Results of Operations

Earned Revenues. Total earned revenues for the year 

ended September 30, 2023, increased by $116 million, 

or 5 percent, from FY 2022.

Filing fee revenue decreased by 9 percent during 

FY 2023 when compared to the prior year, due to a 

decrease in filing volume. The filing fee rate increased 

from $92.70 per million transacted in FY 2022 to 

$110.20 per million transacted in FY 2023.

Section 31 fee revenue increased by $175 million 

primarily due to a higher average fee rate in effect for 

most of FY 2023 compared to the prior year, which was 

offset by a 14 percent decrease in transaction volume. 

For FY 2023, the SEC's Section 31 fee rate in effect was 

$22.90 per million through February 26, after which 

it was adjusted to $8 per million. During FY 2022, 

the fee rate in effect was $5.10 per million through 

May 13, 2022, when it was adjusted higher to the 

$22.90 per million rate.

Reserve Fund. Section 991(e) of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 2010 

(Dodd-Frank Act) authorized the creation of a Reserve 

Fund. Funded from filing fee collections, the SEC can 

deposit up to $50 million per fiscal year, and the fund 

cannot hold more than $100 million in total each fiscal 

year. Excess filing fees are deposited to the U.S. Treasury 

General Fund.

Table 1.4 | Earned Revenues 

For the years ended September 30, 2023 and 2022

(DOLLARS IN MILLIONS) 2023 2022

Section 31 Securities 

Transaction Fees $ 1,974 $ 1,799

Securities Registration, Tender Offer, 

and Merger Fees (Filing Fees) 578 637

Total Earned Revenues $ 2,552 $ 2,436

Chart 1.5 | Reserve Fund Earned Revenue

(DOLLARS IN MILLIONS)

$0

$200

$400

$600

$800

$1,000

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

$145 $145

Earned on Behalf of the

U.S. Treasury General Fund Reserve Fund

(Deposits Only)

Total Earned

Revenue

$749

$699

$587 $782

$48

$529

$579

$50 $50 $50 $50

$832

$637 

$50

$528

$578
MANAGEMENT’S DISCUSSION AND ANALYSIS | 31

For the year ended September 30, 2023, filing fee 

revenues totaled $578 million. In FY 2023, $50 million 

of filing fee revenues was deposited into the Reserve 

Fund, of which $3 million was sequestered. The excess 

of $528 million was earned on behalf of the U.S. 

Treasury General Fund.

Filing fees deposited to the Reserve Fund can be used to 

fund the SEC’s operations, create budgetary authority, 

and are reported as a component of Appropriations 

(Discretionary and Mandatory) on the SEC’s Statement 

of Budgetary Resources. Filing fees deposited to the U.S. 

Treasury General Fund do not create budget authority 

and cannot be used to fund the SEC’s operations.

After FY 2023 deposits of $50 million, prior year 

sequestration totaling $3 million was returned, new 

FY 2023 sequestration totaling $3 million was recorded, 

and Reserve Fund resources totaling $54 million were 

obligated for the year ended September 30, 2023, 

leaving a remaining unobligated balance of $4 million 

of available resources at the end of FY 2023. 

Program Costs. Total Program Costs were $2.4 billion 

for the year ended September 30, 2023, a decrease of 

$284 million, or 11 percent, compared to FY 2022. 

The decrease was primarily due to a decrease in net 

whistleblower costs between the current and prior 

fiscal year.

$528

U.S. Treasury 

General Fund

$50

Reserve Fund 

(Deposits + Ant. 

Deposits + Net 

Seq./Resc.)

Chart 1.6 | FY 2023 Filing Fee Revenue

(DOLLARS IN MILLIONS)

$0

$400

$800

$1,200

$1,600

Salary and Benefit Expenses Other Expenses

FY 2023 FY 2022

 $1,376 $1,321 

$1,480

$933 

Chart 1.7 | Program Costs

(DOLLARS IN MILLIONS)
32 | 2023 SEC AGENCY FINANCIAL REPORT

Budgetary Resources

For the year ended September 30, 2023, the SEC’s total 

budgetary resources equaled $3.3 billion, a 23 percent 

increase from FY 2022.

Unobligated Balance from Prior Year Budget 

Authority. The increase in unobligated balance brought 

forward is a result of a $162 million increase in the 

IPF balance brought forward due to a reduction in 

whistleblower awards during FY 2022.

Spending Authority from Offsetting Collections. 

The increase in spending authority from offsetting 

collections ($574 million) is primarily due to an increase 

in the collection of Section 31 fees during FY 2023 

compared to the previous year. This is mostly due to the 

higher fee rate in effect for most of FY 2023 compared 

to the previous year. 

Table 1.5 | Total Budgetary Resources 

For the years ended September 30, 2023 and 2022

(DOLLARS IN MILLIONS) 2023 2022

Unobligated Balance from Prior Year Budget Authority, Net (Discretionary and Mandatory)

Salaries and Expenses Fund $ 87 $ 94

Reserve Fund 9 6 

Investor Protection Fund 306 144 

Total Unobligated Balance, Brought Forward, October 1 402 244 

Appropriations (Discretionary and Mandatory)

Salaries and Expenses Fund 50 414 

Reserve Fund 50 50 

Investor Protection Fund 645 394 

Spending Authority from Offsetting Collections 2,160 1,586 

Total Budgetary Resources $ 3,307 $ 2,688

23%

Appropriations

65%

Spending 

Authority from

Offsetting 

Collections

12%

Unobligated Balance, 

Brought Forward,

Oct 1

Chart 1.8 | FY 2023 Sources of Funds
MANAGEMENT’S DISCUSSION AND ANALYSIS | 33

Spending Authority from Offsetting 

Collections and Appropriations

During the fiscal year, the SEC receives an appropriation 

to fund its operations. This appropriation establishes the 

SEC’s new budget authority in its Salaries and Expenses 

Fund for the fiscal year. The SEC received new budget 

authority of $2.2 billion for FY 2023.

The SEC’s Section 31 fee collections are used to offset 

the appropriation, and as the collections are received, 

the appropriated authority is returned to the U.S. 

Treasury General Fund. The SEC collected $2.160 

billion in Section 31 transaction fees for the year ended 

September 30, 2023. The shortfall of $50 million 

between Offsetting Collections and Budget Authority 

were Appropriations received.

Chart 1.9 | Offsetting Collections vs. New Budgetary 

Authority Section 31 Exchange and Transaction Fees 

(DOLLARS IN MILLIONS)

$145

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Total Actual 

Offsetting 

Collections

Appropriations New Budgetary 

Authority

$2,452

$1,826

$239

$1,473

$1,712

Collections 

Exceeding 

Budget 

Authority

$626

$1,892

$34

$626 $1,926 $2,000

$414

$1,586

$2,160

$2,210

$50
34 | 2023 SEC AGENCY FINANCIAL REPORT

Investor Protection Fund

The SEC prepares stand-alone financial statements for 

the IPF as required by the Dodd-Frank Act. The IPF 

was established in FY 2010 to provide funding for a 

whistleblower award program and to finance the operations of the SEC OIG’s Employee Suggestion Program.

For the year ended September 30, 2023, the balance of 

the IPF increased by $31 million when compared to the 

prior fiscal year.

During FY 2023, the SEC deposited $660 million:

$643 million from IPF replenishments and $17 million 

from investment interest in Treasury securities. The SEC 

paid $322 million to whistleblowers, while $431 million 

in awards were accrued as payable, a $293 million 

increase from the prior year.

Also, $24 million in prior fiscal year sequestration was 

returned to the IPF and $38 million in FY 2023 funding 

was sequestered, resulting in a net sequestration totaling 

$14 million.

Limitations of the Financial Statements

The financial statements are prepared to report the 

financial position, financial condition, and results of 

operations, consistent with the requirements of 31 

U.S.C. § 3515(b). The statements are prepared from 

records of Federal entities in accordance with Federal 

generally accepted accounting principles (GAAP) and 

the formats prescribed by OMB. Reports used to 

monitor and control budgetary resources are prepared 

from the same records. Users of the statements are 

advised that the statements are for a component of the 

U.S. Government. 

Table 1.6 | Investor Protection Fund Activity

For the years ended September 30, 2023 and 2022

(DOLLARS IN MILLIONS) 2023 2022

Balance of Fund at Beginning of Fiscal Year, October 1 $ 306 $ 144

Amount Deposited Into or Credited to the Fund During the Fiscal Year 660 390 

Amount Awarded but Unpaid During the Fiscal Year (293) 56 

Amount Paid from the Fund During the Fiscal Year to Whistleblowers (322) (287)

Net Sequestration (14) 3 

Balance of the Fund at the End of the Reporting Period* $ 337 $ 306

*Note: Balance of the Fund does not include Anticipated Resources
MANAGEMENT’S DISCUSSION AND ANALYSIS | 35

PERFORMANCE HIGHLIGHTS

The SEC’s performance data provides a foundation for 

both programmatic and organizational decision making, 

and is critical for gauging the agency’s success in meeting 

its strategic goals. The SEC is committed to using 

performance management best practices to promote 

greater accountability. This section provides a summary 

table of all agency performance metrics by strategic goal 

and highlights a few key performance metrics for FY 

2023. Overall, it outlines the SEC’s strategic and performance planning framework and highlights the agency’s 

progress toward reaching its performance targets.

The SEC’s FY 2023 Annual Performance Report (APR) 

will be issued with the agency’s FY 2025 Congressional 

Budget Justification Report, and will provide a complete 

discussion of the agency’s strategic goals, including a 

description of performance goals and objectives, data 

sources, performance results and trends, strategic goal 

costs, and information about internal reviews and evaluations. The below summary of the SEC’s verification and 

validation of all performance data will also be included 

in the APR. The SEC’s APR is expected to be available 

in 2024 at SEC.gov/reports.

Strategic and Performance 

Planning Framework

The SEC’s FY 2023 strategic and performance 

planning framework is based on the Commission’s 

FY 2022–FY 2026 Strategic Plan. The Strategic Plan 

outlines the agency’s mission, vision, values, strategic 

goals, and strategic initiatives. The SEC’s work is 

structured around 3 strategic goals that also serve as 

its strategic objectives, as well as 10 strategic initiatives 

the agency plans to achieve in support of those goals 

and objectives.

Verification and Validation of 

Performance Data

The SEC’s programs require accurate data to properly 

assess program performance and make sound management decisions. To ensure data is correct, a system of 

data verification and validation is used. Data verification 

is a systematic process for evaluating a set of data 

against a set of standards to ascertain its completeness, 

correctness, and consistency using the methods and 

criteria defined in the project documentation. Data 

validation follows the data verification process in 

an effort to ensure that performance data are free of 

systematic error or bias, and that what is intended to be 

measured is actually measured. Together, these processes 

are used to evaluate whether the information has been 

generated according to specifications, satisfies acceptance criteria, and is appropriate and consistent with 

its intended use.

Below is a list of steps taken to ensure the performance 

data presented in this report is complete, reliable, and 

accurate.

1. The agency develops performance goals through its 

strategic planning process.

2. The SEC’s divisions and offices provide: 

• The procedures used to obtain assurance as 

to the accuracy and reliability of the data; 

• The data definitions for reference; 

• Documentation and explanation of the 

performance goal calculations; and 

• The sources of the underlying data elements. 

3. The performance data is approved by the division 

directors and office heads. This process ensures that 

the data used in the calculation of performance goals 

is accurate and reliable, and that internal control is 

maintained throughout the approval process.
36 | 2023 SEC AGENCY FINANCIAL REPORT

PERFORMANCE AT A GLANCE

The following table summarizes the status of the SEC’s performance—as measured by 

each individual performance goal (PG)—in support of the agency’s 3 strategic goals 

and 10 strategic initiatives. 

STRATEGIC GOAL 1 

Protect the investing public against fraud, manipulation, and misconduct

Performance Goal Measurement FY 2023

PG 1. Percentage of enforcement actions in which the Commission obtained 

relief on one or more claims

Percentage

PG 2. Percentage of Fair Fund and disgorgement fund plans that have 

distributed 80 percent of the available funds for distribution within 24 

months of the approval of the distribution plan

Percentage

PG 3. Percentage of investment advisers and broker-dealers examined during 

the year

Investment advisers

Broker-dealers

PG 4. Number of regulatory initiatives to improve investor disclosure Division of Corporation Finance

Division of Investment Management

Division of Trading and Markets

PG 5. Percentage of disclosure-based regulatory initiatives that consider 

whether it would be appropriate to include a provision to structure disclosures 

(to the extent that the benefits justify the economic costs) to enhance 

comparability

Division of Corporation Finance

Division of Investment Management

Division of Trading and Markets

PG 6. Investor Engagement Activities Activities

STRATEGIC GOAL 2

Develop and implement a robust regulatory framework that keeps pace with evolving 

markets, business models, and technologies

Performance Goal Measurement FY 2023

PG 7. Number of regulatory initiatives that enhance transparency in private 

markets or update the disclosure framework to reflect evolving technologies, 

business models, and capital markets

Division of Corporation Finance

Division of Investment Management

Division of Trading and Markets

PG 8. Number of supervisory cooperation requests from foreign authorities for 

SEC assistance and SEC requests for assistance on supervisory cooperation 

from foreign authorities

Requests from foreign authorities

SEC requests for assistance

PG 9. Percentage of supervisory engagements with broker-dealers and 

clearing agencies to address systemic and infrastructure risks

Percentage

PG 10. Number of examinations that request information related to an entity’s 

information security

Examinations

PG 11. Percentage of Systemically Important Financial Market Utilities 

examined by the examinations program

Percentage

PG 12. Number of new investor education materials on emerging and popular 

investment topics

New investor education materials 

issued

Users indicating a positive change
MANAGEMENT’S DISCUSSION AND ANALYSIS | 37

STRATEGIC GOAL 3

Support a skilled workforce that is diverse, equitable, and inclusive and is fully equipped 

to advance agency objectives

Performance Goal Measurement FY 2023

PG 13. Results of Federal Employee Viewpoint Survey Best Places to Work ranking1 N/A

PG 14. Index Results from SEC Federal Employee Viewpoint Survey: 

Diversity, Opportunity, and Employee Inclusion

Diversity and opportunity

Employee inclusion

PG 15. Diversity Outreach Events

PG 16. Equal Employment Opportunity Compliance – Sentiment and 

Assessment

Positive rating on FEVS Q82

Percentage of “yes” (or N/A) 

responses to EEOC questions3

PG 17. Employee Views on Intra-Agency Collaboration Cooperation (Q14)4

Knowledge share (Q17)5

PG 18. Percentage of Plan of Action and Milestones (POA&Ms) closed within 

six months from identification

Percentage

PG 19. Percentage of SEC information systems encrypting data-at-rest and 

encrypting data-in-transit, as reported per FISMA6

Data-at-rest

Data-in-transit

PG 20. Timely completion of corrective actions responsive to audit findings Submitted within 12 months

Not yet submitted within 12 months

PG 21. Number of innovative or analytical models, tools, capabilities, 

platforms, and other solutions deployed or made available to SEC staff

Number

PG 22. Percentage of FISMA6-reportable systems that are current 

(not legacy systems)

Percentage

Note: For more detailed information, please refer to the SEC’s FY 2023 APR, which will be available in 2024 at SEC.gov/reports.

Target met Target not met

1 The Partnership for Public Service is expected to publish the FY 2023 Best Places to Work rankings in December 2023.

2 Federal Employee Viewpoint Survey Q8: “I can disclose a suspected violation of any law, rule or regulation without fear of reprisal.”

3 As prescribed by the Equal Employment Opportunity Commission, 156 questions for evaluating whether agencies have in place policies and procedures

necessary to support a Model EEO Program.

4 Federal Employee Viewpoint Survey Q14: “The people I work with cooperate to get the job done."

5 Federal Employee Viewpoint Survey Q17: “Employees in my work unit share job knowledge.”

6 Federal Information Security Modernization Act
38 | 2023 SEC AGENCY FINANCIAL REPORT

SELECT METRICS

Below are key performance metrics that highlight major achievements and efforts in alignment with the agency’s 

strategic goals and initiatives. 

Strategic Goal 1: Protect the investing public against fraud, manipulation, 

and misconduct

Chart 1.10

Performance Goal 3. Percentage of investment advisers and broker-dealers examined during the year

0

20

40

60

80

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Plan FY 2023 Actual

Percentage

15% 15% 16%

43% 45% 49%

15%

0

20

40

60

80

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Plan FY 2023 Actual

INVESTMENT ADVISERS

Percentage

BROKER-DEALERS

47% 48%

15%

45%

15%

Description: Investment advisers (IA) and broker-dealers (BD) are critical market participants in terms of their interactions with retail 

investors. This metric indicates the percentage of IAs and BDs examined by the SEC or a self-regulatory organization (SRO) as a 

percentage of the total number of registrants. This metric takes into account all types of examinations, including, for example, risk priority 

examinations, cause inspections to follow up on tips and complaints, and limited scope special inspections to probe emerging risk areas.

Target: Investment Advisers – Met; Broker-Dealers – Exceeded

Responsible Division/Office: Division of Examinations

Data Source: Tracking and Reporting Examination National Documentation System (TRENDS) (IA and BD SEC Data) and SRO Databases 

(BD SRO Data)
MANAGEMENT’S DISCUSSION AND ANALYSIS | 39

The Division of Examinations (EXAMS) is dedicated to 

protecting the investing public by annually conducting 

thousands of examinations that promote compliance, 

prevent fraud, monitor risk, and inform policy. EXAMS 

implements a risk-based program designed to focus 

its resources on those firms, market participants, and 

practices that pose the greatest potential risk of securities 

law violations that can harm investors and the markets. 

The division’s examinations are critical to helping the 

SEC in its efforts toward ensuring markets are free of 

fraud, manipulation, and other misconduct. 

During FY 2023, EXAMS completed more than 

3,100 examinations, a majority of which focused 

on key market participants interacting with the 

investing public, including investment advisers and 

broker-dealers. The division’s examinations focused 

on important risk areas, including information security 

and operational resiliency, crypto assets and emerging 

financial technology, compliance with recently adopted 

rules (including those related to standards of care and 

adviser marketing), and additional areas representing 

significant risks to individual investors, such as the 

custody and safekeeping of client assets, conflicts of 

interest, and the activities of advisers to private funds. 

Overall, coverage rates in FY 2023 by the division 

and broker-dealer self-regulatory organizations met 

expectations—as illustrated in Chart 1.10—and 

reflect the continued emphasis on these important 

market participants.

In addition to conducting examinations, the program 

spent considerable time and attention during the year 

on other significant efforts focused on enhancing 

the protection of investors. This included engaging 

in various outreach efforts to promote compliance, 

working with rulemaking offices to inform policy, 

and other internal improvement initiatives intended 

to improve program performance. Going forward, 

EXAMS will continue to prioritize these efforts along 

with examinations of investment advisers and brokerdealers to assist the SEC in fulfilling its mission to 

protect investors, maintain fair, orderly, and efficient 

markets, and facilitate capital formation.
40 | 2023 SEC AGENCY FINANCIAL REPORT

In response to significant developments and trends 

impacting retail investors, the SEC’s Office of Investor 

Education and Advocacy (OIEA) led investor education initiatives focused on diverse and underserved 

communities as well as on emerging and popular 

investment topics, including publishing new investor 

education materials. To support these efforts, OIEA 

continued to gather information regarding the behavior 

of individual investors, the type of information they 

need and use when making investment decisions, and 

the usefulness of the SEC’s investor education efforts 

and related programs. 

As illustrated in Chart 1.11, in FY 2023, OIEA issued 

24 Investor Alerts and Bulletins to warn investors of 

possible fraudulent schemes and educate them on other 

important investing topics. For example, in March 

2023, OIEA published an Investor Alert urging investors 

to be cautious if considering an investment involving 

crypto asset securities. Later in the year, OIEA and 

the Financial Industry Regulatory Authority (FINRA) 

issued a joint Investor Bulletin to provide more clarity 

to individual investors about ways they can hold their 

securities. In response to the Hawaii wildfires, OIEA 

issued an Investor Alert on natural disasters and 

Strategic Goal 2: Develop and implement a robust regulatory regime that keeps pace 

with evolving markets, business models, and technologies

Chart 1.11

Performance Goal 12. Number of new investor education materials on emerging and popular investment topics

0

10

20

30

40

FY 2022 FY 2023 Plan FY 2023 Actual

0

25

50

75

100

FY 2022 FY 2023 Plan FY 2023 Actual

24

Number

90%

16

NEW INVESTOR EDUCATION MATERIALS ISSUED

Percentage

USERS INDICATING A POSITIVE CHANGE

94%

16

Note: Data for FY 2019 – FY 2021 is not available.

91%

Description: Through the Office of Investor Education and Advocacy (OIEA), and often in conjunction with other organizations, the SEC 

issues Investor Alerts and Bulletins to inform investors about different permutations of fraud, new investment products, and other topical 

issues. This metric measures: (a) the number of new investor education materials issued by OIEA; and (b) the percentage of users who 

indicated that the investor education materials may positively impact their behavior in the future.

Target: New Investor Education Materials Issued – Exceeded; Users Indicating a Positive Change – Exceeded

Responsible Division/Office: Office of Investor Education and Advocacy

Data Source: Investor.gov; Qualtrics Experience Management Platform
MANAGEMENT’S DISCUSSION AND ANALYSIS | 41

investment scams to remind investors that bad actors 

may use natural disasters to lure victims into investment 

scams, and that the fraudsters may directly target 

individuals receiving money from insurance companies 

or other sources. Ninety-one percent of respondents to 

Investor.gov’s customer satisfaction survey indicated that 

the information from Investor Alerts and Bulletins may 

positively impact them in the future. 

Strategic Goal 3: Support a skilled workforce that is diverse, equitable, and inclusive 

and is fully equipped to advance agency objectives

Chart 1.12

Performance Goal 15. Diversity Outreach Events

Note: Data for FY 2019 – FY 2022 is not available.

0

25

50

75

100

FY 2023 Plan FY 2023 Actual

60

81

Description: This metric captures the number of SEC-wide diversity outreach recruitment events.

Target: Exceeded

Responsible Division/Office: Office of Minority and Women Inclusion

Data Source: SEC Public Engagement and Outreach Tracker; Office of Minority and Women Inclusion Outreach Reporting Tracker

Enhancing workforce diversity remained a core focus 

for the SEC in FY 2023, and emphasis continued to be 

placed on strategic outreach and targeted recruitment. 

The Office of Minority and Women Inclusion (OMWI) 

maintained its dedication to building a talent pipeline 

that encompassed executives, professionals, recent 

graduates, and students in support of Strategic Initiative 

3.1 of the SEC’s FY 2022 – 2026 Strategic Plan to 

recruit staff with the right mix of skills, experience, and 

expertise that promotes diversity, equity, inclusion, 

and accessibility within the workforce. In pursuit 

of further diversifying this talent pool, OMWI took 

proactive measures during this year’s critical hiring 

surge. The expansion of strategic diversity partnerships 

from the previous year allowed OMWI to utilize these 

relationships effectively, ensuring that its outreach 

and promotional efforts reached a broader yet more 

precisely targeted audience. Most notable was the 

inaugural Diversity Career Fair for attorneys, which 

was hosted at the SEC’s headquarters and provided 

an opportunity for candidates from the partner 

organizations to directly engage with hiring managers 

and staff from various divisions and offices. As a result 

of this and countless other efforts in FY 2023, the 

SEC exceeded its outreach goal, as illustrated in Chart 

1.12. OMWI played a pivotal role in this achievement 

by coordinating, participating, and/or facilitating the 

agency’s involvement in more than 80 outreach events, 

with a clear focus on cultivating a diverse talent pool for 

careers within the SEC.
42 | 2023 SEC AGENCY FINANCIAL REPORT

Chart 1.13

Performance Goal 18. Percentage of Plan of Action and Milestones (POA&Ms) closed within six months from identification Percentage

53.2% 54.7%

61.8%

55.0%

61.1%

0

10

20

30

40

50

60

70

80

FY 2020 FY 2021 FY 2022 FY 2023 Plan FY 2023 Actual

Note: Data for FY 2019 is not available.

Description: POA&Ms are corrective action plans for tracking and planning the resolution of vulnerabilities and risks associated with 

information security and privacy. They detail resources required to accomplish the elements of the plan, any milestones in meeting the 

tasks, and scheduled completion dates for the milestones to address threats to the security, integrity, and availability of the SEC’s systems 

and sensitive data. Organizations implement a consistent process for developing POA&Ms that uses a prioritized approach to risk 

mitigation that is uniform across the organization. A risk assessment guides the prioritization process for items included in the POA&Ms. 

Risk mitigation resources include, for example, personnel, new hardware or software, and tools. (NIST SP 800-37, Rev 2)

Target: Exceeded

Responsible Division/Office: Office of Information Technology

Data Source: Information Securities — Enterprise Governance, Risk, and Compliance Capability

this performance goal is attributed to effective crossorganizational cooperation and mature governance 

efforts. Information system operations and development 

teams planned, tested, and implemented numerous 

actions to resolve POA&Ms for information systems 

within their purview. Oversight of these efforts is 

monitored using a near-real-time governance system and 

reported during routine status meetings that provide key 

stakeholders—including the Chief Operating Officer, 

Chief Information Officer, and Chief Information 

Security Officer—with ongoing awareness of progress 

toward closing POA&Ms. This monitoring and 

reporting also provides leadership with the opportunity 

to adjust priorities and resources, as necessary, to further 

support organizational risk management objectives. 

In accordance with Federal Information Security 

Modernization Act (FISMA) requirements and National 

Institute of Standards and Technology (NIST) guidelines, 

the SEC tracks information security control deficiencies, 

system vulnerabilities, and other information technology 

risks as plans of actions and milestones (POA&Ms). 

POA&Ms place an emphasis on continuous monitoring 

and management of cybersecurity risks to enable 

the SEC to leverage data and technology, both as an 

enterprise and within its individual programs, to gain 

efficiencies and inform policymaking. Monitoring and 

measuring POA&Ms’ time-to-closure supports ongoing 

efforts to effectively manage risk. 

As illustrated in Chart 1.13, in FY 2023, the Office of 

Information Technology closed 61 percent of POA&Ms 

within six months of their identification, thus exceeding 

the target goal of 55 percent. Achieving success for 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 43

is provided through Office of Management and Budget 

(OMB) Circular A-123, Management’s Responsibility 

for Enterprise Risk Management and Internal Control, 

and the Appendix A, Management of Reporting and 

Data Integrity Risk. 

Section 963 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010 (Dodd-Frank 

Act) describes the responsibility of SEC management to 

establish and maintain adequate internal controls and 

procedures for financial reporting. This section requires 

an annual financial controls audit, a Government 

Accountability Office (GAO) audit of the SEC’s 

assessment of the effectiveness of financial controls, and 

attestation by the Chair and the Chief Financial Officer 

(CFO). Section 922 of the Dodd-Frank Act requires 

the SEC to submit audited financial statements of the 

Investor Protection Fund to the Senate Committee on 

Banking, Housing, and Urban Affairs, and the House 

of Representatives Committee on Financial Services. 

The following Annual Assurance Statement is issued in 

accordance with the FMFIA, OMB Circular A-123, and 

Sections 963 and 922 of the Dodd-Frank Act.

MANAGEMENT ASSURANCES AND 

COMPLIANCE WITH LAWS

In FY 2023, the SEC demonstrated its continued 

commitment to maintaining strong internal controls. 

Internal control is an integral component of effective 

agency management, providing reasonable assurance 

that the following objectives are being achieved: 

effectiveness and efficiency of operations, reliability of 

reporting, and compliance with laws and regulations. 

The Federal Managers’ Financial Integrity Act of 1982 

(FMFIA) establishes management’s responsibility 

to assess and report on internal accounting and 

administrative controls. Such controls include 

program, operational, and administrative areas, as 

well as accounting and financial management. The 

FMFIA requires federal agencies to establish controls 

that reasonably ensure obligations and costs are in 

compliance with applicable laws; funds, property, 

and other assets are safeguarded against waste, loss, 

unauthorized use, or misappropriation; and revenues 

and expenditures are properly recorded and accounted 

for to permit the preparation of reliable reports and to 

maintain accountability over the assets. The FMFIA also 

requires agencies to annually assess whether financial 

management systems conform to related requirements 

(FMFIA § 4). Guidance for implementing the FMFIA 
44 | 2023 SEC AGENCY FINANCIAL REPORT

Annual Assurance Statement

SEC management is responsible for establishing and maintaining an effective system of 

internal control that meets the objectives of the Federal Managers’ Financial Integrity Act of 

1982 (FMFIA). In accordance with OMB Circular A-123, Management’s Responsibility for 

Enterprise Risk Management and Internal Control, the SEC conducted its annual assessment 

of its system of internal control. Based on the results of this assessment, the SEC can provide 

reasonable assurance that its system of internal control over operations, reporting, and 

compliance was operating effectively as of September 30, 2023.

SEC management is also responsible for establishing and maintaining an adequate internal 

control structure and procedures for financial reporting. Based on the results of its annual 

assessment of internal controls, the SEC can provide reasonable assurance that internal 

controls and procedures over financial reporting were operating effectively during the year 

ended September 30, 2023. 

The SEC also conducted reviews of its financial management systems in accordance with 

OMB Circular A-123 Appendix D, Management of Financial Management Systems—Risk 

and Compliance. Based on the results of these reviews, the SEC can provide reasonable 

assurance that its financial management systems substantially comply with the requirements 

of the Federal Financial Management Improvement Act of 1996 as of September 30, 2023.

GARY GENSLER CARYN E. KAUFFMAN

Chair Chief Financial Officer 

November 8, 2023 November 8, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS | 45

Management’s Assessment of 

Internal Control 

The Chair and CFO’s FY 2023 Annual Assurance 

Statement for FMFIA provides reasonable assurance 

that internal controls over operations, reporting, and 

compliance were operating effectively as of September 

30, 2023. The associated objectives are effective and 

efficient operations; compliance with applicable laws 

and regulations; and reliability of reporting. 

The basis for management’s assessment of, and 

assurance about, the SEC’s system of internal control 

for FY 2023 was composed of multiple components. A 

central component was the sub-assurance statements 

provided by each division director and/or office head 

about their division or office’s system of internal control. 

These statements were made based on each person’s 

knowledge of their division or office’s daily operations, 

and internal reviews supported by control testing, as 

well as recommendations for improvement from audits, 

investigations, and reviews conducted by the SEC Office 

of Inspector General (OIG) or GAO. 

Management considered the contents of these 

sub-assurance statements along with other sources 

of information that included, but were not limited to, 

the following:

• An entity-level evaluation of the internal control 

system’s adherence to the Standards for Internal 

Control in the Federal Government; 

• Internal management reviews and self-assessments; 

• Reviews of financial management systems under 

OMB Circular A-123 Appendix D, Management 

of Financial Management Systems–Risk and 

Compliance; 

• Reports pursuant to the Federal Information 

Security Modernization Act (FISMA) and OMB 

Circular A-130, Managing Information as a 

Strategic Resource; 

• Reviews on improper payments;

• Reviews that support compliance with the Digital 

Accountability and Transparency Act of 2014 

(DATA Act);

• Reports and other information from Congress or 

agencies such as OMB, the Office of Personnel 

Management, the Office of Government Ethics, 

and/or the General Services Administration (GSA) 

reflecting the adequacy of internal controls; and 

• Additional reviews relating to a division or 

office’s operations. 

With respect to internal controls over reporting 

of financial information, the SEC performed a 

comprehensive risk assessment. The agency documented 

its key controls to address risks, and assessed the design, 

and operating effectiveness of these controls through 

detailed test procedures. The agency also tested the 

operating effectiveness of control activities that were 

found to be deficient in prior years. SEC management 

analyzed the magnitude of internal control deficiencies, 

both individually and in the aggregate, to determine 

whether a material weakness existed in the financial 

reporting processes. 

Taking into account the statements from directors and 

office heads, the supplemental sources of information 

as described above, and the results of the assessment of 

internal controls over operations and financial internal 

controls, reporting, and compliance, the agency’s 

Financial Management Oversight Committee advises the 

Chair as to whether the SEC had any internal control 

deficiencies determined to be significant. 
During FY 2023, the SEC strategically 

addressed climate risk—the risk of 

potential climate impacts on the SEC’s 

infrastructure, operations, and financial 

position—through a framework 

that includes governance, strategic 

planning, and risk management. 

Climate 

Risk 

Efforts

OVERVIEW OF SEC'S
Governance

Resilience and sustainability are core 

values with respect to the facilities and 

operations of the SEC. As such, the SEC 

has in place a governance structure to 

identify and manage operational risks 

within the organization.

The SEC established the Climate and 

Sustainability Oversight Committee (CSOC) 

to advise and provide recommendations 

on climate-related risks affecting SEC’s 

operations, including: 

• Advising on the agency’s climate-related 

risks and potential mitigation techniques 

and the potential impacts on the SEC’s 

strategic goals and annual budget;

• Elevating, as necessary, climate-related 

risks and mitigation opportunities to the 

Risk Management Oversight Committee 

(RMOC); and

• Providing guidance on, and monitoring 

the SEC’s responses to, climate-related 

risks and opportunities.

The CSOC is composed of senior officials 

from SEC divisions and offices that have 

operational, risk, or reporting responsibilities 

and expertise relevant to the mitigation 

of, or reporting on, climate-related risks that 

could impact the agency. 

The SEC has an internal program to assess 

and report climate risks, led by a degreed 

engineer who receives support from 

agency professional staff. The program 

lead is responsible for greenhouse gas 

(GHG) emissions data collection and 

reporting for the SEC, as well as providing 

recommendations to CSOC. 

Strategic Planning

A critical element of the SEC’s Strategic 

Plan is to protect two of the agency’s most 

important assets: its people and its data. 

The SEC FY 2022 – 2026 Strategic Plan

includes initiative 3.3, “Enhance the agency’s 

internal control and risk management 

capabilities, including by the development 

of a robust and resilient program for dealing 

with threats to the security, integrity, 

and availability of the SEC’s systems and 

sensitive data.”

A critical element of the SEC’s 

Strategic Plan is to protect two 

of the agency’s most important 

assets: its people and its data. 

“

“

Climate-related risks can occur in various 

forms. The most immediate climate-related 

risks facing the SEC are potential damage to 

infrastructure and disruptions in operations 

due to climate-driven events. The most 

significant near-term climate-related 

threats are floods, fires, rising heat index, 

severe droughts, and high winds (including 

hurricanes, tornadoes, and derechos). 

Such events can lead to potential harm 

to or loss of personnel, data, property, 

energy, and water availability. Any of these 

losses can have an adverse impact on 

agency operations. 
Risk Management

To mitigate the climate-related risks 

identified above, the SEC employs strategies 

to reduce the likelihood and impact of 

damage or disruptions to SEC assets or 

operations. These strategies include: 

• Geographically dispersing 

regional offices; 

• Utilizing GSA space which provides 

access to best practices and 

standards for design, construction, 

and building operations; 

• Implementing SEC’s design standards 

requiring regional offices to locate on 

the 2nd floor or above; 

• Locating computer and filing rooms in 

building core areas; 

• Designating alternate worksites for 

mission-essential functions;

• Maintaining data center redundancies 

and fail-over capabilities; and

• Transitioning to cloud computing. 

Further, the SEC maintains a comprehensive and robust Continuity of Operations 

program consistent with applicable 

government-wide directives and requirements. This program helps to ensure that 

essential functions continue during a wide 

range of emergencies, including localized 

acts of nature, accidents, and technological 

or other emergencies.

The SEC also collaborates with other 

financial regulatory agencies to share 

climate-related risk management best 

practices. 

Sustainability Actions Taken 

and Underway

As part of its climate risk management and 

sustainability efforts, the SEC is conducting 

an inventory of its GHG emissions. The 

agency also has undertaken several efforts 

that will help promote sustainability, reduce 

emissions, or mitigate climate risks. 

For example, in FY 2023, the SEC completed 

an office space consolidation project to 

reduce the headquarters footprint to better 

align with the agency’s post-pandemic 

telework posture. As a result of this 

consolidation effort, the agency realized a 

16.4 percent reduction in rentable square 

feet at its headquarters location. The smaller 

footprint yields rent savings as well as 

reduced GHG emissions from SEC facilities. 

The SEC uses an electronic repository 

system for contract files that has decreased 

both the use of paper and the need for 

physical space in the headquarters building 

and off-site storage. As a result of this effort, 

the agency reduced its paper footprint 

The SEC uses an electronic 

repository system for contract 

files that has decreased both 

the use of paper and the 

need for physical space in the 

headquarters building and 

off-site storage. 

“

“
while meeting federal records management 

mandates. For many of its IT and electronics 

hardware procurements, the SEC leverages 

the government’s buying power through 

the use of Government-wide Acquisition 

Contracts and Federal Supply Schedules 

that include energy efficiency and sustainability requirements.

The SEC adjusted the way it handles forensic 

information related to its enforcement 

activity. Previously, all forensic information 

received and produced was developed on 

hard media, with numerous hard disk drives 

required to maintain duplicate copies of 

the data. Further, these hard drives not 

only contained plastic, aluminum, and steel, 

but also trace quantities of lead, mercury, 

beryllium, thallium, and arsenic. Shredding a 

hard drive—the typical method for securely 

disposing of the drives—releases toxins 

such as polychlorinated biphenyls and 

polychlorinated dibenzodioxins. During 

FY 2023, the SEC moved to shared network 

resources, dramatically reducing the 

number of individual hard drives purchased, 

used, and disposed of by the SEC. The 

E-Discovery program also significantly 

decreased the volume of physical productions (e.g., data that are processed, 

analyzed, and reviewed) received from and 

provided to opposing parties for use in 

litigation, such as hard drives, DVDs/CDs, 

paper, and thumb drives, as a result of the 

program’s move to electronic productions 

of data. 

The agency continues to use data centers 

that are optimized to meet energy savings 

as these vendor facilities are powered 

using 100 percent renewable energy. The 

agency’s transition to cloud computing and 

investments in virtualization technologies 

should help lower space and power 

consumption costs over time. In addition, 

the SEC’s Office of Records Management 

Services made significant strides in 

supporting the SEC’s transition to digital 

records and reducing the reliance on 

paper records. 

The Commission continues to take 

action to reduce the use of paper by 

promoting electronic filings. In June 2022, 

the Commission adopted rule and form 

amendments that require certain Forms 

144 to be filed electronically, for the 

reasons described in the release, and those 

amendments went into effect on April 

13, 2023. The Commission also proposed 

rules requiring the electronic submission of 

certain other forms, filings, and materials 

under the Securities Exchange Act of 1934. 

Upon adoption, these amendments would 

help to further reduce paper submissions to 

the Commission. 

The agency continues to 

use data centers that are 

optimized to meet energy 

savings as these vendor facilities are powered using 100 

percent renewable energy. 

“

“
50 | 2023 SEC AGENCY FINANCIAL REPORT

Enterprise Risk Management 

The SEC’s Office of the Chief Risk Officer (OCRO) 

leads the agency’s enterprise risk management (ERM) 

efforts, as required under OMB Circular A-123 and 

OMB Circular A-11, Preparation, Submission, and 

Execution of the Budget, and champions risk management throughout the agency. ERM assists the agency 

in achieving its strategic and operational objectives by 

providing an enterprise-wide approach for managing 

the most significant risks and challenges. The SEC 

employs a structured approach to identify enterprise 

risks that may arise from a variety of internal and 

external environments. Priority risks are categorized 

and documented by the SEC’s RMOC in the SEC 

Enterprise Risk Profile. 

The RMOC considers the most salient enterprise risks 

for the SEC. The RMOC evaluates whether a particular 

risk is sufficiently mitigated and recommends additional 

measures as needed to bring a risk within the agency’s 

tolerance level. OCRO supports the Committee’s efforts 

and provides leadership and guidance on enterprise-wide 

risks, including the effectiveness of strategies to address 

those risks. 

The continued integration of internal controls and risk 

management is critical to the full implementation and 

success of a comprehensive enterprise risk framework. 

In FY 2023, the SEC initiated efforts to better understand risks to the SEC through improved operational 

risk management and internal control processes, and 

increased collaboration between OCRO and the SEC’s 

divisions and offices. In addition, the RMOC continued 

to expand and improve its use of data in risk tolerance 

decision-making. 

Other Reviews

The Payment Integrity Information Act of 2019 

The Payment Integrity Information Act of 2019 (PIIA) 

updated government-wide improper payment reporting 

requirements by repealing and replacing all previous 

improper payment legislation. PIIA requires agencies 

to review all programs and activities they administer 

to identify those that may be susceptible to significant 

erroneous payments. For all programs and activities 

in which the risk of erroneous payments is significant, 

agencies are to estimate the annual amount of erroneous 

payments made in those programs. The SEC’s risk 

assessments have consistently indicated that none of 

the agency’s programs are susceptible to significant 

improper payments; therefore, per OMB guidelines, the 

SEC is required to conduct risk assessments every three 

years, or sooner if a program has a significant change 

in legislation, a significant increase in funding, or a 

determination of possible significant improper payments 

in the following year. The agency’s latest risk assessment 

was conducted in FY 2022. The results of this assessment continued to support the determination that all 

of the SEC-evaluated programs are low risk. Based on 

these results, and consistent with OMB guidelines, the 

SEC did not conduct a risk assessment for FY 2023 and 

is not required to conduct another risk assessment until 

FY 2025. 

For additional information regarding the SEC’s compliance with improper payments, please refer to Payment 

Integrity Reporting Details in the Other Information 

section of this report. 
MANAGEMENT’S DISCUSSION AND ANALYSIS | 51

Digital Accountability and Transparency Act 

of 2014/Data Quality Plan 

The DATA Act (Pub. L. 113-101) was enacted to 

establish government-wide financial data standards to 

increase the availability, accuracy, and usefulness of 

federal spending information. The DATA Act requires 

that federal agencies report financial spending data in 

accordance with data standards established by the U.S. 

Department of the Treasury (Treasury) and OMB. The 

DATA Act requires federal agencies to disclose direct 

federal agency expenditures and link federal contract 

spending information to programs of federal agencies 

to enable taxpayers to track federal spending more 

effectively using USASpending.gov. In accordance with 

the DATA Act, the SEC formalized financial system and 

manual controls over the completeness and accuracy 

of federal spending data reported both internally and 

externally. The SEC submitted the mandatory monthly 

transmissions required in FY 2023. 

The current OMB Circular A-123 Appendix A called 

for the creation of a Data Quality Plan (DQP). The SEC 

has a DQP in place, which is reviewed and updated on 

an annual basis. The SEC DQP contains the processes 

in place to address the completeness and accuracy of 

award and financial data reported to Treasury. It utilizes 

the principles of OMB Circular A-123 Appendix A 

to highlight the discipline and internal controls of the 

related information systems that contain spending 

information. 

Financial Management System 

Conformance 

The Federal Financial Management Improvement Act 

of 1996 (FFMIA) requires that each agency implement 

and maintain financial management systems that 

comply substantially with federal financial management 

systems requirements, applicable federal accounting 

standards, and the U.S. Standard General Ledger at 

the transaction level. The purpose of the FFMIA is to 

advance federal financial management by verifying 

that financial management systems provide accurate, 

reliable, and timely financial management information 

in order to manage daily operations, produce reliable 

financial statements, maintain effective internal control, 

and comply with legal and regulatory requirements. 

Although the SEC, as an independent agency, is exempt 

from the requirement to determine substantial compliance with the FFMIA, the agency assesses its financial 

management system annually for conformance with the 

requirements of OMB Circular A-123 Appendix D and 

other federal financial system requirements. 

Summary of Current Financial System 

and Future Strategies 

The FY 2023 assessment of the current financial system 

demonstrated that a low risk rating would be appropriate, and that the agency substantially complied with the 

requirements of Section 803(a) of the FFMIA. The SEC’s 

financial system, Delphi, is supported by an approved 

Federal Shared Service Provider (FSSP) and meets all of 

the requirements of the FFMIA. In FY 2023, the SEC 

continued to work with its FSSP, the Department of 

Transportation’s Enterprise Services Center, to enhance 

its existing system. The SEC believes that continuing to 

invest in technology-based solutions will further improve 

the sustainability of our controls. 
52 | 2023 SEC AGENCY FINANCIAL REPORT

Federal Information Security 

Modernization Act (FISMA) 

FISMA requires federal agencies to “develop, document, 

and implement an agency-wide information security 

program to provide information security for the 

information and information systems that support the 

operations and assets of the agency, including those 

provided or managed by another agency, contractor, 

or other source.” In addition, FISMA requires federal 

agencies to conduct annual assessments of their information security and privacy programs; develop and 

implement remediation efforts for identified weaknesses 

and vulnerabilities; and report compliance to OMB.

The SEC’s Inspector General, Chief Information Officer 

(CIO), and Senior Agency Official for Privacy (SAOP) 

perform a multi-part review of the Commission’s 

compliance with FISMA requirements each year. The 

OIG report is due one month following the close of the 

third quarter, and the CIO and SAOP reports are due 

one month following the close of the fiscal year.

Oversight1 and Compliance 

During FY 2023, the SEC’s Office of Information 

Technology (OIT)—in partnership with OIT project 

teams, information system owners, and division/

office business owners—completed security assessment 

and authorization activities for 60 FISMA reportable 

systems. OIT completed 270 privacy reviews in accordance with the Privacy Act of 1974, the Paperwork 

Reduction Act, the E-Government Act of 2002, and 

assessments required by OMB Circular A-130. As a 

result, OIT published 18 privacy impact assessments, 

11 privacy assessment reports, and two Privacy Act 

statements for systems that collect, maintain, or disseminate personally identifiable information (PII). 

OIT facilitated the remediation of 691 deficiencies via 

Plans of Action and Milestones (POA&Ms) associated 

with the SEC’s assessments of its network infrastructure 

and major applications. 

The SEC OIG performed the annual independent 

evaluation of the SEC’s information security program, 

as required by the E-Government Act of 2002. During 

FY 2023, the OIG closed 24 prior-year IT-related audit 

recommendations. GAO performed the annual financial 

statement audit, which includes within its scope an 

audit of security controls for SEC financial management 

systems. OIT completed corrective actions for one prioryear IT-related GAO audit recommendation. 

Governance and Technology 

OIT continues to update governance procedures 

and processes consistent with OMB policy and 

National Institute of Standards and Technology 

guidance. In support of these efforts, OIT utilizes a 

centralized information security governance, risk, and 

compliance (GRC) management system to maintain the 

Commission’s information system inventory, FISMA 

compliance data, POA&Ms, and incident tracking. OIT 

published significant updates to agency-wide policy 

regulations covering non-public information, acceptable 

use of technology, and user rules of behavior. OIT also 

continues to improve its operational security capabilities 

by maturing the Information Security Continuous 

Monitoring program and implementing zero trust 

cybersecurity principles in accordance with OMB 

M-22-09, Moving the U.S. Government Toward Zero 

Trust Cybersecurity Principles. In coordination with the 

U.S. Department of Homeland Security’s Cybersecurity 

and Infrastructure Security Agency (CISA), OIT 

achieved milestones established by OMB for the 

1 SEC policies set forth the roles and responsibilities for management of the SEC’s agency-wide information security program, including oversight by the SEC 

Chair, Chief Information Officer, and Chief Information Security Officer, as well as the operational responsibilities of the individual information system owners 

and business units.
MANAGEMENT’S DISCUSSION AND ANALYSIS | 53

implementation of the Continuous Diagnostic and 

Mitigation Dashboard program in support of ongoing 

federal government-wide initiatives to improve IT risk 

management activities.

The SEC continued to improve security through several 

key initiatives in FY 2023. OIT made improvements to 

security monitoring and logging in support of ongoing 

efforts to comply with OMB M-21-31, Improving the 

Federal Government’s Investigative and Remediation 

Capabilities Related to Cybersecurity Incidents, as well 

as through the deployment of tools and techniques for 

enhancing application security, vulnerability scanning, 

and asset inventory. These initiatives will be key factors 

for moving to a Continuous Security Assessment and 

Authorization posture in FY 2024. OIT also made 

significant strides toward a zero trust architecture in line 

with OMB M-22-09 and CISA Zero Trust Maturity 

Model guidance. Efforts included a comprehensive 

network perimeter re-design, deployment of Secure 

Access Service Edge technology, and enforcement of 

multi-factor authentication for all SEC users.

Training and Communications 

OIT delivered Privacy and Information Security 

Awareness (PISA) training to all SEC personnel during 

FY 2023. OIT continued utilizing robust processes 

to manage PISA compliance on a continuous basis 

using automation capabilities of the SEC enterprise

learning management system, and ramifications 

(e.g., network access restrictions) were imposed for 

not completing the training on time. In October 2022, 

OIT Security conducted a four-part outreach series for 

Cybersecurity Awareness Month that educated SEC 

users on key cybersecurity topics using interactive online 

learning activities and communications. In January 

2023, OIT Security launched SEC’s inaugural Data 

Privacy Week, presenting an opportunity for all staff 

to engage in refresher training on the best practices for 

managing data privacy and safeguarding personally 

identifiable information (PII) maintained in SEC’s 

information systems and records. Daily articles and 

interactive content highlighted topics covering PII, 

breach identification and response, encryption, and 

proper document destruction methods. In addition, 

OIT organized and hosted the agency’s seventh annual 

Breach Response Team tabletop exercise to strengthen 

the agency’s capabilities for strategically responding to 

a high impact breach. The office also initiated virtual 

instructor-led training with the Chicago Regional 

Office on the topic of “Protection of PII.” This 

interactive course was designed to remind employees 

about their roles and responsibilities in safeguarding 

sensitive data, protecting SEC resources, and reporting 

privacy breaches. 

OIT continued to promote information security and 

privacy awareness throughout the year via the agency’s 

internal newsletter. For example, OIT conducted 

quarterly phishing exercises for all SEC employees 

and contractors, and advanced the complexity of 

the phishing exercises to further challenge staff and 

improve their ability to discern real messages from 

phishing attempts. The training modules were also 

updated, and personnel identified by these exercises as 

being susceptible to phishing were required to undergo 

supplemental phishing training in addition to meeting 

the annual security awareness training requirement. OIT 

continues to offer staff access to an industry-leading 

online platform for web-based training. Finally, OIT 

worked with SEC University to develop OIT learning 

channels for all staff and also assign learning paths for 

Cloud Product owners and Agile developers. 
ap·pro·pri·a·tion

ə-'prō-prē-'ā-shən 

Budget authority to incur obligations and 

to make payments from the Treasury for 

specified purposes.

cus·to·di·al ac·tiv·i·ty

'

kə-'stō-dē-əl ak-'ti-və-tē

Revenue that is collected, and its 

disposition, by a federal agency on behalf 

of other entities is accounted for as a 

custodial activity of the collecting entity. 

SEC custodial collections include amounts 

collected from violators of securities laws 

as a result of enforcement proceedings.

con·tin·gent li·a·bil·i·ty

 kən-'tin-jənt 'lī-ə-'bi-lə-tē

A liability that may occur depending on 

the outcome of an uncertain future event. 

Contingent liabilities is recorded if the 

contingency is likely and the amount of the 

liability can be reasonably estimated.
FINANCIAL SECTION | 55

FINANCIAL SECTION

This section contains the SEC's financial statements, the financial statements of the SEC's Investor Protection Fund (IPF), and additional information for FYs 2023 and 2022. Information presented here satisfies 

the financial reporting requirements of the Accountability of Tax Dollars Act of 2002 and the Dodd-Frank 

Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The SEC prepares these 

statements and accompanying notes in compliance with U.S. generally accepted accounting principles for 

the federal government and OMB Circular A-136, Financial Reporting Requirements. 

1 Budgetary information aggregated for purposes of the Statement of Budgetary Resources is disaggregated for each of the SEC’s major budget accounts 

and is presented as Required Supplementary Information. 

2 The SEC does not have stewardship over resources or responsibilities for which supplementary stewardship reporting would be required.

SEC Financial Statements

Balance Sheets

Presents, as of a specific time, the amount of resources 

that embody economic benefits or services owned or 

managed by the SEC (assets); amounts owed by the SEC 

(liabilities); and amounts that comprise the difference 

(net position). 

Statements of Net Cost

Presents the gross cost incurred by the SEC, less exchange 

revenue earned from its activities. The SEC presents cost 

of operations by program to provide cost information at 

the program level, and recognizes collections as exchange 

revenue on the Statement of Net Cost, even when the 

collections are transferred to other entities. 

Statements of Changes in Net Position

Reports the change in net position during the reporting 

period, including changes to Cumulative Results of 

Operations and Unexpended Appropriations. 

Statements of Budgetary Resources1

Provides information about how budgetary resources 

were made available, and reports their status at year end. 

Statements of Custodial Activity

Reports the collection of revenue for the U.S. Treasury 

General Fund. The SEC accounts for sources and disposition of the collections as custodial activities on this 

statement. Custodial collections of non-exchange revenue, 

such as amounts collected from violators of securities laws 

as a result of enforcement proceedings, are reported only 

on the Statement of Custodial Activity. 

Accompanying Notes to the Financial Statements

Provides a description of significant accounting policies 

and detailed information on select statement line items. 

Required Supplementary Information (Unaudited)2

Reports the Combining Statements of Budgetary 

Resources by fund account. 

IPF Financial Statements 

IPF Financial Statements 

Provides stand-alone, comparative financial statements 

(Balance Sheets, Statements of Net Cost, Statements of 

Changes in Net Position, and Statements of Budgetary 

Resources), as required by the Dodd-Frank Act. 

Accompanying Notes to the IPF Financial Statements

Provides a description of significant accounting policies 

and detailed information on select statement line items, 

as required by the Dodd-Frank Act. 
Sound financial management 

is the cornerstone of effective 

and prudent stewardship of 

the taxpayer resources. I am 

proud of the hard work, skill, 

and dedication of the staff over 

the past year on the agency’s 

budgetary performance, internal 

controls, and financial reporting.

CARYN E. KAUFFMAN, CFO

“

“
FINANCIAL SECTION | 57

MESSAGE FROM THE

CHIEF FINANCIAL OFFICER

I am pleased to join Chair 

Gensler in presenting the 

SEC’s Agency Financial Report 

(AFR) for FY 2023 and hope 

you will find this report a 

useful summary of our performance results and financial 

statements.

Our independent auditor, the U.S. Government 

Accountability Office (GAO), issued an unmodified 

opinion on the SEC’s financial statements and internal 

controls. As noted in GAO’s report on the internal 

controls over the Investor Protection Fund (IPF), we 

had a significant deficiency during FY 2023 related to 

the improper deposit of amounts into the fund over 

multiple months totaling approximately $8.4 million. 

Corrective actions were taken prior to the end of the 

fiscal year, including transferring out the excess funds. 

More specifically, since the evaluation of collections 

eligible for deposit is performed daily and is a very 

manual process, the SEC added additional review 

processes to its internal controls over the analysis of 

eligible collections to be deposited into the IPF. These 

additional controls resulted in the remediation of this 

significant deficiency as of September 30, 2023. The SEC 

recognizes the importance of a strong system of internal 

controls in achieving sound financial reporting. The 

financial statements, financial analysis, and highlights of 

the agency’s performance within this AFR demonstrate 

how the SEC uses its financial resources to protect 

investors, maintain fair, orderly, and efficient markets, 

and facilitate capital formation. 

Among our accomplishments during the past year was 

the successful implementation of the Treasury’s Bureau 

of the Fiscal Service G-Invoicing platform, which will 

enhance government-wide financial management and 

improve the quality of intragovernmental (IGT) transactions. Providing a common platform and data standard 

will facilitate reconciliation of IGT activities and 

elimination of accounting differences from the Financial 

Report of the U.S. Government.

We continue to focus on technology advancements 

to improve our financial operations. In FY 2022, the 

Commission adopted the Filing Fee Disclosure and 

Payment Methods Modernization rule to improve the 

accuracy and efficiency of filing fee payments. The 

rule discusses additional validation measures to help 

promote greater accuracy of fee calculations, and the 

system enhancements to implement those measures are 

being developed. Registrants now have the option to 

submit test filings prior to the effective date for large, 

accelerated filers in January 2024. The rule will be 

incrementally phased in for all filers through 2025. 

Sound financial management is the cornerstone of effective and prudent stewardship of the taxpayer resources. 

I am proud of the hard work, skill, and dedication of 

the staff over the past year on the agency’s budgetary 

performance, internal controls, and financial reporting.

Sincerely, 

CARYN E. KAUFFMAN 

Chief Financial Officer 

November 9, 2023 
58 | 2023 SEC AGENCY FINANCIAL REPORT

REPORT OF INDEPENDENT AUDITORS

441 G St. N.W.

Washington, DC 20548

Independent Auditor’s Report

To the Chair of the United States Securities and Exchange Commission

In our audits of the fiscal years 2023 and 2022 financial statements of the United States 

Securities and Exchange Commission (SEC)1 and its Investor Protection Fund (IPF),2 we found

• the SEC and IPF financial statements as of and for the fiscal years ended September 30, 

2023, and 2022, are presented fairly, in all material respects, in accordance with U.S.

generally accepted accounting principles;

• SEC maintained, in all material respects, effective internal control over financial reporting for 

SEC and for IPF as of September 30, 2023; and

• no reportable noncompliance for fiscal year 2023 with provisions of applicable laws, 

regulations, contracts, and grant agreements we tested.

The following sections discuss in more detail (1) our report on SEC and IPF’s financial 

statements and on internal control over financial reporting, which includes the required

supplementary information (RSI)3 and other information included with the financial statements;4

(2) our report on compliance with laws, regulations, contracts, and grant agreements; and (3) 

agency comments.

1Section 963 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), requires that (1) 

SEC annually submit a report to Congress describing management’s responsibility for, and assessing the 

effectiveness of, internal control over financial reporting during the fiscal year; (2) the SEC Chair and Chief Financial 

Officer attest to SEC’s report; and (3) GAO assess the effectiveness of SEC’s internal control over financial reporting 

and evaluate, attest to, and report on SEC’s assessment. Pub. L. No. 111-203, § 963(a), (b), 124 Stat. 1376, 1910 

(July 21, 2010) classified at 15 U.S.C. § 78d-8(a), (b). SEC evaluated its internal control over financial reporting in 

accordance with the Office of Management and Budget’s Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control, based on criteria established under 31 U.S.C. § 3512(c), (d), commonly 

known as the Federal Managers’ Financial Integrity Act of 1982.

2IPF was established by section 922 of the Dodd-Frank Act. It funds the activities of SEC’s whistleblower award 

program under that section and the SEC Office of Inspector General Employee Suggestion Program established 

under section 966 of the same law. Pub. L. No. 111-203, §§ 922(a), 966, 124 Stat. 1376, 1844, 1912-13 (July 21, 

2010) (classified at 15 U.S.C. §§ 78d-4(e), 78u-6(b), (g)). IPF is a separate SEC fund, and its financial statements 

present SEC’s financial activity associated with these programs. Accordingly, IPF’s financial transactions are also 

included in SEC’s overall financial statements.

3The RSI consists of the Management’s Discussion and Analysis and the Combined Statement of Budgetary 

Resources, by Fund, which are included with the financial statements.

4Other information consists of information included with the financial statements, other than the RSI and the auditor’s 

report.
FINANCIAL SECTION | 59

Report on the Financial Statements and on Internal Control over Financial Reporting

Opinion on the Financial Statements

SEC is required by law to annually prepare and submit audited financial statements covering all 

accounts and associated activities of the Commission to Congress and the Office of 

Management and Budget.5 Further, the Securities Exchange Act of 1934, as amended in 2010 

by section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act), requires SEC to annually submit a complete set of audited financial statements for 

IPF to Congress.6 IPF’s financial transactions are also included in SEC’s overall financial 

statements. In accordance with our authority to audit statements and schedules prepared by 

executive agencies and their components,7 we have audited the SEC and IPF financial

statements.

SEC’s financial statements comprise the balance sheets as of September 30, 2023, and 2022; 

the related statements of net cost, changes in net position, budgetary resources, and custodial 

activity for the fiscal years then ended; and the related notes to the financial statements. IPF’s 

financial statements comprise the balance sheets as of September 30, 2023, and 2022; the 

related statements of net cost, changes in net position, and budgetary resources for the fiscal 

years then ended; and the related notes to the financial statements.

In our opinion, SEC’s financial statements present fairly, in all material respects, SEC’s financial

position as of September 30, 2023, and 2022, and its net cost of operations, changes in net 

position, budgetary resources, and custodial activity for the fiscal years then ended in 

accordance with U.S. generally accepted accounting principles. In our opinion, IPF’s financial 

statements present fairly, in all material respects, IPF’s financial position as of September 30, 

2023, and 2022, and its net cost of operations, changes in net position, and budgetary 

resources for the fiscal years then ended in accordance with U.S. generally accepted 

accounting principles.

Opinion on Internal Control over Financial Reporting

In accordance with the Dodd-Frank Act, we have assessed the effectiveness of SEC’s internal 

control over financial reporting, evaluated SEC’s assessment of such effectiveness, and are 

attesting to and reporting on SEC’s assessment of its internal control over financial reporting.

We also have audited SEC’s internal control over financial reporting as of September 30, 2023, 

based on criteria established under 31 U.S.C. § 3512(c), (d), commonly known as the Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA). In our opinion, SEC maintained, in all 

material respects, effective internal control over financial reporting as of September 30, 2023, 

for SEC and for IPF, based on criteria established under FMFIA. As discussed below in more 

detail, our 2023 audit identified deficiencies in SEC’s controls over transfers to the IPF that

collectively represent a significant deficiency in SEC’s internal control over financial 

531 U.S.C. § 3515.

6Dodd-Frank Act, § 922(a), 124 Stat. 1844 (July 21, 2010), adding § 21F(g)(5) of the Securities Exchange Act of 

1934 classified at 15 U.S.C. § 78u-6(g)(5).

731 U.S.C. § 3521(g), (i).
60 | 2023 SEC AGENCY FINANCIAL REPORT

reporting during fiscal year 2023.8 We considered this significant deficiency in determining the 

nature, timing, and extent of our audit procedures on SEC’s fiscal year 2023 financial 

statements.

In addition to the significant deficiency in internal control over transfers to the IPF, we also 

identified other deficiencies in SEC’s internal control over financial reporting that we do not 

consider to be material weaknesses or significant deficiencies. Nonetheless, these deficiencies 

warrant SEC management’s attention. We have communicated these matters to SEC 

management and, where appropriate, will report on them separately.

Significant Deficiency in Internal Control over Transfers to the Investor Protection Fund

During our fiscal year 2023 audit, we identified control deficiencies over SEC’s process for

identifying and depositing eligible collections of monetary sanctions into the IPF, which led to 

errors in the amount of funds available in the IPF. Because of these deficiencies, SEC was 

unable to reasonably assure that collections transferred into the IPF were appropriate. 

When the IPF balance is equal to or below $300 million, SEC identifies eligible collections to 

transfer to the IPF until the balance exceeds $300 million.9 During our testing, we found several 

instances where SEC transferred collections when the balance exceeded $300 million.10 The 

errors occurred in four of the twelve months we reviewed. These errors were due to a formula 

error in the funds identification workbook and inadequate supervisory review of the workbook. 

The funds identification workbook identifies the Fund Balance with Treasury and investment 

amounts at the case action level that are available to transfer to the IPF. 

SEC agreed with the errors identified and corrected the amount recorded in the IPF during fiscal 

year 2023. SEC also revised their controls over the transfers for the months of August and 

September to address the deficiencies. We tested the control activities in August and 

September and found that SEC had remediated the identified control deficiencies. 

While remediated as of September 30, 2023, these issues collectively represent a significant 

deficiency in SEC’s internal control over financial reporting during fiscal year 2023.

Basis for Opinions

We conducted our audits in accordance with U.S. generally accepted government auditing 

standards. Our responsibilities under those standards are further described in the Auditor’s 

Responsibilities for the Audits of the Financial Statements and Internal Control over Financial 

8A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal 

control over financial reporting that is less severe than a material weakness, yet important enough to merit attention 

by those charged with governance. A material weakness is a deficiency, or combination of deficiencies, in internal 

control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected, on a timely basis.

9Collections of Enforcement-related monetary sanctions must be deposited into the IPF when funding provisions in 

section 21(g)(3) of the Securities Exchange Act of 1934 (classified as amended at 15 U.S.C. § 78u-6(g)(3)) are 

triggered.

10The balance of the IPF is reported on the Unobligated Balance, End of Year line item on the IPF Statement of 

Budgetary Resources. 
FINANCIAL SECTION | 61

Reporting section of our report. We are required to be independent of the SEC and to meet our 

other ethical responsibilities, in accordance with the relevant ethical requirements relating to our 

audits. We believe that the audit evidence we have obtained is sufficient and appropriate to 

provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements and Internal Control over Financial 

Reporting

Management is responsible for

• the preparation and fair presentation of SEC’s and IPF’s financial statements in accordance

with U.S. generally accepted accounting principles;

• preparing, measuring, and presenting the RSI in accordance with U.S. generally accepted 

accounting principles;

• preparing and presenting other information included in SEC’s agency financial report, and

ensuring the consistency of that information with the audited financial statements and the 

RSI;

• designing, implementing, and maintaining effective internal control over financial reporting 

relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error;

• assessing the effectiveness of internal control over financial reporting based on the criteria 

established under FMFIA; and

• its assessment about the effectiveness of internal control over financial reporting as of 

September 30, 2023, included in the accompanying Management’s Report on Internal 

Control over Financial Reporting. 

Auditor’s Responsibilities for the Audits of the Financial Statements and Internal Control over

Financial Reporting

Our objectives are to (1) obtain reasonable assurance about whether the financial statements

as a whole are free from material misstatement, whether due to fraud or error, and whether 

effective internal control over financial reporting was maintained in all material respects, and (2) 

issue an auditor’s report that includes our opinions. 

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore 

is not a guarantee that an audit of the financial statements or an audit of internal control over 

financial reporting conducted in accordance with U.S. generally accepted government auditing 

standards will always detect a material misstatement or a material weakness when it exists. 

The risk of not detecting a material misstatement resulting from fraud is higher than for one 

resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control. Misstatements, including omissions, are 

considered to be material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the financial 

statements.
62 | 2023 SEC AGENCY FINANCIAL REPORT

In performing an audit of financial statements and an audit of internal control over financial 

reporting in accordance with U.S. generally accepted government auditing standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audits.

• Identify and assess the risks of material misstatement of the financial statements, whether 

due to fraud or error, and design and perform audit procedures responsive to those risks. 

Such procedures include examining, on a test basis, evidence regarding the amounts and 

disclosures in the financial statements.

• Obtain an understanding of internal control relevant to our audit of the financial statements in 

order to design audit procedures that are appropriate in the circumstances.

• Obtain an understanding of internal control relevant to our audit of internal control over 

financial reporting, assess the risks that a material weakness exists, and test and evaluate 

the design and operating effectiveness of internal control over financial reporting based on 

the assessed risk. Our audit of internal control also considered SEC’s process for evaluating 

and reporting on internal control over financial reporting based on criteria established under 

FMFIA. We did not evaluate all internal controls relevant to operating objectives as broadly

established under FMFIA, such as those controls relevant to preparing performance 

information and ensuring efficient operations. We limited our internal control testing to 

testing controls over financial reporting. Our internal control testing was for the purpose of 

expressing an opinion on whether effective internal control over financial reporting was 

maintained, in all material respects. Consequently, our audit may not identify all deficiencies

in internal control over financial reporting that are less severe than a material weakness.

• Evaluate the appropriateness of accounting policies used and the reasonableness of 

significant accounting estimates made by management, as well as evaluate the overall 

presentation of the financial statements.

• Perform other procedures we consider necessary in the circumstances.

We are required to communicate with those charged with governance regarding, among other 

matters, the planned scope and timing of the audit, significant audit findings, and certain internal 

control-related matters that we identified during the financial statement audit. 

Definition and Inherent Limitations of Internal Control over Financial Reporting

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel. The objectives of internal control over financial 

reporting are to provide reasonable assurance that

• transactions are properly recorded, processed, and summarized to permit the preparation of 

financial statements in accordance with U.S. generally accepted accounting principles, and 

assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and

• transactions are executed in accordance with provisions of applicable laws, including those 

governing the use of budget authority, regulations, contracts, and grant agreements,

noncompliance with which could have a material effect on the financial statements.
FINANCIAL SECTION | 63

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements due to fraud or error. We also caution that projecting any 

evaluation of effectiveness to future periods is subject to the risk that controls may become 

inadequate because of changes in conditions, or that the degree of compliance with the policies 

or procedures may deteriorate.

Required Supplementary Information

U.S. generally accepted accounting principles issued by the Federal Accounting Standards 

Advisory Board (FASAB) require that the RSI be presented to supplement the financial 

statements. Such information is the responsibility of management and, although not a part of the 

financial statements, is required by FASAB, which considers it to be an essential part of

financial reporting for placing the financial statements in appropriate operational, economic, or 

historical context.

We have applied certain limited procedures to the RSI in accordance with U.S. generally 

accepted government auditing standards. These procedures consisted of (1) inquiring of 

management about the methods used to prepare the RSI and (2) comparing the RSI for 

consistency with management’s responses to our inquiries, the financial statements, and other 

knowledge we obtained during the audit of the financial statements, in order to report omissions 

or material departures from FASAB guidelines, if any, identified by these limited procedures. We 

did not audit and we do not express an opinion or provide any assurance on the RSI because 

the limited procedures we applied do not provide sufficient evidence to express an opinion or 

provide any assurance.

Other Information

SEC’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements or the RSI. Management is 

responsible for the other information included in SEC’s agency financial report. The other 

information comprises the Inspector General’s Statement on Management and Performance 

Challenges, Summary of Financial Statement and Audit and Management Assurances, 

Payment Integrity Reporting Details, and Civil Monetary Penalty Adjustment for Inflation, but 

does not include the financial statements and our auditor’s report thereon. Our opinion on the 

financial statements does not cover the other information, and we do not express an opinion or 

any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information 

and the financial statements, or the other information otherwise appears to be materially 

misstated. If, based on the work performed, we conclude that an uncorrected material 

misstatement of the other information exists, we are required to describe it in our report.

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

In connection with our audits of SEC’s and IPF’s financial statements, we tested compliance 

with selected provisions of applicable laws, regulations, contracts, and grant agreements

consistent with our auditor’s responsibilities discussed below.
64 | 2023 SEC AGENCY FINANCIAL REPORT

Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and 

grant agreements disclosed no instances of noncompliance for fiscal year 2023 that would be 

reportable under U.S. generally accepted government auditing standards. However, the 

objective of our tests was not to provide an opinion on compliance with laws, regulations, 

contracts, and grant agreements applicable to SEC and IPF. Accordingly, we do not express 

such an opinion.

Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant

Agreements

We performed our tests of compliance in accordance with U.S. generally accepted government 

auditing standards.

Responsibilities of Management for Compliance with Laws, Regulations, Contracts, and Grant

Agreements

SEC management is responsible for complying with laws, regulations, contracts, and grant 

agreements applicable to SEC and IPF.

Auditor’s Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant

Agreements

Our responsibility is to test compliance with selected provisions of laws, regulations, contracts, 

and grant agreements applicable to SEC and IPF that have a direct effect on the determination 

of material amounts and disclosures in SEC’s and IPF’s financial statements and perform 

certain other limited procedures. Accordingly, we did not test compliance with all provisions of 

laws, regulations, contracts, and grant agreements applicable to SEC and IPF. We caution that 

noncompliance may occur and not be detected by these tests.

Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant

Agreements

The purpose of this report is solely to describe the scope of our testing of compliance with 

selected provisions of applicable laws, regulations, contracts, and grant agreements, and the 

results of that testing, and not to provide an opinion on compliance. This report is an integral 

part of an audit performed in accordance with U.S. generally accepted government auditing 

standards in considering compliance. Accordingly, this report on compliance with laws, 

regulations, contracts, and grant agreements is not suitable for any other purpose.
FINANCIAL SECTION | 65

Agency Comments

In commenting on a draft of this report, SEC stated that it is pleased that GAO found that its 

financial statements and notes were presented fairly, in all material respects, in conformity with 

U.S. generally accepted accounting principles. SEC recognized the significant deficiency 

reported and stated that SEC staff put corrective actions in place to remediate the significant 

deficiency by September 30, 2023. The complete text of SEC’s response is reprinted in enclosure 

I.

M. Hannah Padilla

Director

Financial Management and Assurance

November 9, 2023
66 | 2023 SEC AGENCY FINANCIAL REPORT

November 9, 2023 

Ms. M. Hannah Padilla 

Director 

Financial Management and Assurance 

United States Government Accountability Office 

441 G Street, N.W. 

Washington, DC 20548 

Dear Ms. Padilla: 

Thank you for the opportunity to review and comment on the draft audit report of the 

Government Accountability Office (GAO). I am pleased that the GAO’s FY 2023 audit found that 

the Securities and Exchange Commission’s (SEC) financial statements and notes were presented

fairly, in all material respects, and in conformity with U.S. generally accepted accounting principles. 

I appreciate the important role that the GAO’s audit plays in evaluating financial reporting 

and internal controls practices. We remain committed to sound financial management and strong 

internal controls. 

Although GAO noted a significant deficiency in our internal controls over the deposits of 

collections into the Investor Protection Fund during the fiscal year, SEC staff immediately put

corrective actions in place to remediate the significant deficiency by September 30, 2023. We

recognize the role a strong internal control program plays to help the SEC achieve its mission—and 

we appreciate GAO’s prompt attention to this matter. 

I thank the GAO staff for their professionalism and dedication during the audit. I look 

forward to another positive and productive relationship in the coming year. If you have any 

questions or concerns, please do not hesitate to contact me.

Sincerely,

Gary Gensler 

Chair 

ENCLOSURE I: MANAGEMENT’S RESPONSE 

TO AUDIT OPINION
FINANCIAL SECTION | 67

SEC FINANCIAL STATEMENTS

U.S. SECURITIES AND EXCHANGE COMMISSION

Balance Sheets

As of September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

ASSETS (NOTE 2):

Intragovernmental:

Fund Balance with Treasury (Note 3) $ 9,329,772 $ 8,831,476 

Investments, Net (Note 5) 3,569,579 3,243,003 

Accounts Receivable (Note 6) 4 —

Advances and Prepayments 10,907 8,636 

Total Intragovernmental 12,910,262 12,083,115 

With the Public:

Cash and Other Monetary Assets (Note 4) 41 1 

Accounts Receivable, Net (Note 6) 559,026 1,926,171 

Property and Equipment, Net (Note 7) 107,719 91,436 

Total With the Public 666,786 2,017,608 

Total Assets $ 13,577,048 $ 14,100,723 

LIABILITIES (NOTE 8):

Intragovernmental:

Accounts Payable $ 5,659 $ 2,123 

Other Liabilities

Payroll Taxes Payable 792 598 

Custodial Liability 243,893 1,154,376 

Liability for Non-Entity Assets 439 223 

Benefit Program Contributions Payable 5,591 5,326 

Other Liabilities 3,595 3,792 

Total Intragovernmental 259,969 1,166,438 

With the Public:

Accounts Payable 504,783 207,849 

Federal Employee Leave and Benefits Payable 145,483 147,376 

Registrant Deposits 58,357 56,001 

Other Liabilities

Accrued Payroll 21,022 19,038 

Liability for Disgorgement and Penalties (Note 16) 4,007,133 3,899,686 

Contingent Liabilities (Note 10) 111,988 530,695 

Other Accrued Liabilities (Note 8) 3,386 3,266 

Total With the Public 4,852,152 4,863,911 

Total Liabilities 5,112,121 6,030,349

Commitments and Contingencies (Note 10)

NET POSITION:

Unexpended Appropriations – Funds from Dedicated Collections (Note 11) 265,026 217,841 

Cumulative Results of Operations – Funds from Dedicated Collections (Note 11) 8,199,901 7,852,533 

Total Net Position $ 8,464,927 $ 8,070,374 

Total Liabilities and Net Position $ 13,577,048 $ 14,100,723

The accompanying notes are an integral part of these financial statements.
68 | 2023 SEC AGENCY FINANCIAL REPORT

U.S. SECURITIES AND EXCHANGE COMMISSION

Statements of Net Cost

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

PROGRAM COSTS:

Enforcement $ 887,207 $ 1,283,163 

Examinations 506,205 471,875

Corporation Finance 188,383 180,002 

Trading and Markets 123,742 118,327

Investment Management 97,332 91,274 

Economic and Risk Analysis 84,376 73,921 

General Counsel 70,377 64,216 

Other Program Offices 111,865 103,514 

Agency Direction and Administrative Support 318,641 288,096 

Inspector General 24,690 22,820 

Total Program Costs 2,412,818 2,697,208 

Less: Earned Revenue Not Attributed to Programs 2,551,661 2,435,831 

Net Cost of Operations (Note 15) $ (138,843) $ 261,377

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION | 69

U.S. SECURITIES AND EXCHANGE COMMISSION

Statements of Changes in Net Position

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023

Funds from 

Dedicated Collections All Other Funds Consolidated Total

UNEXPENDED APPROPRIATIONS:

Beginning Balances $ 217,841 $ — $ 217,841

Appropriations Received 49,752 — 49,752 

Appropriations Used (2,567) — (2,567)

Net Change in Unexpended Appropriations 47,185 — 47,185 

Total Unexpended Appropriations: Ending 265,026 — 265,026 

CUMULATIVE RESULTS OF OPERATIONS:

Beginning Balances 7,852,533 — 7,852,533

Appropriations Used 2,567 — 2,567 

Non-Exchange Revenue (Note 12) 659,663 — 659,663 

Imputed Financing 74,073 — 74,073 

Other (Note 12) — (527,778) (527,778)

Net Cost of Operations 388,935 (527,778) (138,843)

Net Change in Cumulative Results of Operations 347,368 — 347,368 

Cumulative Results of Operations: Ending (Note 11) 8,199,901 — 8,199,901

Net Position $ 8,464,927 $ — $ 8,464,927 

The accompanying notes are an integral part of these financial statements.
70 | 2023 SEC AGENCY FINANCIAL REPORT

U.S. SECURITIES AND EXCHANGE COMMISSION

Statements of Changes in Net Position (continued)

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2022

Funds from 

Dedicated Collections All Other Funds Consolidated Total

UNEXPENDED APPROPRIATIONS:

Beginning Balances $ 213,922 $ — $ 213,922 

Appropriations Received 414,402 — 414,402 

Appropriations Used (410,483) — (410,483)

Net Change in Unexpended Appropriations 3,919 — 3,919 

Total Unexpended Appropriations: Ending 217,841 — 217,841 

CUMULATIVE RESULTS OF OPERATIONS:

Beginning Balances 7,856,952 — 7,856,952

Appropriations Used 410,483 — 410,483 

Non-Exchange Revenue (Note 12) 389,305 — 389,305 

Imputed Financing 43,992 — 43,992 

Other (Note 12) — (586,822) (586,822)

Net Cost of Operations 848,199 (586,822) 261,377 

Net Change in Cumulative Results of Operations (4,419) — (4,419)

Cumulative Results of Operations: Ending (Note 11) 7,852,533 — 7,852,533

Net Position $ 8,070,374 $ — $ 8,070,374

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION | 71

U.S. SECURITIES AND EXCHANGE COMMISSION

Statements of Budgetary Resources

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

BUDGETARY RESOURCES:

Unobligated Balance from Prior Year Budget Authority, Net (Discretionary and Mandatory) 

(Note 14)

$ 402,111 $ 244,350 

Appropriations (Discretionary and Mandatory) 745,162 857,903 

Spending Authority from Offsetting Collections (Discretionary and Mandatory) 2,160,254 1,585,831 

Total Budgetary Resources $ 3,307,527 $ 2,688,084 

STATUS OF BUDGETARY RESOURCES:

New Obligations and Upward Adjustments (Total) $ 2,882,793 $ 2,323,030

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 391,696 199,158 

Exempt from Apportionment, Unexpired Accounts 3,905 6,128 

Unapportioned, Unexpired Accounts 29,133 159,768 

Unobligated Balance, End of Year (Total) 424,734 365,054 

Total Budgetary Resources $ 3,307,527 $ 2,688,084

OUTLAYS, NET:

Outlays, Net (Total) (Discretionary and Mandatory) $ 315,804 $ 777,788

Distributed Offsetting Receipts (17,382) (2,726)

Agency Outlays, Net (Discretionary and Mandatory) (Note 15) $ 298,422 $ 775,062

The accompanying notes are an integral part of these financial statements.
72 | 2023 SEC AGENCY FINANCIAL REPORT

U.S. SECURITIES AND EXCHANGE COMMISSION

Statements of Custodial Activity

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

REVENUE ACTIVITY:

Sources of Cash Collections:

Disgorgement and Penalties $ 1,345,965 $ 263,941

Other 4,205 1,969 

Total Cash Collections 1,350,170 265,910 

Accrual Adjustments (Note 13) (910,483) 1,035,073 

Total Custodial Revenue 439,687 1,300,983 

DISPOSITION OF COLLECTIONS:

Amounts Transferred to:

Department of the Treasury 1,350,170 265,910 

Amounts Yet to be Transferred (910,483) 1,035,073 

Total Disposition of Collections 439,687 1,300,983 

NET CUSTODIAL ACTIVITY $ — $ — 

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION | 73

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The U.S. Securities and Exchange Commission (SEC) 

is an independent agency of the U.S. Government 

established pursuant to the Securities Exchange Act 

of 1934 (Exchange Act), charged with regulating

this country’s capital markets. The SEC’s mission is 

to protect investors; maintain fair, orderly, and 

efficient markets; and facilitate capital formation. 

The SEC works with Congress, other executive branch 

agencies, self-regulatory organizations (SROs) (e.g., 

stock exchanges and the Financial Industry Regulatory 

Authority), accounting and auditing standards setters, 

state securities regulators, law enforcement officials, 

and many other organizations in support of the 

agency’s mission.

The SEC consists of five presidentially-appointed 

Commissioners with staggered five-year terms. The 

SEC is organized into six divisions and multiple offices. 

The six divisions are the Division of Enforcement, the 

Division of Examinations, the Division of Corporation 

Finance, the Division of Trading and Markets, the 

Division of Investment Management, and the Division 

of Economic and Risk Analysis. The offices include 

the Office of the General Counsel, the Office of 

Administrative Law Judges, the Office of the Advocate 

for Small Business Capital Formation, the Office of 

the Chief Accountant, the Office of Credit Ratings, 

the Office of International Affairs, the Office of the 

Investor Advocate, the Office of Investor Education 

and Advocacy, the Office of Municipal Securities, the 

Strategic Hub for Innovation and Financial Technology, 

the Office of Inspector General, 11 regional offices, and 

various supporting services. 

The reporting entity is a component of the U.S. 

Government. For this reason, some of the assets and 

liabilities reported by the entity may be eliminated for 

government-wide reporting because they are offset by 

assets and liabilities of another U.S. Government entity. 

These financial statements should be read with the 

realization that they are for a component of the U.S. 

Government, a sovereign entity. 

The SEC reporting entity includes the Investor 

Protection Fund. In addition to being included in the 

SEC’s financial statements, the Investor Protection 

Fund’s financial activities and balances are also presented separately as stand-alone financial statements, 

as required by Exchange Act Section 21F(g)5. 

As discussed in Note 1.R, Disgorgement and Penalties, 

disgorgement funds collected and held by the SEC on 

behalf of harmed investors are part of the SEC reporting 

entity. However, disgorgement funds held by the U.S. 

Courts and by non-federal receivers on behalf of harmed 

investors are not part of the SEC reporting entity. 

As discussed in Note 10.A, Commitments: 

Securities Investor Protection Act, the SEC reporting 

entity does not include the Securities Investor 

Protection Corporation. 

The SEC reporting entity also does not include the 

Public Company Accounting Oversight Board (PCAOB), 

a private-sector, nonprofit corporation created to oversee 

the audits of public companies, brokers, and dealers 

registered with the SEC. When the Sarbanes-Oxley 

NOTES TO THE FINANCIAL STATEMENTS

As of September 30, 2023 and 2022
74 | 2023 SEC AGENCY FINANCIAL REPORT

Act of 2002 created the PCAOB, it gave the SEC the 

authority to oversee the PCAOB's operations, to appoint 

or remove Board members, to approve the PCAOB's 

budget and rules, and to entertain appeals of PCAOB 

inspection reports and disciplinary actions. 

The PCAOB is not part of the federal government. 

It is funded by an accounting support fee collected 

from public companies, brokers, and dealers. The 

primary duties of the PCAOB include: registering 

public accounting firms that prepare audit reports for 

public companies, brokers, and dealers; establishing 

or adopting auditing and related attestation, quality 

control, ethics, and independence standards; and 

inspecting and disciplining registered accounting firms 

and their associated persons.

The SEC’s financial statements also do not include 

the Financial Accounting Standards Board (FASB) 

or its parent organization, the Financial Accounting 

Foundation (FAF). The FAF is a Delaware nonprofit 

non-stock corporation, incorporated in 1972, 

which was created for the purpose of providing a 

corporate structure for the FASB, the body whose 

financial accounting and reporting standards for 

non-governmental entities have been recognized as 

authoritative by the American Institute of CPAs and 

the SEC. The structure of the FAF and the FASB reflects 

the view that a standard-setter should be independent 

from preparers of financial statements and from 

accounting and auditing firms. This independence is 

necessary to assure that the interests of the users of 

financial statements remain paramount, and has been 

critical to the integrity of our financial and capital 

markets. Although pursuant to Section 109 of the 

Sarbanes-Oxley Act of 2002, the SEC is required to 

determine annually that the FASB accounting support 

fee is within the parameters prescribed by Congress, the 

SEC does not have authority, and is not required, to 

approve the FASB budget.

B. Basis of Presentation and Accounting

These notes are an integral part of the SEC’s financial 

statements, which present the financial position, net 

cost of operations, changes in net position, budgetary 

resources, and custodial activities of the SEC as required 

by the Accountability of Tax Dollars Act of 2002. 

The statements may differ from other financial reports 

submitted pursuant to Office of Management and 

Budget (OMB) directives for the purpose of monitoring 

and controlling the use of the SEC’s budgetary resources, 

due to differences in accounting and reporting principles 

discussed in the following paragraphs. The SEC’s books 

and records serve as the source of the information 

presented in the accompanying financial statements. 

The agency classifies assets and liabilities in these financial statements according to the type of entity associated 

with the transactions. Intragovernmental assets and 

liabilities are those due from or to other federal entities. 

The SEC’s financial statements are prepared in conformity with generally accepted accounting principles 

(GAAP) for federal reporting entities and presented 

in conformity with OMB Circular A-136, Financial 

Reporting Requirements. In accordance with OMB 

Circular A-136, the Statement of Budgetary Resources 

is presented on a combined basis, and the Balance 

Sheet, Statement of Net Cost, Statement of Changes in 

Net Position, and Statement of Custodial Activity are 

presented on a consolidated basis. 
FINANCIAL SECTION | 75

The Balance Sheet, Statement of Net Cost, and Statement of Changes in Net Position are prepared using the 

accrual basis of accounting. Accordingly, revenues are 

recognized when services are provided, and expenses 

are recognized when incurred without regard to the 

receipt or payment of cash. These principles differ from 

budgetary accounting and reporting principles on which 

the Statement of Budgetary Resources is prepared. The 

differences relate primarily to the capitalization and 

depreciation of property and equipment, as well as 

the recognition of other assets and liabilities. See Note 

15, Reconciliation of Net Cost of Operations to Net 

Outlays, for more information. The Statement of Custodial Activity is presented on the modified cash basis of 

accounting. See Note 13, Custodial Activity. 

The SEC presents cost of operations by program. 

The presentation by program is consistent with the 

presentation used by the agency in submitting its 

budget requests.

Accounting standards require all reporting entities to 

disclose that accounting standards allow certain presentations and disclosures to be modified, if needed, to 

prevent the disclosure of classified information.

C. Use of Estimates

The preparation of financial statements in conformity 

with GAAP requires management to make estimates 

and assumptions that affect the reported amounts of 

assets, liabilities, revenues, and costs. These estimates 

are based on management’s best knowledge of current 

events, historical experience, actions that the SEC may 

undertake in the future, and various other assumptions 

believed to be reasonable under the circumstances. The 

estimates include, but are not limited to, the allowance 

for uncollectible accounts and the allocation of costs 

to the SEC programs presented in the Statement of Net 

Cost. Estimates also include (a) the recognition and 

disclosure of any contingent liabilities and the disclosure 

of other potential future payments as of the date of 

the financial statements, and (b) the reported amounts 

of revenue and expenses during the reporting period. 

Actual results may differ from these estimates. 

D. Intra- and Inter-Agency Relationships

The SEC is a single federal agency composed of various 

Treasury Appropriation Fund Symbols (Funds), and it 

has only limited intra-entity transactions. The Investor 

Protection Fund finances the operations of the Office 

of Inspector General Employee Suggestion Program 

on a reimbursable basis. This has given rise to a small 

amount of intra-entity eliminations of the related 

revenue and expense transactions between the Investor 

Protection Fund and the SEC’s general Salaries and 

Expenses Fund. See Note 1.E, Fund Accounting Structure, for more information about the SEC’s Funds.

E. Fund Accounting Structure

The SEC, in common with other federal agencies, 

utilizes various Funds to recognize and track appropriation authority provided by Congress, collections from 

the public, and other financial activity. These Funds are 

described below: 

1. Funds from Dedicated Collections: Statement 

of Federal Financial Accounting Standards 27, 

Identifying and Reporting Funds from Dedicated 

Collections, as amended, states that, “funds from 

dedicated collections are financed by specifically 

identified revenues, provided to the government by 

non-federal sources, often supplemented by other 

financing sources, which remain available over 

time. These specifically identified revenues and 
76 | 2023 SEC AGENCY FINANCIAL REPORT

other financing sources are required by statute to be 

used for designated activities, benefits, or purposes, 

and must be accounted for separately from the 

government’s general revenues.” The SEC’s funds 

from dedicated collections are deposited into Fund 

X0100, Salaries and Expenses; Fund X5567, Investor 

Protection Fund; and Fund X5566, Reserve Fund. 

• Salaries and Expenses: Earned revenues from 

securities transaction fees from SROs are deposited 

into Fund X0100, Salaries and Expenses, Securities 

and Exchange Commission. These collections are 

used to offset the SEC’s annual appropriation and 

are remitted to the U.S. Treasury General Fund 

at the end of the year. The Salaries and Expenses 

Fund is dedicated to carrying out the SEC’s mission, 

functions, and day-to-day operations. Collections in 

excess of congressional spending limits are unavailable by law and reported as Non-Budgetary Fund 

Balance with Treasury. See Note 3, Fund Balance 

with Treasury. 

• Investor Protection Fund: The Investor Protection Fund provides funding for the payment 

of whistleblower awards as required by the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act of 2010 (Dodd-Frank Act). The 

Investor Protection Fund is financed by a portion of 

monetary sanctions collected by the SEC in judicial 

or administrative actions brought by the SEC. 

Persons may receive award payments from the 

Investor Protection Fund if they voluntarily provide 

original information to the SEC that results in a 

successful enforcement action and other conditions 

are met. In addition, the Investor Protection Fund 

is used to finance the operations of the Office of 

Inspector General Employee Suggestion Program 

for the receipt of suggestions for improvements in 

work efficiency and effectiveness, and allegations 

of misconduct or mismanagement within the 

SEC. This activity is recognized in Fund X5567, 

Monetary Sanctions and Interest, Investor Protection Fund, Securities and Exchange Commission 

(Investor Protection Fund). 

• Reserve Fund: A portion of SEC registration fee 

collections up to $50 million in any one fiscal year 

may be deposited in the Reserve Fund, the balance 

of which cannot exceed $100 million. The Reserve 

Fund may be used by the SEC to obligate up to 

$100 million in one fiscal year as the SEC determines necessary to carry out its functions. Although 

amounts deposited in the Reserve Fund are not 

subject to apportionment, the SEC must notify 

Congress when funds are obligated. Resources 

available in the Reserve Fund may be rescinded 

or sequestered through congressional action. This 

activity is recognized in Fund X5566, Securities and 

Exchange Commission Reserve Fund. 

2. Miscellaneous Receipt and Other Accounts:

Miscellaneous Receipt Accounts hold non-entity 

receipts and accounts receivable from custodial 

activities that the SEC cannot deposit into funds 

under its control. These accounts include registration 

fee collections in excess of amounts deposited into 

the Reserve Fund, receipts pursuant to certain SEC 

enforcement actions, and other small collections that 

will be sent to the U.S. Treasury General Fund upon 

collection. These activities are recognized in Fund 

0850.150, Registration, Filing, and Transaction Fees, 

Securities and Exchange Commission; Fund 1060, 

Forfeitures of Unclaimed Money and Property; Fund 

1091, Post Judgement Interest; Fund 1099, Fines, 

Penalties, and Forfeitures, Not Otherwise Classified; 

Fund 1435, General Fund Proprietary Interest, Not 

Otherwise Classified; and Fund 3220, General Fund 

Proprietary Receipts, Not Otherwise Classified. 
FINANCIAL SECTION | 77

Miscellaneous Receipt Accounts are reported as 

“All Other Funds” on the Statement of Changes in 

Net Position. The SEC has custodial responsibilities, 

as disclosed in Note 1.L, Liabilities. Fund X3875, 

Budget Clearing Account, is a suspense account that 

temporarily holds immaterial cash balances.

3. Deposit Funds: Deposit Funds hold disgorgement, 

penalties, and interest collected and held on behalf of 

harmed investors, registrant monies held temporarily 

until earned by the SEC, and collections awaiting 

disposition or reclassification. These activities 

are recognized in Fund X6561, Unearned Fees, 

Securities and Exchange Commission, and Fund 

X6563, Disgorgement and Penalty Amounts Held 

for Investors, Securities and Exchange Commission. 

Deposit Funds do not impact the SEC’s Net Position 

and are not reported on the Statement of Changes in 

Net Position.

F. Entity and Non-Entity Assets

Entity assets are assets that the SEC may use in 

its operations. 

Non-entity assets are assets that the SEC holds on 

behalf of another federal agency or a third party and 

are not available for the SEC to use in its operations. 

See Note 2, Entity and Non-Entity Assets. 

G. Fund Balance with Treasury

Fund Balance with Treasury reflects amounts the SEC 

holds in the U.S. Treasury that have not been invested 

in federal securities. Additional information regarding 

the SEC’s Fund Balance with Treasury is provided in

Note 3, Fund Balance with Treasury.

The SEC conducts all of its banking activity in accordance with directives issued by the U.S. Department of 

the Treasury’s Bureau of the Fiscal Service. 

H. Investments

The SEC has the authority to invest disgorgement funds 

in Treasury securities, including civil penalties collected 

under the “Fair Fund” provision of the Sarbanes-Oxley 

Act of 2002. As the funds are collected, the SEC holds 

them in a deposit fund account and may invest them 

in overnight and short-term market-based Treasury 

securities through the U.S. Department of the Treasury’s 

Bureau of the Fiscal Service. 

The SEC also has authority to invest amounts in the 

Investor Protection Fund in overnight and short-term 

market-based Treasury securities through the U.S. 

Department of the Treasury’s Bureau of the Fiscal 

Service. The interest earned on the investments is a 

component of the balance of the Fund and available to 

be used for expenses of the Investor Protection Fund.

Additional information regarding the SEC’s investments 

is provided in Note 5, Investments.

I. Accounts Receivable and Allowance for 

Uncollectible Accounts

The SEC’s entity and non-entity accounts receivable 

consist primarily of amounts due from the public. 

Entity accounts receivable are amounts that the SEC 

may retain upon collection. Non-entity accounts 

receivable are amounts that the SEC will forward to 

another federal agency or to the public after the funds 

are collected. 
78 | 2023 SEC AGENCY FINANCIAL REPORT

Entity Accounts Receivable

The bulk of the SEC’s entity accounts receivable arise 

from securities transaction fees. Securities transaction 

fees are payable to the SEC twice a year: in March 

for the period September through December, and in 

September for the period January through August. 

Accordingly, the year-end accounts receivable accrual 

generally represents fees payable to the SEC for one 

month of securities transaction fee activity (September). 

In addition, the SEC has small amounts of activity 

arising from the sale of services provided by the SEC to 

other federal agencies and employee-related debt. 

Non-Entity Accounts Receivable

Non-entity accounts receivable arise mainly from 

amounts assessed against violators of securities laws, 

including disgorgement of illegal gains, civil penalties, 

and related assessed interest. The SEC is responsible for 

collection, and recognizes a receivable, when an order 

of the Commission or a federal court directs payment to 

the SEC or the U.S. Treasury General Fund. 

Interest recognized by the SEC on non-entity accounts 

receivable includes prejudgment interest specified by the 

court or administrative order as well as post-judgment 

interest on collectible accounts. The SEC does not 

recognize interest revenue on accounts considered to 

be uncollectible.

The SEC’s enforcement investigation and litigation 

activities often result in court orders directing violators 

of federal securities laws to pay amounts assessed 

to a federal court or to a non-federal receiver acting 

on behalf of harmed investors. These orders are not 

recognized as accounts receivable by the SEC because 

the debts are payable to, and collected by, another party. 

Securities registration, tender offer, merger, and other 

fees from registrants (filing fee) collections in excess of 

those deposited into the SEC’s Reserve Fund are not 

available for the SEC’s operations and are transferred 

to the U.S. Treasury General Fund. Accounts receivable 

amounts arising from filing fees in excess of those 

deposited into the Reserve Fund are non-entity and are 

held on behalf of the U.S. Treasury General Fund.

Allowance for Uncollectible Accounts

The SEC uses a three-tiered methodology for calculating 

the allowance for loss on its disgorgement and penalties 

accounts receivable. The first tier involves making an 

individual collection assessment of cases that represent 

at least 65 percent of the portfolio. The second and 

third tiers are composed of the remaining cases that are 

equal to or less than 30 days old and over 30 days old, 

respectively. For the second and third tiers, the SEC 

applies an allowance rate based on historical collection 

data analysis.

The SEC calculates the allowance for uncollectible 

accounts and the related provision for estimated losses 

for filing fees and other accounts receivable using an 

analysis of historical collection data. No allowance for 

uncollectible accounts or related provision for estimated 

losses has been established for securities transaction fees 

payable by SROs, as these amounts are fully collectible 

based on historical experience.

The SEC writes off receivables that are delinquent for 

two or more years by removing the debt amounts from 

the gross accounts receivable and any related allowance 

for uncollectible accounts. 

Additional information about the SEC’s accounts receivable and allowance for doubtful accounts is provided in 

Note 6, Accounts Receivable, Net.
FINANCIAL SECTION | 79

J. Advances and Prepayments

Payments made in advance of the receipt of goods and 

services are recorded as advances or prepayments and 

recognized as expenses when the related goods and 

services are received. Advances and prepayments are 

made to other federal agencies such as the U.S. Department of Defense, the U.S. Government Publishing Office, 

and the U.S. Department of Transportation for expenses 

that may include investigation services, accounting 

processing fees, official publications in the Federal 

Register, and the Federal Transit Benefit Program.

K. Property and Equipment, Net

The SEC’s property and equipment consists of software, 

general-purpose equipment used by the agency, capital 

improvements made to buildings leased by the SEC for 

office space, and, when applicable, internal-use software 

development costs for projects in development. The SEC 

reports property and equipment purchases and additions 

at historical cost. The agency expenses property and 

equipment acquisitions that do not meet the capitalization criteria as well as normal repairs and maintenance.

The SEC depreciates property and equipment over the 

estimated useful lives using the straight-line method of 

depreciation. The agency removes property and equipment from its asset accounts in the period of disposal, 

retirement, or removal from service. The SEC recognizes 

the difference between the book value and any proceeds 

as a gain or loss in the period that the asset is removed.

L. Liabilities

The SEC recognizes liabilities for probable future 

outflows or other sacrifices of resources as a result 

of events that have occurred as of the Balance Sheet 

date. The SEC’s liabilities consist of routine operating 

accounts payable, accrued payroll and benefits, legal 

liabilities, liabilities to offset non-entity assets such as 

registrant monies held temporarily until earned by the 

SEC, disgorgement and penalties collected and receivable, and amounts collected or receivable on behalf of 

the U.S. Treasury General Fund. See Note 1.F, Entity 

and Non-Entity Assets, for additional information.

Enforcement-Related Liabilities 

A liability for disgorgement and penalties arises when 

an order is issued for the SEC to collect disgorgement, 

penalties, and interest from securities law violators. 

When the Commission or court issues such an order, the 

SEC establishes an accounts receivable due to the SEC 

offset by a liability. The presentation of this liability on 

the Balance Sheet is dependent upon several factors. If 

the court or Commission order indicates that collections 

are to be retained by the federal government by transfer 

to the U.S. Treasury General Fund, the liabilities are 

classified as custodial (that is, collected on behalf of 

the government) and intragovernmental. If the order 

indicates that the funds are eligible for distribution to 

harmed investors, the SEC will recognize a liability 

(that is, a liability of the SEC to make a payment to 

the public). This liability is not presented as a custodial 

liability. The SEC does not record liabilities on its 

financial statements for disgorgement and penalty 

amounts that another government entity, such as a 

court, or a non-governmental entity, such as a receiver, 

has collected or will collect.

In accordance with the provisions of the Dodd-Frank 

Act, collections not distributed to harmed investors may 

be transferred to either the Investor Protection Fund or 

the U.S. Treasury General Fund. See Note 16, Disgorgement and Penalties, for additional information.
80 | 2023 SEC AGENCY FINANCIAL REPORT

Liability Classification

The SEC recognizes liabilities that are covered by 

budgetary resources, liabilities that are not covered by 

budgetary resources, and liabilities that do not require 

the use of budgetary resources. See Note 8, Liabilities 

Covered and Not Covered by Budgetary Resources, for 

more information.

M. Employee Retirement Systems and Benefits 

The SEC’s employees may participate in either the 

Civil Service Retirement System (CSRS) or the Federal 

Employees Retirement System (FERS), depending on 

when they started working for the federal government. 

FERS and Social Security automatically cover most 

employees hired after December 31, 1983. 

All employees are eligible to contribute to a Thrift 

Savings Plan (TSP). For those employees participating in 

FERS, the TSP is automatically established, and the SEC 

makes a mandatory 1 percent contribution to this plan. 

In addition, the SEC matches contributions ranging 

from 1 to 4 percent for FERS-eligible employees who 

contribute to their TSP. Employees participating in CSRS 

do not receive matching contributions to their TSP. The 

SEC also provides a supplemental retirement contribution program that matches an employee’s TSP contribution up to an additional 3 percent of their salary. 

The SEC does not report CSRS, FERS, Federal Employees Health Benefits Program, Federal Employees Group 

Life Insurance Program assets, or accumulated plan 

benefits; the U.S. Office of Personnel Management 

(OPM) reports this information. In accordance with 

federal accounting standards, the SEC recognizes costs 

incurred by the SEC but financed by OPM on behalf 

of the SEC as an expense. The funding for this expense 

is reflected as imputed financing on the Statement of 

Changes in Net Position. 

N. Injury and Post-Employment Compensation

The Federal Employees’ Compensation Act (FECA), 

administered by the U.S. Department of Labor, provides 

income and medical cost protection to covered federal 

civilian employees harmed on the job or who have 

contracted an occupational disease, and dependents of 

employees whose death is attributable to a job-related 

injury or occupational disease. See Note 8, Liabilities 

Covered and Not Covered by Budgetary Resources. 

O. Annual, Sick, and Other Leave

The SEC accrues annual leave and compensatory time as 

earned and reduces the accrual when leave is taken. The 

balances in the accrued leave accounts reflect current 

leave balances and pay rates. See Note 8, Liabilities 

Covered and Not Covered by Budgetary Resources. The 

SEC expenses sick leave and other types of non-vested 

leave as used.

P. Exchange and Non-Exchange Revenue 

The SEC’s revenues include exchange revenues, which 

are generated from transactions in which both parties 

give and receive value, and non-exchange revenues, 

which arise from the federal government’s ability to 

demand payment. 

The SEC does not recognize amounts collected and held 

by another government entity, such as a court registry, 

or a non-government entity, such as a receiver. 
FINANCIAL SECTION | 81

The following table summarizes the SEC’s sources of exchange and non-exchange revenues.

The SEC’s Revenues 

and Financing Sources

Exchange and NonExchange Revenue Revenue Availability Financial Statement Presentation

Securities transaction 

fees1

Exchange 

Revenue

Collection of securities transaction fees are used 

to offset the SEC’s annual appropriation, up to 

the annual limit set by legislation. Collections of 

transaction fees beyond the amount needed to 

offset the SEC’s annual appropriation cannot be 

used to fund the SEC’s operations, nor transferred 

to the U.S. Treasury General Fund.

Reported on the Statement of 

Net Cost4

Securities registration, 

tender offer, merger, 

and other fees from 

registrants (filing fees)1,2

Exchange 

Revenue

Collections of filing fees up to $50 million per 

fiscal year may be transferred to the SEC’s 

Reserve Fund, as directed by legislation. 

Collections of filing fees that are not transferred 

to the SEC’s Reserve Fund are transferred to the 

U.S. Treasury General Fund.

Reported on the Statement of 

Net Cost4

Collections of monetary 

sanctions and related 

interest3

Non-Exchange

Revenue

Certain collections of monetary sanctions are 

deposited into the SEC’s Investor Protection 

Fund in accordance with legislation.

Reported on the Statement 

of Changes in Net Position

All other monetary sanctions are not a revenue 

source for the SEC, and are either:

(a) Distributed to harmed investors, or

(b) Transferred to the U.S. Treasury 

General Fund.

Reported as follows:

(a) Disclosed in Note 16, 

Disgorgement and 

Penalties

(b) Reported on the 

Statement of 

Custodial Activity

1 Transaction fee and filing fee rates are calculated and established by the SEC in accordance with federal law and are applied to volumes of activity reported by 

SROs or to filings submitted by registrants. Fees are recognized as exchange revenue on the effective date of the transaction or the date of the acceptance of 

the filing submission. See Note 1.E, Fund Accounting Structure. The SEC recognizes amounts remitted by registrants in advance of the transaction or filing date 

as a liability until earned by the SEC or returned to the registrant. 

2 Federal regulations require the return of registrant advance deposits when an account is dormant for three years, except in certain cases where refunds are 

not permitted. The Securities Act of 1933 and the Exchange Act do not permit refunds to registrants for securities that remain unsold after the completion, 

termination, or withdrawal of an offering. However, Code of Federal Regulations (CFR) Title 17 Chapter II, Part 230, Section 457(p) permits filers to offset a fee 

paid (filing fee offset) for a subsequent registration statement (offering) filed within five years of the initial filing date of the earlier registration statement. The total 

aggregate dollar amount of the filing fee associated with the unsold securities may be offset against the total filing fee due on the subsequent offering. Unused 

filing fee offsets are not an accounts payable to the SEC because registrants cannot obtain refunds of fees or additional services in relation to securities that 

remain unsold.

3 The SEC’s non-exchange revenues consist of disgorgement of illegal gains, civil penalties, and related interest.

4 The SEC’s exchange revenues are a means to recover all or most of the total cost of all SEC programs and to deposit excess collections from registrants to the 

U.S. Treasury General Fund. As a result, they offset the total costs of the organization in the Statement of Net Cost, rather than individual SEC programs. This 

presentation is consistent with the financial accounting concepts described in Statement of Federal Financial Accounting Concepts 2, Entity and Display.
82 | 2023 SEC AGENCY FINANCIAL REPORT

Q. Budgets and Budgetary Accounting

Salaries and Expenses

The SEC may use funds from the SEC’s Salaries and 

Expenses account only as authorized by Congress and 

made available by OMB apportionment, upon issuance 

of a Treasury warrant. Revenue collected in excess of 

appropriated amounts is restricted from use by the SEC. 

Collections in excess of congressional spending limits 

are unavailable by law and reported as Non-Budgetary 

Fund Balance with Treasury. See Note 3, Fund Balance 

with Treasury. Each fiscal year, OMB provides the SEC’s 

Salaries and Expenses account with quarterly apportionments. These apportionments include both new 

budget authority appropriated by Congress and unused 

no-year funds (unobligated balances) from prior years. 

The Salaries and Expenses account also receives a small 

amount of funds related to reimbursable activity, which 

are exempt from quarterly apportionment. See Note 1.E, 

Fund Accounting Structure, and Note 14, Statement of 

Budgetary Resources and Other Budgetary Disclosures.

Investor Protection Fund

The Dodd-Frank Act provides that the Investor Protection Fund has permanent authority that is available 

without further appropriation or fiscal year limitation 

for the purpose of funding awards to whistleblowers 

and for the operations of the Office of Inspector 

General Employee Suggestion Program. However, the 

SEC is required to request and obtain apportionments 

from OMB to use these funds. The Investor Protection 

Fund is financed by transferring a portion of monetary 

sanctions collected by the SEC under Section 308 of 

the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246). As 

provided by Section 21F of the Exchange Act, sanctions 

collected by the Commission payable either to the SEC 

or the U.S. Treasury General Fund will be transferred to 

the Investor Protection Fund if the balance in that fund 

is less than $300 million on the day of collection. See 

Note 1.E, Fund Accounting Structure.

Reserve Fund

The Reserve Fund is a special fund that has the authority 

to retain certain revenues not used in the current 

period for future use. The Dodd-Frank Act provides 

that the Fund is available to the SEC without further 

appropriation or fiscal year limitation “to carry out the 

functions of the Commission.” Amounts in the Reserve 

Fund are exempt from apportionment. Collections 

arising from securities registration, tender offer, and 

merger fees from registrants, other than those that are 

deposited in the Reserve Fund, are not available to be 

used in the operations of the SEC. See Note 1.E, Fund 

Accounting Structure. 

Borrowing Authority

The SEC’s borrowing authority is limited to authority 

to borrow funds from the U.S. Treasury in order to loan 

funds to the Securities Investor Protection Corporation, 

as discussed in Note 10.A, Commitments: Securities 

Investor Protection Act. 

R. Disgorgement and Penalties

The SEC maintains non-entity assets related to disgorgement and penalties ordered pursuant to civil injunctive 

and administrative proceedings. The SEC also recognizes an equal and offsetting liability for these assets, 

as discussed in Note 1.I, Accounts Receivable and 

Allowance for Uncollectible Accounts, and Note 1.L, 

Liabilities. Additional details regarding disgorgement 

and penalties are presented in Note 11, Funds from 

Dedicated Collections, and Note 16, Disgorgement 

and Penalties.
FINANCIAL SECTION | 83

NOTE 2. ENTITY AND NON-ENTITY ASSETS

Entity assets are assets that the SEC may use in its 

operations. 

Non-entity assets are assets that the SEC holds on behalf 

of another federal agency or a third party and are not 

available for the SEC’s use. The SEC’s non-entity assets 

include the following: (a) disgorgement, penalties, and 

interest collected and held or invested by the SEC; 

(b) disgorgement, penalties, and interest receivable that 

will be collected by the SEC; (c) securities registration, 

tender offer, merger, and other fees collected and receivable from registrants, in excess of amounts deposited 

in the SEC’s Reserve Fund; and (d) other miscellaneous 

receivables and collections such as registrant monies held 

temporarily until earned by the SEC. Additional details 

are provided in Note 16, Disgorgement and Penalties.

At September 30, 2023, SEC entity and non-entity assets consisted of the following:

(DOLLARS IN THOUSANDS) Entity Non-Entity Total

Intragovernmental:

Fund Balance with Treasury:

SEC Funds $ 8,700,565 $ — $ 8,700,565 

Registrant Deposits — 58,357 58,357 

Disgorgement and Penalties (Note 16) — 570,822 570,822 

Custodial and Other Non-Entity Assets — 28 28 

Investments, Net:

Disgorgement and Penalties (Note 16) — 3,211,439 3,211,439 

Investor Protection Fund 358,140 — 358,140 

Accounts Receivable 4 — 4 

Advances and Prepayments 10,907 — 10,907 

Total Intragovernmental Assets 9,069,616 3,840,646 12,910,262 

Cash and Other Monetary Assets:

Disgorgement and Penalties (Note 16) — 41 41 

Accounts Receivable, Net:

SEC Funds 89,864 — 89,864 

Disgorgement and Penalties (Note 16) — 466,038 466,038 

Custodial and Other Non-Entity Assets — 3,124 3,124 

Property and Equipment, Net (Note 7) 107,719 — 107,719 

Total Assets $ 9,267,199 $ 4,309,849 $ 13,577,048
84 | 2023 SEC AGENCY FINANCIAL REPORT

At September 30, 2022, SEC entity and non-entity assets consisted of the following:

(DOLLARS IN THOUSANDS) Entity Non-Entity Total

Intragovernmental:

Fund Balance with Treasury:

SEC Funds $ 8,197,318 $ — $ 8,197,318 

Registrant Deposits — 56,001 56,001 

Disgorgement and Penalties (Note 16) — 578,124 578,124 

Custodial and Other Non-Entity Assets — 33 33 

Investments, Net:

Disgorgement and Penalties (Note 16) — 2,826,250 2,826,250 

Investor Protection Fund 416,753 — 416,753 

Accounts Receivable — — —

Advances and Prepayments 8,636 — 8,636 

Total Intragovernmental Assets 8,622,707 3,460,408 12,083,115 

Cash and Other Monetary Assets:

Disgorgement and Penalties (Note 16) — 1 1 

Accounts Receivable, Net:

SEC Funds 276,260 — 276,260 

Disgorgement and Penalties (Note 16) — 1,646,914 1,646,914 

Custodial and Other Non-Entity Assets — 2,997 2,997 

Property and Equipment, Net (Note 7) 91,436 — 91,436 

Total Assets $ 8,990,403 $ 5,110,320 $ 14,100,723 
FINANCIAL SECTION | 85

NOTE 3. FUND BALANCE WITH TREASURY

The status of Fund Balance with Treasury as of September 30, 2023 and 2022 consisted of the following:

(DOLLARS IN THOUSANDS) 2023 2022

Status of Fund Balance with Treasury:

Unobligated Balance:

Available $ 65,539 $ (59,374)

Unavailable 105,220 97,592 

Obligated Balance not Yet Disbursed 1,416,964 1,047,282 

Non-Budgetary Fund Balance with Treasury 7,742,049 7,745,976 

Total Fund Balance with Treasury $ 9,329,772 $ 8,831,476 

Obligated and unobligated balances reported for 

the status of Fund Balance with Treasury differ from 

the amounts reported in the Statement of Budgetary 

Resources because budgetary balances are supported by 

amounts other than Fund Balance with Treasury. These 

amounts include funds to be reimbursed from other 

federal agencies as well as Investor Protection Fund 

investments, which are reversed from the unobligated 

available amount to account for Fund Balance with 

Treasury only, resulting in the negative balance for 

that line.

Non-Budgetary Fund Balance with Treasury consists 

of amounts in deposit funds and offsetting collections 

temporarily precluded from obligation in the SEC’s 

general Salaries and Expenses Fund (X0100). Amounts 

temporarily precluded from obligation represent 

offsetting collections in excess of appropriated amounts 

related to securities transactions fees, as well as securities 

registration, tender offer, merger, and other fees collected 

from registrants (filing fees).

There were no significant differences between the Fund 

Balance with Treasury reflected in the SEC’s financial 

statements and the corresponding balance in the U.S. 

Treasury Department accounts.

Fund Balance with Treasury is an intragovernmental 

asset, and accordingly it is eliminated as part of the 

consolidation process for the Financial Report of 

the U.S. Government. For additional information 

on the nature of intragovernmental assets, see 

Note 5, Investments.

NOTE 4. CASH AND OTHER MONETARY ASSETS

The SEC had a cash balance of $41 thousand as of 

September 30, 2023. The SEC receives collections 

throughout the year. Any collections received after the 

U.S. Treasury Department cut-off for deposit of checks 

are treated as deposits in transit and recognized as Cash 

on the Balance Sheet. The SEC had a cash balance of 

$1 thousand as of September 30, 2022.
86 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 5. INVESTMENTS

The SEC invests funds in overnight and short-term 

non-marketable market-based Treasury securities. The 

SEC records the value of its investments in Treasury 

securities at cost. Premiums and discounts are amortized 

on a straight-line (S/L) basis for market-based Treasury 

bills and on the effective interest basis for market-based 

Treasury notes. Amortization is calculated through 

the maturity date of these securities. Non-marketable 

market-based Treasury securities are issued by the 

U.S. Department of the Treasury’s Bureau of the Fiscal 

Service to federal agencies. They are not traded on any 

securities exchange but mirror the prices of similar 

Treasury securities trading in the government securities 

market. The market value of Treasury securities is a 

composite market bid price, using market data provided 

by the Federal Reserve Bank of New York that reflects 

the average price that brokers were offering to pay on 

the reporting date. 

At September 30, 2023, investments consisted of the following:

(DOLLARS IN THOUSANDS) Cost

Amortization 

Method

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investment, 

Net

Market Value 

Disclosure

Non-Marketable Market-Based Securities

Disgorgement and Penalties $ 3,186,341 $ 24,624 $ 474 $ 3,211,439 $ 3,210,913 

Market-Based Notes 197,528 Effective 8,086 196 205,810 205,453 

Market-Based Bills 1,133,296 S/L 16,538 — 1,149,834 1,149,943 

One-Day Certificates 1,855,517 N/A — 278 1,855,795 1,855,517 

Investor Protection Fund – Entity 358,086 — 54 358,140 358,086 

One-Day Certificates 358,086 N/A — 54 358,140 358,086 

Total $ 3,544,427 $ 24,624 $ 528 $ 3,569,579 $ 3,568,999 

At September 30, 2022, investments consisted of the following:

(DOLLARS IN THOUSANDS) Cost

Amortization 

Method

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investment, 

Net

Market Value 

Disclosure

Non-Marketable Market-Based Securities

Disgorgement and Penalties $ 2,821,424 $ 4,826 $ — $ 2,826,250 $ 2,825,123 

Market-Based Notes — Effective — — — —

Market-Based Bills 780,120 S/L 4,826 — 784,946 783,819 

One-Day Certificates 2,041,304 N/A — — 2,041,304 2,041,304 

Investor Protection Fund – Entity 416,753 — — 416,753 416,753 

One-Day Certificates 416,753 N/A — — 416,753 416,753 

Total $ 3,238,177 $ 4,826 $ — $ 3,243,003 $ 3,241,876 
FINANCIAL SECTION | 87

Intragovernmental Investments in 

Treasury Securities

The federal government does not set aside assets to pay 

future benefits or other expenditures associated with the 

investment by federal agencies in non-marketable federal 

securities. The funds used to purchase these investments 

are deposited in the U.S. Treasury, which uses the cash 

for general government purposes. Treasury securities are 

issued to the SEC as evidence of these balances. Treasury 

securities are an asset of the SEC and a liability of the 

U.S. Treasury General Fund. Because the SEC and the 

U.S. Treasury are both components of the government, 

these assets and liabilities offset each other from the 

standpoint of the government as a whole. For this 

reason, the investments presented by the SEC do not 

represent an asset or a liability in the U.S. Governmentwide financial statements.

Treasury securities provide the SEC with authority to 

draw upon the U.S. Treasury to make future payments 

from these accounts. When the SEC requires redemption 

of these securities to make expenditures, the government finances those expenditures out of accumulated 

cash balances, by raising taxes or other receipts, by 

borrowing from the public or repaying less debt, or by 

curtailing other expenditures. This is the same manner 

in which the government finances all expenditures.

NOTE 6. ACCOUNTS RECEIVABLE, NET

At September 30, 2023, accounts receivable consisted of the following:

(DOLLARS IN THOUSANDS) Gross Receivables Allowance Net Receivables

Intragovernmental Entity Accounts Receivable:

Reimbursable Activity $ 4 $ — $ 4

Entity Accounts Receivable:

Securities Transaction Fees 89,647 $ — 89,647 

Other 217 — 217 

Non-Entity Accounts Receivable:

Disgorgement and Penalties1 2,368,781 1,902,743 466,038 

Filing Fees 489 52 437 

Other 45,753 43,066 2,687 

Subtotal Non-Intragovernmental Accounts Receivable 2,504,887 1,945,861 559,026 

Total Accounts Receivable $ 2,504,891 $ 1,945,861 $ 559,030

1 Disgorgement and Penalties Accounts Receivable by Tiers (Note 1.I)

(DOLLARS IN THOUSANDS) Gross Receivable Allowance Net Receivable

Tier 1 $ 1,568,688 $ 1,247,936 $ 320,752 

Tier 2 137,018 54,345 82,673 

Tier 3 663,075 600,462 62,613 

Total Non-Entity Accounts Receivable: Disgorgement and Penalties $ 2,368,781 $ 1,902,743 $ 466,038 
88 | 2023 SEC AGENCY FINANCIAL REPORT

At September 30, 2022, accounts receivable consisted of the following:

(DOLLARS IN THOUSANDS) Gross Receivables Allowance Net Receivables

Intragovernmental Entity Accounts Receivable:

Reimbursable Activity $ — $ — $ —

Entity Accounts Receivable:

Securities Transaction Fees $ 276,001 $ — $ 276,001 

Other 259 — 259 

Non-Entity Accounts Receivable:

Disgorgement and Penalties2 3,919,173 2,272,259 1,646,914 

Filing Fees 262 41 221 

Other 13,537 10,761 2,776 

Subtotal Non-Intragovernmental Accounts Receivable 4,209,232 2,283,061 1,926,171 

Total Accounts Receivable $ 4,209,232 $ 2,283,061 $ 1,926,171 

2 Disgorgement and Penalties Accounts Receivable by Tiers (Note 1.I)

(DOLLARS IN THOUSANDS) Gross Receivable Allowance Net Receivable

Tier 1 $ 2,748,469 $ 1,255,885 $ 1,492,584

Tier 2 131,690 61,102 70,588

Tier 3 1,039,014 955,272 83,742 

Total Non-Entity Accounts Receivable: Disgorgement and Penalties $ 3,919,173 $ 2,272,259 $ 1,646,914

Refer to Note 1.I, Accounts Receivable and Allowance 

for Uncollectible Accounts, for methods used to estimate 

allowances. The SEC does not recognize interest 

revenue on accounts considered to be uncollectible. The 

SEC estimates that accumulated interest on accounts 

receivable considered to be uncollectible is $44.1 million 

and $11.9 million as of September 30, 2023 and 2022, 

respectively. This estimate does not include interest 

accumulated on debts written off or officially waived. 

Disgorgement and penalties net accounts receivable of 

$466 million and $1.6 billion at September 30, 2023 

and 2022, respectively, includes amounts designated 

as payable to the U.S. Treasury General Fund per 

court order, as well as amounts held for distribution 

to harmed investors. As discussed in Note 1.L, Liabilities, the receivables designated as payable to the U.S. 

Treasury General Fund, their offsetting liabilities, 

and the associated revenues, are classified as custodial. 

As of September 30, 2023 and 2022, the custodial 

disgorgement and penalties accounts receivable balance 

designated as payable to the U.S. Treasury General 

Fund, net of allowance, was $241.2 million and 

$1.2 billion, respectively. 

As discussed in Note 1.I, Accounts Receivable and 

Allowance for Uncollectible Accounts, pursuant 

to Section 991(e) of the Dodd-Frank Act, accounts 

receivable for securities registration, tender offer, merger, 

and other fees from registrants in excess of the amounts 

deposited into the Reserve Fund are held on behalf 

of the U.S. Treasury and are transferred to the U.S. 

Treasury General Fund upon collection. 
FINANCIAL SECTION | 89

NOTE 7. PROPERTY AND EQUIPMENT, NET

At September 30, 2023, property and equipment consisted of the following:

Class of Property 

(DOLLARS IN THOUSANDS)

Depreciation/

Amortization

Method

Capitalization

Threshold

for Individual

Purchases

Capitalization

Threshold

for Bulk

Purchases

Service

Life

(Years)

Acquisition

Cost

Accumulated

Depreciation/

Amortization

Net Book

Value

Furniture and Equipment S/L $ 50 $ 300 3–5 $ 73,192 $ 59,388 $ 13,804 

Software S/L 300 300 3–5 367,669 285,184 82,485 

Leasehold Improvements S/L 300 N/A 10 89,070 77,640 11,430 

Total $ 529,931 $ 422,212 $ 107,719 

During FY 2023, activity impacting Net Book Value consisted of the following:

(DOLLARS IN THOUSANDS)

Net Book 

Value 

Balance Beginning of Year $ 91,436 

Capitalized Acquisitions 58,018 

Dispositions (903)

Depreciation Expense (40,832)

Balance End of Year $ 107,719 

At September 30, 2022, property and equipment consisted of the following:

Class of Property 

(DOLLARS IN THOUSANDS)

Depreciation/

Amortization

Method

Capitalization

Threshold

for Individual

Purchases

Capitalization

Threshold

for Bulk

Purchases

Service

Life

(Years)

Acquisition

Cost

Accumulated

Depreciation/

Amortization

Net Book

Value

Furniture and Equipment S/L $ 50 $ 300 3–5 $ 106,086 $ 91,647 $ 14,439 

Software S/L 300 300 3–5 322,482 255,913 66,569 

Leasehold Improvements S/L 300 N/A 10 95,278 84,850 10,428 

Total $ 523,846 $ 432,410 $ 91,436 

During FY 2022, activity impacting Net Book Value consisted of the following:

(DOLLARS IN THOUSANDS)

Net Book 

Value 

Balance Beginning of Year $ 85,037 

Capitalized Acquisitions 52,532 

Dispositions (3,728)

Depreciation Expense (42,405)

Balance End of Year $ 91,436 

Bulk purchases are acquisitions of a quantity of similar 

items that individually cost less than the threshold for 

individual purchases but collectively exceed the designated bulk purchase threshold of $300,000.

The SEC recorded two impairments during FY 2023. 

In December 2022, a partially amortized application 

was retired early, resulting in a loss of $263 thousand. 

Additionally, in May 2023, a system that was in 

development was cancelled due to technical and staffing 

delay issues. The Office of Information Technology 

is currently modernizing this application in another 

development effort, and most of the earlier work is not 

needed in this modernization. The cancelled system 

write-off resulted in a loss of $640 thousand.
90 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 8. LIABILITIES COVERED AND NOT COVERED BY 

BUDGETARY RESOURCES 

The SEC recognizes liabilities that are covered by 

budgetary resources, liabilities that are not covered by 

budgetary resources, and liabilities that do not require 

the use of budgetary resources. 

Liabilities that are covered by budgetary resources are 

liabilities incurred for which budgetary resources are 

available to the SEC during the reporting period without 

further congressional action. 

The SEC also recognizes liabilities not covered by 

budgetary resources. Budgetary and financial statement 

reporting requirements sometimes differ on the timing 

for the required recognition of an expense. For example, 

in the financial statements, annual leave expense must 

be accrued in the reporting period when the annual 

leave is earned. However, in the budget, annual leave is 

required to be recognized and funded in the fiscal year 

when the annual leave is either used or paid out to a 

separating employee, not when it is earned. As a result 

of this timing difference, accrued annual leave liability 

is classified as a liability “not covered by budgetary 

resources” as of the financial statement date. 

Liabilities not covered by budgetary resources require 

future congressional action whereas liabilities covered by 

budgetary resources reflect prior congressional action. 

Regardless of when the congressional action occurs, 

when the liabilities are liquidated, Treasury will finance 

the liquidation in the same way that it finances all other 

disbursements, which is to borrow from the public if 

the government has a budget deficit (and to use current 

receipts if the government has a budget surplus).

Liabilities that do not require the use of budgetary 

resources are covered by assets that do not represent 

budgetary resources to the SEC. Liabilities that do not 

require the use of budgetary resources include registrant 

monies held temporarily until earned by the SEC and 

offsetting liabilities that correspond to non-entity assets 

that the SEC holds, such as collections and receivables 

from disgorgement and penalties, as discussed in Note 

1.L, Liabilities. 
FINANCIAL SECTION | 91

At September 30, 2023, liabilities consisted of the following:

(DOLLARS IN THOUSANDS)

Liabilities 

Covered by 

Budgetary 

Resources

Liabilities 

Not Covered by 

Budgetary 

Resources

Liabilities 

Not Requiring 

Budgetary 

Resources Total

Intragovernmental:

Accounts Payable $ 5,659 $ — $ — $ 5,659 

Other Liabilities 

Payroll Taxes Payable 792 — — 792 

Custodial Liability — — 243,893 243,893 

Liability for Non-Entity Assets — — 439 439 

Benefit Program Contributions Payable 4,728 863 — 5,591 

Recognition of Lease Liability (Note 9) — 3,595 — 3,595 

Total Other Liabilities 5,520 4,458 244,332 254,310

Total Intragovernmental 11,179 4,458 244,332 259,969

With the Public:

Accounts Payable 504,783 — — 504,783 

Federal Employee Leave and Benefits Payable 954 144,529 — 145,483 

Registrant Deposits — — 58,357 58,357 

Other Liabilities

Accrued Payroll 21,022 — — 21,022 

Liability for Disgorgement and Penalties (Note 16) — — 4,007,133 4,007,133 

Contingent Liabilities (Note 10) — 111,988 — 111,988 

Other Accrued Liabilities

Recognition of Lease Liability (Note 9) — 2,327 — 2,327 

Other — — 1,059 1,059 

Total Other Liabilities 21,022 114,315 4,008,192 4,143,529 

Total With the Public 526,759 258,844 4,066,549 4,852,152

Total Liabilities $ 537,938 $ 263,302 $ 4,310,881 $ 5,112,121 

Other Liabilities (intragovernmental and with the 

public) totaled $4.4 billion as of September 30, 2023, 

of which all but $117.3 million is current. Current 

liabilities are liabilities that are expected to be paid 

within the fiscal year following the reporting date. 

The non-current portion of Other Liabilities includes 

the appropriate portions of Unfunded FECA and 

Unemployment Liability, Contingent Liabilities, 

and Lease Liability. Current liabilities not covered 

by budgetary resources totaled $1.5 million as of 

September 30, 2023. As of September 30, 2023, the 

SEC’s unfunded leave balance was $139.4 million.
92 | 2023 SEC AGENCY FINANCIAL REPORT

At September 30, 2022, liabilities consisted of the following:

(DOLLARS IN THOUSANDS)

Liabilities 

Covered by 

Budgetary 

Resources

Liabilities 

Not Covered by 

Budgetary 

Resources

Liabilities 

Not Requiring 

Budgetary 

Resources Total

Intragovernmental:

Accounts Payable $ 2,123 $ — $ — $ 2,123 

Other Liabilities 

Payroll Taxes Payable 598 — — 598 

Custodial Liability — — 1,154,376 1,154,376 

Liability for Non-Entity Assets — — 223 223 

Benefit Program Contributions Payable 4,368 958 — 5,326

Recognition of Lease Liability (Note 9) — 3,792 — 3,792 

Total Other Liabilities 4,966 4,750 1,154,599 1,164,315 

Total Intragovernmental 7,089 4,750 1,154,599 1,166,438 

With the Public:

Accounts Payable 207,849 — — 207,849 

Federal Employee Leave and Benefits Payable 870 146,506 — 147,376 

Registrant Deposits — — 56,001 56,001 

Other Liabilities

Accrued Payroll 19,038 — — 19,038 

Liability for Disgorgement and Penalties (Note 16) — — 3,899,686 3,899,686 

Contingent Liabilities (Note 10) — 530,695 — 530,695 

Other Accrued Liabilities

Recognition of Lease Liability (Note 9) — 3,224 — 3,224 

Other — — 42 42 

Total Other Liabilities 19,038 533,919 3,899,728 4,452,685 

Total With the Public 227,757 680,425 3,955,729 4,863,911 

Total Liabilities $ 234,846 $ 685,175 $ 5,110,328 $ 6,030,349

Other Liabilities (intragovernmental and with the 

public) totaled $5.6 billion as of September 30, 2022, 

of which all but $537.2 million was current. The 

non-current portion of Other Liabilities includes the 

appropriate portions of the Unfunded FECA and 

Unemployment Liability, Contingent Liabilities, 

and Lease Liability. Current liabilities not covered 

by budgetary resources totaled $1.5 million as of 

September 30, 2022. As of September 30, 2022, the 

SEC’s unfunded leave balance was $141.4 million.
FINANCIAL SECTION | 93

NOTE 9. LEASES

Operating Leases

At September 30, 2023, the SEC leased office space 

at 15 locations under operating lease agreements that 

expire between FY 2024 and FY 2042. The SEC paid 

$105.9 million and $105.8 million for rent for the years 

ended September 30, 2023 and 2022, respectively.

The following table details expected future lease 

payments for (a) the full term of all non-cancelable 

leases with terms of more than one year, and (b) any 

non-cancelable period over one year that is part of a 

cancelable lease. “Non-cancelable” leases are leases for 

which the lease agreements do not provide an option 

for the lessee to cancel the lease prior to the end of the 

lease term. The table excludes future payments for the 

lease extensions of the SEC’s headquarters facilities that 

are now cancelable. 

Under existing commitments, expected future lease payments through FY 2029 and thereafter are as follows:

FISCAL YEAR

(DOLLARS IN THOUSANDS) Federal Non-Cancelable

Non-Federal 

Non-Cancelable

Non-Cancelable Expected 

Future Lease Payments

2024 $ 3,163 $ 1,812 $ 4,975 

2025 3,163 — 3,163 

2026 3,145 — 3,145 

2027 2,945 — 2,945 

2028 2,945 — 2,945 

2029 and thereafter 2,700 — 2,700 

Total $ 18,061 $ 1,812 $ 19,873 

In February 2022, the San Francisco Regional Office 

was delegated Government Services Administration 

(GSA) lease extension authority; however, this extension 

is not cancelable until February 2024. The total 

expected future lease payments reflect an estimate of 

base rent and contractually required costs.

During FY 2021, the SEC entered into a cancelable 

15-year occupancy agreement for a new SEC 

headquarters facility with the GSA, and the $244.5 

million appropriated in FY 2018 for this purpose was 

obligated. See Note 14.B, Other Budgetary Disclosures, 

“Legal Restrictions on Unobligated Budgetary 

Resources.” Occupancy of the new SEC headquarters 

facility is currently not expected until 2027 at the 

earliest. Until that time, the SEC is expected to continue 

its occupancy of Station Place 1 and Station Place 2 

through lease extensions negotiated under GSA lease 

extension authority. The SEC did not renew its lease 

of Station Place 3 when it expired in September 2023. 

As a result, the SEC will no longer pay rent, taxes, and 

operating expenses for that building, which totaled 

$14.9 million in FY 2023.

Expense Recognition of “Rent Holiday” and 

Broker Commission Credit

In the execution of lease agreements, many times 

lessors offer incentives for the occupation of office 

space. These include months of free rent or reduced 

rent at the occupied space or a temporary space while 

the new office is being prepared for occupancy. When 

a rent holiday or broker commission credit is taken at 

the beginning of the lease term or at the beginning of 

occupancy of the temporary space, a rent expense is 

accrued, even though no payment is due or a reduced 

amount is due. This accrued expense is recognized as an 
94 | 2023 SEC AGENCY FINANCIAL REPORT

unfunded liability because funding will not be provided 

until the future period in which payment is due. The 

accrual and amortization of rent holiday and broker 

commission credit discounts allow the rent expense to 

be allocated equally to each period of the lease term. 

The accrued lease liability for rent holidays was 

$2.3 million and $3.2 million as of September 30, 

2023 and 2022, respectively. The accrued lease liability 

for broker commission credits taken was $3.6 million 

and $3.8 million as of September 30, 2023 and 2022, 

respectively. 

NOTE 10. COMMITMENTS AND CONTINGENCIES 

A. Commitments: Securities 

Investor Protection Act 

The Securities Investor Protection Act of 1970 (SIPA), 

as amended, created the Securities Investor Protection 

Corporation (SIPC) to restore funds and securities to 

investors and to protect the securities markets from 

disruption following the failure of broker-dealers. 

Generally, if a brokerage firm is not able to meet its 

obligations to customers, then customers’ cash and 

securities held by the brokerage firm are returned to 

customers on a pro rata basis. If sufficient funds are 

not available at the firm to satisfy customer claims, 

the reserve funds of SIPC are used to supplement the 

distribution, up to a ceiling of $500,000 per customer, 

including a maximum of $250,000 for cash claims. 

SIPA authorizes SIPC to create a fund to maintain all 

monies received and disbursed by SIPC. SIPA gives SIPC 

the authority to borrow up to $2.5 billion from the 

SEC in the event that the SIPC Fund is or may appear 

insufficient for purposes of SIPA. To borrow the funds, 

SIPC must file with the SEC a statement of the uses of 

such a loan and a repayment plan, and then the SEC 

must certify to the Secretary of the Treasury that the 

loan is necessary to protect broker-dealer customers and 

maintain confidence in the securities markets and that 

the repayment plan provides as reasonable assurance of 

prompt repayment as may be feasible under the circumstances. The U.S. Treasury would make these funds 

available to the SEC through the purchase of notes or 

other obligating instruments issued by the SEC. Such 

notes or other obligating instruments would bear interest at a rate determined by the Secretary of the Treasury. 

As of September 30, 2023, the SEC had not loaned any 

funds to the SIPC, and there are no outstanding notes or 

other obligating instruments issued by the SEC.

Based on the estimated costs to complete ongoing 

customer protection proceedings, the current size of the 

SIPC Fund supplemented by SIPC’s ongoing assessments 

on brokers is expected to provide sufficient funds to 

cover acknowledged customer claims. There are several 

broker-dealers that are being liquidated under SIPA or 

that have been referred to SIPC for liquidation that may 

result in additional customer claims. In the event that 

the SIPC Fund is or may reasonably appear to be 

insufficient for the purposes of SIPA, SIPC may seek a 

loan from the SEC.

B. Commitments and Contingencies: 

Investor Protection Fund

As discussed in Note 1.E, Fund Accounting Structure, 

the Investor Protection Fund is used to pay awards to 

whistleblowers if they voluntarily provide original information to the SEC and meet other conditions. Approved 

awards are between 10 and 30 percent of the monetary 

sanctions collected in the covered action (and when 

applicable, in a related action), with the actual percentage being determined at the discretion of the SEC, using 

criteria provided in the legislation and the related rules 

to implement the legislation adopted by the SEC. 

A Preliminary Determination is an assessment, made by 

the Claims Review staff appointed by the Director of the 

Division of Enforcement, as to whether the claim should 
FINANCIAL SECTION | 95

be allowed or denied and, if allowed, what the proposed 

award percentage amount should be.

Contingent liabilities are reported as follows:

• A contingent liability is recognized when (a) a positive 

Preliminary Determination has been made by the 

Claims Review staff, (b) collection has been made, 

and (c) the percentage to be paid can be reasonably 

estimated. A contingent liability is also disclosed 

as a range for the minimum and maximum totals 

of whistleblower awards, using 10 percent and 30 

percent of collections, respectively. 

• A potential liability is disclosed but not recognized 

when a positive Preliminary Determination is expected 

and collection has been received, using 10 percent 

and 30 percent of collections as the minimum and 

maximum award amounts, respectively. 

At September 30, 2023, commitments and contingencies consisted of the following:

(DOLLARS IN THOUSANDS) Accrued Liabilities

Estimated Range of Loss

Lower End Upper End

2023 Whistleblower Awards:

Probable $ 111,988 $ 44,002 $ 132,007 

Reasonably Possible — 312,361 937,083 

At September 30, 2022, commitments and contingencies consisted of the following:

(DOLLARS IN THOUSANDS) Accrued Liabilities

Estimated Range of Loss

Lower End Upper End

2022 Whistleblower Awards:

Probable $ 530,695 $ 242,702 $ 728,105 

Reasonably Possible — 103 310 

A liability (accounts payable) is recognized when a Final 

Determination has been approved by the Commission 

and collection has been received. In all cases, the 

whistleblower award is not paid until amounts have 

been collected, a final order is issued by the Commission, and the appeal rights of all claimants on the matter 

have been exhausted. 

In the event that whistleblower awards reduce the 

Investor Protection Fund unobligated balance below 

$300 million, the Investor Protection Fund will be 

replenished, as described in Note 1.Q, Budgets and 

Budgetary Accounting, “Investor Protection Fund.” The 

unobligated balances of the Investor Protection Fund at 

September 30, 2023 and 2022 were $337 million and 

$306 million, respectively. Since the contingent liabilities 

balance does not exceed the unobligated balance at 

September 30, 2023, additional replenishments will not 

be needed before these liabilities are awarded and paid.

C. Other Commitments

In addition to future lease commitments discussed in 

Note 9, Leases, the SEC is obligated for the purchase 

of goods and services that have been ordered but not 

received. As of September 30, 2023, net obligations 

for all SEC activities were $1.4 billion, of which 

$537.9 million was delivered and unpaid. As of 

September 30, 2022, net obligations for all SEC 

activities were $1.0 billion, of which $234.8 million 

was delivered and unpaid.
96 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 11. FUNDS FROM DEDICATED COLLECTIONS

The SEC’s funds from dedicated collections consist 

of transactions and balances recorded in its Salaries 

and Expenses Fund, Investor Protection Fund, and 

Reserve Fund. Treasury securities reflect a government 

commitment to the program and allow the program to 

continue to provide benefits required by law. See Note 

1.E.1, Funds from Dedicated Collections, and Note 5, 

Investments, for additional information about intragovernmental investments in Treasury securities.

For FY 2023, the assets, liabilities, net position, and net income from operations relating to funds from dedicated collections 

consisted of the following:

(DOLLARS IN THOUSANDS)

Salaries & 

Expenses

Investor 

Protection 

Fund

Reserve 

Fund

Total 

Combined 

Funds from 

Dedicated 

Collections Eliminations

Total 

Consolidated 

Funds from 

Dedicated 

Collections

Balance Sheet as of September 30, 2023

ASSETS

Intragovernmental:

Fund Balance with Treasury $ 8,202,803 $ 448,625 $ 48,105 $ 8,699,533 $ — $ 8,699,533 

Investments, Net — 358,140 — 358,140 — 358,140 

Accounts Receivable 4 — — 4 — 4 

Advances and Prepayments 10,907 — — 10,907 — 10,907 

Total Intragovernmental 8,213,714 806,765 48,105 9,068,584 — 9,068,584 

With the Public:

Accounts Receivable, Net 89,864 — — 89,864 — 89,864 

Property and Equipment, Net 47,051 — 60,668 107,719 — 107,719 

Total With the Public 136,915 — 60,668 197,583 — 197,583 

Total Assets $ 8,350,629 $ 806,765 $ 108,773 $ 9,266,167 $ — $ 9,266,167 

LIABILITIES

Intragovernmental:

Accounts Payable $ 5,659 $ — $ — $ 5,659 $ — $ 5,659 

Other Liabilities

Payroll Taxes Payable 792 — — 792 — 792 

Benefit Program 

Contributions Payable 5,591 — — 5,591 — 5,591 

Other Liabilities 3,595 — — 3,595 — 3,595 

Total Intragovernmental Liabilities 15,637 — — 15,637 — 15,637 

With the Public:

Accounts Payable 65,768 431,406 7,609 504,783 — 504,783 

Federal Employee Leave and 

Benefits Payable 145,483 — — 145,483 — 145,483 

Other Liabilities

Accrued Payroll 21,022 — — 21,022 — 21,022 

Contingent Liabilities — 111,988 — 111,988 — 111,988 

Other Accrued Liabilities 2,327 — — 2,327 — 2,327 

Total With the Public 234,600 543,394 7,609 785,603 — 785,603 

Total Liabilities 250,237 543,394 7,609 801,240 — 801,240 
FINANCIAL SECTION | 97

(DOLLARS IN THOUSANDS)

Salaries & 

Expenses

Investor 

Protection 

Fund

Reserve 

Fund

Total 

Combined 

Funds from 

Dedicated 

Collections Eliminations

Total 

Consolidated 

Funds from 

Dedicated 

Collections

NET POSITION

Unexpended Appropriations 265,026 — — 265,026 — 265,026 

Cumulative Results of Operations 7,835,366 263,371 101,164 8,199,901 — 8,199,901 

Total Net Position $ 8,100,392 $ 263,371 $ 101,164 $ 8,464,927 $ — $ 8,464,927 

Total Liabilities and Net Position $ 8,350,629 $ 806,765 $ 108,773 $ 9,266,167 $ — $ 9,266,167 

Statement of Net Cost for the year ended September 30, 2023

Gross Program Costs $ 2,181,015 $ 195,364 $ 36,456 $ 2,412,835 $ (28) $ 2,412,807 

Less Earned Revenues Not 

Attributable to Program Costs 1,973,900 — 50,000 2,023,900 (28) 2,023,872 

Net Cost of Operations $ 207,115 $ 195,364 $ (13,544) $ 388,935 $ — $ 388,935 

Statement of Changes in Net Position for the year ended September 30, 2023

Unexpended Appropriations:

Beginning Balances $ 217,841 $ — $ — $ 217,841 $ — $ 217,841 

Appropriations Received 49,752 — — 49,752 — 49,752 

Appropriations Used (2,567) — — (2,567) — (2,567)

Net Change in Unexpended 

Appropriations 47,185 — — 47,185 — 47,185 

Total Unexpended Appropriations: 

Ending 265,026 — — 265,026 — 265,026 

Cumulative Results of Operations:

Beginning Balances 7,965,841 (200,928) 87,620 7,852,533 — 7,852,533 

Appropriations Used 2,567 — — 2,567 — 2,567 

Non-Exchange Revenue — 659,663 — 659,663 — 659,663 

Imputed Financing 74,073 — — 74,073 — 74,073 

Net Cost of Operations 207,115 195,364 (13,544) 388,935 — 388,935 

Net Change in Cumulative Results 

of Operations (130,475) 464,299 13,544 347,368 — 347,368 

Cumulative Results of Operations: 

Ending 7,835,366 263,371 101,164 8,199,901 — 8,199,901 

Net Position $ 8,100,392 $ 263,371 $ 101,164 $ 8,464,927 $ — $ 8,464,927 

NOTE 11. FUNDS FROM DEDICATED COLLECTIONS (CONTINUED)
98 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 11. FUNDS FROM DEDICATED COLLECTIONS (CONTINUED)

For FY 2022, the assets, liabilities, net position, and net income from operations relating to funds from dedicated collections 

consisted of the following:

(DOLLARS IN THOUSANDS)

Salaries & 

Expenses

Investor 

Protection 

Fund

Reserve 

Fund

Total 

Combined 

Funds from 

Dedicated 

Collections Eliminations

Total 

Consolidated 

Funds from 

Dedicated 

Collections

Balance Sheet as of September 30, 2022

ASSETS

Intragovernmental:

Fund Balance with Treasury $ 8,101,892 $ 51,910 $ 43,508 $ 8,197,310 $ — $ 8,197,310 

Investments, Net — 416,753 — 416,753 — 416,753 

Accounts Receivable — — — — — —

Advances and Prepayments 8,636 — — 8,636 — 8,636 

Total Intragovernmental 8,110,528 468,663 43,508 8,622,699 — 8,622,699 

With the Public:

Accounts Receivable, Net 276,260 — — 276,260 — 276,260 

Property and Equipment, Net 40,854 — 50,582 91,436 — 91,436 

Total With the Public 317,114 — 50,582 367,696 — 367,696 

Total Assets $ 8,427,642 $ 468,663 $ 94,090 $ 8,990,395 $ — $ 8,990,395 

LIABILITIES

Intragovernmental:

Accounts Payable $ 2,123 $ — $ — $ 2,123 $ — $ 2,123 

Other Liabilities

Payroll Taxes Payable 598 — — 598 — 598 

Benefit Program 

Contributions Payable 5,326 — — 5,326 — 5,326 

Other Liabilities 3,792 — — 3,792 — 3,792 

Total Intragovernmental Liabilities 11,839 — — 11,839 — 11,839 

With the Public:

Accounts Payable 62,483 138,896 6,470 207,849 — 207,849 

Federal Employee Leave and 

Benefits Payable 147,376 — — 147,376 — 147,376 

Other Liabilities

Accrued Payroll 19,038 — — 19,038 — 19,038 

Contingent Liabilities — 530,695 — 530,695 — 530,695 

Other Accrued Liabilities 3,224 — — 3,224 — 3,224 

Total With the Public 232,121 669,591 6,470 908,182 — 908,182 
FINANCIAL SECTION | 99

(DOLLARS IN THOUSANDS)

Salaries & 

Expenses

Investor 

Protection 

Fund

Reserve 

Fund

Total 

Combined 

Funds from 

Dedicated 

Collections Eliminations

Total 

Consolidated 

Funds from 

Dedicated 

Collections

Total Liabilities 243,960 669,591 6,470 920,021 — 920,021 

NET POSITION

Unexpended Appropriations 217,841 — — 217,841 — 217,841 

Cumulative Results of Operations 7,965,841 (200,928) 87,620 7,852,533 — 7,852,533 

Total Net Position $ 8,183,682 $ (200,928) $ 87,620 $ 8,070,374 $ — $ 8,070,374

Total Liabilities and Net Position $ 8,427,642 $ 468,663 $ 94,090 $ 8,990,395 $ — $ 8,990,395 

Statement of Net Cost for the year ended September 30, 2022

Gross Program Costs $ 2,010,965 $ 630,320 $ 55,955 $ 2,697,240 $ (43) $ 2,697,197

Less Earned Revenues Not 

Attributable to Program Costs 1,799,041 — 50,000 1,849,041 (43) 1,848,998 

Net Cost of Operations $ 211,924 $ 630,320 $ 5,955 $ 848,199 $ — $ 848,199

Statement of Changes in Net Position for the year ended September 30, 2022

Unexpended Appropriations:

Beginning Balances $ 213,922 $ — $ — $ 213,922 $ — $ 213,922 

Appropriations Received 414,402 — — 414,402 — 414,402 

Appropriations Used (410,483) — — (410,483) — (410,483)

Net Change in Unexpended 

Appropriations 3,919 — — 3,919 — 3,919 

Total Unexpended Appropriations: 

Ending 217,841 — — 217,841 — 217,841 

Cumulative Results of Operations:

Beginning Balances 7,723,290 40,087 93,575 7,856,952 — 7,856,952 

Appropriations Used 410,483 — — 410,483 — 410,483 

Non-Exchange Revenue — 389,305 — 389,305 — 389,305 

Imputed Financing 43,992 — — 43,992 — 43,992 

Net Cost of Operations 211,924 630,320 5,955 848,199 — 848,199

Net Change in Cumulative Results 

of Operations 242,551 (241,015) (5,955) (4,419) — (4,419)

Cumulative Results of Operations: 

Ending 7,965,841 (200,928) 87,620 7,852,533 — 7,852,533 

Net Position $ 8,183,682 $ (200,928) $ 87,620 $ 8,070,374 $ — $ 8,070,374 

NOTE 11. FUNDS FROM DEDICATED COLLECTIONS (CONTINUED)
100 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 12. STATEMENT OF CHANGES IN NET POSITION 

A. Other 

In FY 2023, the negative $527.8 million in “Other” 

reported in the Statement of Changes in Net Position 

consists of securities registration, tender offer, merger, 

and other fees from registrants (filing fees) as well 

as other non-entity exchange revenue deposited into 

the U.S. Treasury General Fund. Filing fees and other 

non-entity exchange revenue are recognized as exchange 

revenue on the SEC’s Statement of Net Cost, and the 

transfer-out to the U.S. Treasury General Fund is recognized as a negative other financing source on the SEC’s 

consolidated Statement of Changes in Net Position. See 

Note 1.P, Exchange and Non-Exchange Revenue.

In FY 2022, the negative $586.8 million in “Other” 

consists of the transfer-out of filing fees and other 

non-entity exchange revenue to the U.S. Treasury 

General Fund.

B. Non-Custodial Non-Exchange Revenues 

The SEC deposits non-exchange revenue to the Investor 

Protection Fund when the replenishment criteria 

is met. These collections and related interest from 

the investment of funds are derived from monetary 

sanctions that would otherwise be deposited to the U.S. 

Treasury General Fund. See Note 1.P, Exchange and 

Non-Exchange Revenue, for more information about 

non-exchange revenue. 

For the period ended September 30, 2023 and 2022, Non-Custodial Non-Exchange Revenues consisted of the following:

Non-Exchange Revenue

(DOLLARS IN THOUSANDS) FY 2023 FY 2022

Deposits of Monetary Sanctions to the Investor Protection Fund $ 643,276 $ 387,168 

Investment Interest Revenue in the Investor Protection Fund 16,387 2,137

Total Amount of Federal Revenues Collected $ 659,663 $ 389,305

NOTE 13. CUSTODIAL ACTIVITY

The Statement of Custodial Activity reports custodial 

collections and accounts receivable on a modified cash 

basis of accounting. Cash collections and amounts 

transferred to U.S. Treasury General Fund are reported 

on a cash basis. The change in receivables and related 

payables are reported on an accrual basis. The SEC’s 

Miscellaneous Receipt Accounts are used to account 

for custodial receipts pursuant to SEC enforcement 

actions and other small collections that will be sent to 

the U.S. Treasury General Fund. For more information 

about the SEC’s Miscellaneous Receipt Accounts, see 

Note 1.E, Fund Accounting Structure. For information 

about the estimated collectability of accounts receivable, 

see Note 1.I, Accounts Receivable and Allowance for 

Uncollectible Accounts.
FINANCIAL SECTION | 101

NOTE 14. STATEMENT OF BUDGETARY RESOURCES AND OTHER 

BUDGETARY DISCLOSURES

A. Explanation of Differences between the 

Statement of Budgetary Resources (SBR) 

and the Budget of the U.S. Government 

A comparison between the FY 2023 SBR and the actual 

FY 2023 data in the Budget of the U.S. Government 

(Budget) cannot be presented, as the FY 2025 Budget, 

which will contain FY 2023 actual data, is not yet 

available. The FY 2025 Budget with actual amounts for 

FY 2023 will be available at a later date at whitehouse.

gov/omb/budget/. The comparison will be presented in 

next year’s financial statements. 

There are no differences between the FY 2022 Statement of Budgetary Resources and the FY 2022 data in 

the Budget. 

B. Other Budgetary Disclosures

General Provisions of Appropriation

The SEC’s annual Appropriations Act provides 

$2,149,000,000 in new budget authority for 

FY 2023. The Act contains general provisions that 

limit the amount that can be obligated for international 

conferences, International Organization of Securities 

Commission dues, and representation expenses. The Act 

requires the SEC to fund its Office of Inspector General 

with a minimum of $18,979,000 in new budget authority. The Act also provides for costs associated for move, 

replication, and related costs associated with a replacement lease for the Commission’s District of Columbia 

headquarters facilities, not to exceed $57,405,000, to 

remain available until expended; and for move, replication, and related costs associated with a replacement 

lease for the Commission’s San Francisco Regional 

Office facilities, not to exceed $3,365,000.

Unobligated Balance from Prior Year Budget 

Authority, Net (Discretionary and Mandatory) 

For FY 2023, the Unobligated Balance from Prior Year 

Budget Authority, Net consisted of available unobligated balance brought forward from the prior year in 

the amount of $365 million as well as FY 2023 recoveries of prior-year obligations totaling $37.1 million. For 

FY 2022, the Unobligated Balance from Prior Year 

Budget Authority, Net consisted of available unobligated 

balance brought forward from the prior year in the 

amount of $194.1 million as well as FY 2022 recoveries 

of prior-year obligations totaling $50.3 million.

Undelivered Orders at the End of the Period

Undelivered orders consist of orders of goods and 

services that the SEC has not received. The SEC’s total 

undelivered orders were $889.9 million and $821.1 

million for the years ended September 30, 2023 

and 2022, respectively. Of the $889.9 million total 

undelivered orders at September 30, 2023, $353.3 

million were with federal trading partners and $536.6 

million were with non-federal trading partners. The 

total undelivered orders contained unpaid and paid 

undelivered orders, with unpaid orders making up the 

majority of the total. The SEC’s total unpaid undelivered 

orders were $879 million and $812.5 million for the 

years ended September 30, 2023 and 2022, respectively. 

Of the $879 million unpaid undelivered orders at 

September 30, 2023, $342.4 million were with

federal trading partners and $536.6 million were 

with non-federal trading partners.
102 | 2023 SEC AGENCY FINANCIAL REPORT

Legal Restrictions on Unobligated 

Budgetary Resources 

Unobligated budgetary resources are restricted for 

the following:

a) $244.5 million appropriated in FY 2018, 

$18.7 million appropriated in FY 2021, and 

$57.4 million appropriated in FY 2023 for costs 

associated with relocation under a replacement lease 

for the Commission’s headquarters facilities, of 

which $257.2 million has been obligated and 

$2.3 million expended as of September 30, 2023; 

b) $37.2 million appropriated in FY 2019 and 

$10.5 million appropriated in FY 2020 for costs 

associated with the relocation under a replacement 

lease for the Commission’s New York Regional 

Office facilities, of which $40.6 million has been 

obligated and $15.7 million expended as of 

September 30, 2023; 

c) $12.7 million appropriated in FY 2021, 

$4.4 million appropriated in FY 2022, and

$3.4 million appropriated in FY 2023 for costs 

associated with the relocation under a replacement 

lease for the Commission’s San Francisco Regional 

Office facilities, of which $13.7 million has been 

obligated and $814 thousand expended as of 

September 30, 2023; and

d) $6.7 million appropriated in FY 2022 for costs 

associated with the relocation under a replacement 

lease for the Commission’s Fort Worth Regional 

Office facilities, of which $4.2 million has been 

obligated and $932 thousand expended as of 

September 30, 2023.

Any funds that are not expended for the purposes 

designated above will be refunded to the payers 

(the U.S. Treasury and/or the payers of Section 31 fees).

Borrowing Authority

See Note 10.A, Commitments: Securities Investor 

Protection Act, for information on the SEC’s 

borrowing authority.
FINANCIAL SECTION | 103

NOTE 15. RECONCILIATION OF NET COST OF OPERATIONS 

TO NET OUTLAYS

Budgetary and financial accounting information differ. 

Budgetary accounting is used for planning and control 

purposes and relates to both the receipt and use of 

cash, as well as reporting the federal deficit. Financial 

accounting is intended to provide a picture of the 

government's financial operations and financial position, 

so it presents information on an accrual basis. The 

accrual basis includes information about costs arising 

from the consumption of assets and the incurrence of 

liabilities. The reconciliation of net outlays, presented 

on a budgetary basis, and the net cost, presented 

on an accrual basis, provides an explanation of the 

relationship between budgetary and financial accounting 

information. The reconciliation serves not only to 

identify costs paid for in the past and those that will be 

paid in the future, but also to assure integrity between 

budgetary and financial accounting. The following 

analysis illustrates this reconciliation by listing the key 

differences between net cost and net outlays.

Components of net cost of operations that are not part 

of net outlays represent required timing differences in 

the Statement of Net Cost and the SBR. One example is 

depreciation expense. In budgetary reporting, the entire 

cost of a depreciable asset is recognized in the period 

when the asset is purchased. However, in financial 

statement reporting, accrual accounting requires the 

cost of such assets to be allocated among the reporting 

periods that represent the estimated useful life of the 

asset. In the reconciliation, depreciation is recognized 

as a “component of net cost that is not part of net 

outlays.” Another example is securities registration, 

tender offer, and other fees from registrants (filing fees). 

Filing fees are recognized as exchange revenue on the 

Statement of Net Cost, but collections of filing fees are 

transferred to either the U.S. Treasury General Fund 

or to the SEC’s Reserve Fund, and have no impact on 

the SEC’s net outlays. See Note 1.P, Exchange and 

Non-Exchange Revenue.

Other components of net cost that are not part of net 

outlays are:

• revaluations of property, plant, and equipment;

• increases and decreases in assets such as advances and 

prepayments and accounts receivable; 

• increases and decreases in liabilities such as accounts 

payable and contingent liabilities; and

• imputed financing for expenses that are paid by OPM, 

as discussed in Note 1.M, Employee Retirement 

Systems and Benefits.

The primary component of net outlays that is not part of 

net cost is the acquisition of capital assets. In budgetary 

reporting, the entire cost of a depreciable asset is 

recognized in the period when the asset is purchased. 

Another component of net outlays that is not part 

of net cost is the collection of non-exchange interest. 

Non-exchange interest deposited to the U.S. Treasury 

General Fund is reported on the SBR as distributed 

offsetting receipts. Distributed offsetting receipts are 

collections that typically offset the outlays of the agency 

that conducts the activity generating the receipts. See 

Note 1.P, Exchange and Non-Exchange Revenue, for 

more information about non-exchange revenue.
104 | 2023 SEC AGENCY FINANCIAL REPORT

For the year ended September 30, 2023:

(DOLLARS IN THOUSANDS) Intragovernmental With the Public Total

Net Cost of Operations $ 430,688 $ (569,531) $ (138,843) 

Components of Net Cost That Are Not Part of Net Outlays:

Property and Equipment Depreciation $ — $ (40,832) $ (40,832) 

Property and Equipment Disposal Reevaluation — (903) (903)

Securities Registration, Tender Offer, Merger, and Other Fees 

from Registrants (Note 1.P) — 577,752 577,752

Treasury Investment Fees (72) 72 — 

Increase/(Decrease) in Assets:

Accounts Receivable 4 (186,396) (186,392)

Advances and Prepayments 2,271 — 2,271 

(Increase)/Decrease in Liabilities:

Accounts Payable (3,536) (296,934) (300,470)

Federal Employee Leave and Benefits Payable — 1,893 1,893 

Other Liabilities

Benefit Program Contributions Payable (265) — (265)

Accrued Payroll and Payroll Taxes Payable (194) (1,984) (2,178)

Contingent Liabilities — 418,707 418,707 

Other Accrued Liabilities 197 897 1,094 

Financing Sources:

Imputed Costs (74,073) — (74,073)

Total Components of Net Cost That Are Not Part of Net Outlays (75,668) 472,272 396,604

Components of Net Outlays That Are Not Part of Net Cost:

Acquisition of Capital Assets — 58,018 58,018 

Non-Exchange Interest Receipts Reported as Distributed 

Offsetting Receipts (16,334) (1,023) (17,357)

Total Components of Net Outlays That Are Not Part of Net Cost (16,334) 56,995 40,661 

Net Outlays $ 338,686 $ (40,264) $ 298,422 
FINANCIAL SECTION | 105

For the year ended September 30, 2022:

(DOLLARS IN THOUSANDS) Intragovernmental With the Public Total

Net Cost of Operations $ 373,400 $ (112,023) $ 261,377 

Components of Net Cost That Are Not Part of Net Outlays:

Property and Equipment Depreciation $ — $ (42,405) $ (42,405)

Property and Equipment Disposal Reevaluation — (3,728) (3,728)

Securities Registration, Tender Offer, Merger, and Other Fees 

from Registrants (Note 1.P) — 636,736 636,736 

Treasury Investment Fees (65) 65 —

Increase/(Decrease) in Assets:

Accounts Receivable — 213,185 213,185 

Advances and Prepayments 346 — 346 

(Increase)/Decrease in Liabilities:

Accounts Payable 2,839 58,854 61,693 

Federal Employee Leave and Benefits Payable — 2,728 2,728 

Other Liabilities

Benefit Program Contributions Payable 6,884 — 6,884 

Accrued Payroll and Payroll Taxes Payable 1,217 32,758 33,975 

Contingent Liabilities — (398,746) (398,746)

Other Accrued Liabilities (3,792) 909 (2,883)

Financing Sources:

Imputed Costs (43,992) — (43,992)

Total Components of Net Cost That Are Not Part of Net Outlays (36,563) 500,356 463,793 

Components of Net Outlays That Are Not Part of Net Cost:

Acquisition of Capital Assets — 52,532 52,532 

Non-Exchange Interest Receipts Reported as Distributed 

Offsetting Receipts (2,667) 27 (2,640)

Total Components of Net Outlays That Are Not Part of Net Cost (2,667) 52,559 49,892 

Net Outlays $ 334,170 $ 440,892 $ 775,062 
106 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 16. DISGORGEMENT AND PENALTIES

The SEC’s non-entity assets include disgorgement, 

penalties, and interest assessed against securities law 

violators by the Commission or a federal court. The SEC 

also recognizes an equal and offsetting liability for these 

non-entity assets, as discussed in Note 1.L, Liabilities. 

When the Commission or court issues an order for the 

SEC to collect disgorgement, penalties, and interest 

from securities law violators, the SEC establishes an 

account receivable due to the SEC. Upon collection, 

the SEC may (a) hold receipts in the Disgorgement and 

Penalty Deposit Fund as Fund Balance with Treasury or 

Treasury investments pending distribution to harmed 

investors, (b) deposit receipts in the U.S. Treasury 

General Fund, or (c) transfer amounts to the Investor 

Protection Fund. The situations where funds would 

not be held for distribution to harmed investors arise 

when the SEC either determines it is not practical to 

return funds to investors or when court orders expressly 

state that funds are to be remitted to the U.S. Treasury 

General Fund. The determination as to whether funds 

not held for distribution to harmed investors will 

be deposited in the U.S. Treasury General Fund or 

transferred to the Investor Protection Fund is made in 

accordance with the provisions of the Dodd-Frank Act, 

and is dependent on the balance in the Investor Protection Fund on the day the amounts are collected. 

Disbursements related to disgorgement and penalties 

include distributions to harmed investors, payments to 

tax authorities, and fees paid to plan administrators and 

the U.S. Department of the Treasury’s Bureau of the 

Fiscal Service. The SEC does not record activity in its 

financial statements related to enforcement actions that 

result in amounts ordered to another government entity 

such as a court, or a non-governmental entity such as a 

receiver. See Note 1.R, Disgorgement and Penalties, and 

Note 2, Entity and Non-Entity Assets. 

In FY 2023, total Disgorgement and Penalties assets of 

$4.2 billion included $4 billion held for distribution to 

harmed investors and $241.2 million to be transferred 

to the U.S. Treasury General Fund. In FY 2022, total 

Disgorgement and Penalties assets of $5.1 billion 

included $3.9 billion held for distribution to harmed 

investors and $1.2 billion to be transferred to the U.S. 

Treasury General Fund.
FINANCIAL SECTION | 107

At September 30, 2023 and 2022, the net inflows and outflows for Fund Balance with Treasury, Investments, and Accounts 

Receivable related to disgorgement and penalties consisted of the following:

(DOLLARS IN THOUSANDS) 2023 2022

Fund Balance with Treasury:

Beginning Balance $ 578,124 $ 482,078 

Collections 2,848,950 1,635,806 

Purchases and Redemptions of Treasury Securities (224,015) (227,378)

Disbursements (642,996) (661,273)

Transfers and Deposits to the Investor Protection Fund (643,276) (387,168)

Transfers and Deposits to the U.S. Treasury General Fund (1,345,965) (263,941)

Total Fund Balance with Treasury (Note 2) 570,822 578,124 

Cash and Other Monetary Assets:

Beginning Balance 1 141 

Net Activity 40 (140)

Total Cash and Other Monetary Assets (Notes 2 and 4) 41 1 

Investments, Net:

Beginning Balance 2,826,250 2,575,475 

Net Activity 385,189 250,775 

Total Investments, Net (Notes 2 and 5) 3,211,439 2,826,250 

Accounts Receivable, Net:

Beginning Balance 1,646,914 338,520 

Net Activity (1,180,876) 1,308,394 

Total Accounts Receivable, Net (Notes 2 and 6) 466,038 1,646,914 

Total Disgorgement and Penalties $ 4,248,340 $ 5,051,289 
108 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 17. RECLASSIFICATION OF BALANCE SHEET, STATEMENT 

OF NET COST, AND STATEMENT OF CHANGES IN NET POSITION 

FOR COMPILATION PROCESS OF THE FINANCIAL REPORT OF 

THE U.S. GOVERNMENT

To prepare the Financial Report of the U.S. Government 

(FR), the U.S. Department of the Treasury’s Bureau 

of the Fiscal Service requires agencies to submit an 

adjusted trial balance, which is a listing of amounts 

by U.S. Standard General Ledger account that appear 

in the financial statements. Treasury uses the trial 

balance information reported in the Government-wide 

Treasury Account Symbol Adjusted Trial Balance 

System (GTAS) to develop a Reclassified Balance Sheet, 

Reclassified Statement of Net Cost, and a Reclassified 

Statement of Changes in Net Position for each agency, 

which are accessed using GTAS. Treasury eliminates 

all intragovernmental balances from the reclassified 

statements and aggregates lines with the same title to 

develop the FR statements. This note shows the SEC’s 

financial statements and the SEC’s reclassified statements 

prior to elimination of intragovernmental balances and 

prior to aggregation of repeated FR line items. A copy 

of the 2022 FR can be found at: fiscal.treasury.gov/

reports-statements/financial-report/current-report.html.
FINANCIAL SECTION | 109

FY 2023 Balance Sheet As of September 30, 2023

Line Items Used to Prepare FY 2023 Government-wide Balance Sheet

Financial Statement Line(DOLLARS IN THOUSANDS)

FY 2023 SEC 

Balance Sheet

Dedicated 

Collections 

Combined

Dedicated 

Collections

Eliminations

All Other 

Amounts (with

Eliminations) Total

Reclassified Financial (DOLLARS IN THOUSAND

ASSETS: ASSETS: 

Intragovernmental: Intragovernmental:

Fund Balance with Treasury $ 9,329,772 $ 8,699,533 $ — $ 630,239 $ 9,329,772 Fund Balance with TInvestments, Net 3,569,579 358,140 — 3,211,439 3,569,579 Investments, NetAccounts Receivable 4 4 — — 4 Accounts ReceivableAdvances and Prepayments 10,907 10,907 — — 10,907 Advances and Prepa

Total Intragovernmental 12,910,262 9,068,584 — 3,841,678 12,910,262 Total IntragovernmenWith the Public: With the Public:

Cash and Other Monetary 

Assets 41 — — 41 41 Cash and Other Mon

Accounts Receivable, Net 559,026 89,864 — 469,162 559,026 Accounts ReceivableProperty and Equipment, Net 107,719 107,719 — — 107,719 General Property, Pla

Total With the Public 666,786 197,583 — 469,203 666,786 Total With the Public

Total Assets $ 13,577,048 $ 9,266,167 $ — $ 4,310,881 $ 13,577,048 Total AssetsLIABILITIES: LIABILITIES:

Intragovernmental: Intragovernmental:

Accounts Payable $ 5,659 $ 5,659 $ — $ — $ 5,659 Accounts PayableOther Liabilities

Payroll Taxes Payable 792 792 — — 792 Other Liabilities (WithCustodial Liability 243,893 — — 243,893 243,893 

Liability to the Gener

Government for CNon-Entity Asset

Liability for Non-Entity 

Assets 439 — — 439 439 

Liability to the Gener

Government for CNon-Entity Asset

Benefit Program 

Contributions Payable 5,591 5,591 — — 5,591 Benefit Program Con

Other Liabilities (RC 22) 3,595 3,595 — — 3,595 

Other Liabilities – Re

(RC 22)

Total Other Liabilities 254,310 9,978 — 244,332 254,310 Total Other Liabilities

Total Intragovernmental 259,969 15,637 — 244,332 259,969 Total Intragovernmen
110 | 2023 SEC AGENCY FINANCIAL REPORT FY 2023 Balance Sheet (continued) As of September 30, 2023 Line Items Used to Prepare FY 2023 Government-wide Balance Sheet Financial Statement Line (DOLLARS IN THOUSANDS) FY 2023 SEC Balance Sheet Dedicated Collections Combined Dedicated Collections Eliminations All Other Amounts (with Eliminations) Total Reclassified Financial 

(DOLLARS IN THOUSAND

With the Public: Accounts Payable 504,783 504,783 — — 504,783 Accounts Payable Federal Employee Benefits Payable 145,483 145,483 — — 145,483 Federal Employee an

Payable Registrant Deposits 58,357 — — 58,357 58,357 Advances from OtheRevenue Other Liabilities — Accrued Payroll 21,022 21,022 — — 21,022 Other Liabilities Liability for Disgorgement and Penalties 4,007,133 — — 4,007,133 4,007,133 Other Liabilities

Contingent Liabilities 111,988 111,988 — — 111,988 Other LiabilitiesOther Accrued Liabilities 3,386 2,327 — 1,059 3,386 Other LiabilitiesTotal Other Liabilities 4,143,529 135,337 — 4,008,192 4,143,529 Total Other LiabilitiesTotal with the Public 4,852,152 785,603 — 4,066,549 4,852,152 Total with the Public

Total Liabilities 5,112,121 801,240 — 4,310,881 5,112,121 Total Liabilities

Commitments and Contingencies

NET POSITION: NET POSITION:

Unexpended Appropriations 

– Funds from Dedicated Collections 265,026 265,026 — — 265,026 

Unexpended Approp

Dedicated Collec

Cumulative Results of Operations 

– Funds from Dedicated Collections 8,199,901 8,199,901 — — 8,199,901 

Cumulative Results o

from Dedicated C

Total Net Position $ 8,464,927 $ 8,464,927 $ — $ — $ 8,464,927 Total Net Position

Total Liabilities and Net Position $ 13,577,048 $ 9,266,167 $ — $ 4,310,881 $ 13,577,048 Total Liabilities and 
FINANCIAL SECTION | 111

FY 2023 Statement of Net CostFor the year ended September 30, 2023

Line Items Used to Prepare FY 2023 Government-wide Statement of Net Cost

Financial Statement Line(DOLLARS IN THOUSANDS)

FY 2023 SEC 

Statement of 

Net Cost

Dedicated 

Collections 

Combined

Dedicated 

Collections

Eliminations

All Other 

Amounts (with

Eliminations)

Eliminations 

Between 

Dedicated and 

All Other Total

Reclassified Financial (DOLLARS IN THOUSANDS

Program Costs: Non-Federal Cost

Total Program Costs $ 2,412,818 $ 1,981,983 $ — $ (61) $ — $ 1,981,922 Non-Federal Gross C

 Intragovernmenta

 237,884 — — — 237,884 Benefit Program Co

 74,073 — — — 74,073 Imputed Costs  59,291 (28) 72 — 59,335 Buy/Sell Costs  59,604 — — — 59,604 Other Expenses 

 430,852 (28) 72 — 430,896 Total Intragovernm

Total Program Costs 2,412,818 2,412,835 (28) 11 — 2,412,818 Total Reclassified Less: Earned Revenues not 

Attributed to Programs 2,551,661 Non-Federal Earn

 2,023,664 — 527,789 — 2,551,453 Non-Federal Earned 

 Intragovernmenta

 236 (28) — — 208 Buy/Sell Revenue 

Total Earned Revenues $ 2,551,661 $ 2,023,900 $ (28) $ 527,789 $ — $ 2,551,661 Total Reclassified Net Cost of Operations $ (138,843) $ 388,935 $ — $ (527,778) $ — $ (138,843) Net Cost of Opera
112 | 2023 SEC AGENCY FINANCIAL REPORT FY 2023 Statement of Changes in Net Position For the year ended September 30, 2023 Line Items Used to Prepare FY 2023 Government-wide Statement of Changes in Net 

Financial Statement Line (DOLLARS IN THOUSANDS) FY 2023 SEC Statement of Changes in Net Position Dedicated Collections Combined Dedicated Collections Eliminations All Other Amounts (with Eliminations) Total Reclassified Financial 

UNEXPENDED APPROPRIATIONS: Beginning Balances $ 217,841 $ 217,841 $ — $ — $ 217,841 Net Position, BeginnAppropriations Received 49,752 49,752 — — 49,752 Appropriations Rece

Appropriations Used (2,567) (2,567) — — (2,567) Appropriations Used Net Change in Unexpended Appropriations 47,185 47,185 — — 47,185 Total Unexpended Appropriations 265,026 265,026 — — 265,026 CUMULATIVE RESULTS 

OF OPERATIONS:Beginning Balances 7,852,533 7,852,533 — — 7,852,533 Net Position, Beginn

Appropriations Used 2,567 2,567 — — 2,567 Appropriations ExpeNon-Exchange Revenue 659,663 643,276 — (161,174) 482,102 Other Taxes and Rec

 — 16,387 — 161,174 177,561 

Federal Securities Int

Associated Gains

Total Non-Exchange 

Revenues 659,663 659,663 — — 659,663 Total Reclassified No

Imputed Financing 74,073 74,073 — — 74,073 Imputed Financing SOther (527,778) — — (527,562) (527,562)

Non-Entity Collection

General Fund of 

 — — (216) (216)

Accrual for Non-Entity 

and Transferred to U.S. Government 

Total Other (527,778) — — (527,778) (527,778) Total Reclassified Ot

Net Cost of Operations (138,843) 388,935 — (527,778) (138,843) Net Cost of OperatioNet Change in Cumulative Results 

of Operations 347,368 347,368 — — 347,368 

Cumulative Results of Operations: 

Ending 8,199,901 8,199,901 — — 8,199,901 

Net Position $ 8,464,927 $ 8,464,927 $ — $ — $ 8,464,927 Net Position, End of 
FINANCIAL SECTION | 113

FY 2023 Statement of Changes in Net Position (continued)For the year ended September 30, 2023

Line Items Used to Prepare FY 2023 Government-wide Statement of Changes in Net 

Financial Statement Line(DOLLARS IN THOUSANDS)

FY 2023 SEC 

Statement of 

Changes in Net 

Position

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with Eliminations) Total Reclassified Financial 

NON-EXCHANGE STATEMENT 

OF CUSTODIAL ACTIVITY

Non-Exchange Custodial 

Revenue from the Statement of Custodial Activity

Total Cash Collections $ 1,350,170 $ — $ — $ 1,350,170 $ 1,350,170 Other Taxes and RecAccrual Adjustments (910,483) — — (910,483) (910,483) Other Taxes and RecTotal Custodial Revenue 439,687 — — 439,687 439,687 Total Reclassified CuDisposition of Non-Exchange 

Custodial Collections from the Statement of Custodial Activity

Amounts Transferred to 

Department of the Treasury 1,350,170 — — 1,350,170 1,350,170 

Non-Entity Collection

General Fund of 

Amounts Yet to be Transferred (910,483) — — (910,483) (910,483)

Accrual for Non-Enti

Collected and TraFund of the U.S. 

Total Disposition of 

Collections $ 439,687 $ — $ — $ 439,687 $ 439,687 

Total Reclassified Dis

Custodial Collect
114 | 2023 SEC AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

This section provides the Required Supplementary Information as prescribed by OMB Circular A-136, 

Financial Reporting Requirements. 

U.S. SECURITIES AND EXCHANGE COMMISSION

Combining Statements of Budgetary Resources by Fund

For the year ended September 30, 2023

(DOLLARS IN THOUSANDS)

Salaries and 

Expenses and 

Other Funds

Investor 

Protection 

Fund

Reserve 

Fund Total

X0100, 1435, 

1492, 3220, 3875 5567 5566

BUDGETARY RESOURCES:

Unobligated Balance from Prior Year Budget Authority, Net 

(Discretionary and Mandatory) (Note 14) $ 87,251 $ 306,469 $ 8,391 $ 402,111 

Appropriations (Discretionary and Mandatory) 49,752 645,410 50,000 745,162 

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 2,160,254 — — 2,160,254 

Total Budgetary Resources $ 2,297,257 $ 951,879 $ 58,391 $ 3,307,527 

STATUS OF BUDGETARY RESOURCES:

New Obligations and Upward Adjustments (Total) $ 2,214,136 $ 614,171 $ 54,486 $ 2,882,793 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 82,017 309,679 — 391,696 

Exempt from Apportionment, Unexpired Accounts — — 3,905 3,905 

Unapportioned, Unexpired Accounts 1,104 28,029 — 29,133 

Unobligated Balance, End of Year (Total) 83,121 337,708 3,905 424,734 

Total Budgetary Resources $ 2,297,257 $ 951,879 $ 58,391 $ 3,307,527 

OUTLAYS, NET:

Outlays, Net (Discretionary and Mandatory) $ (51,160) $ 321,561 $ 45,403 $ 315,804 

Distributed Offsetting Receipts (1,049) (16,333) — (17,382)

Agency Outlays, Net (Discretionary and Mandatory) (Note 15) $ (52,209) $ 305,228 $ 45,403 $ 298,422 

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION | 115

U.S. SECURITIES AND EXCHANGE COMMISSION

Combining Statements of Budgetary Resources by Fund

For the year ended September 30, 2022

(DOLLARS IN THOUSANDS)

Salaries and 

Expenses and 

Other Funds

Investor 

Protection 

Fund

Reserve 

Fund Total

X0100, 1435, 

1492, 3220, 3875 5567 5566

BUDGETARY RESOURCES:

Unobligated Balance from Prior Year Budget Authority, Net 

(Discretionary and Mandatory) (Note 14) $ 94,057 $ 144,442 $ 5,851 $ 244,350 

Appropriations (Discretionary and Mandatory) 414,402 393,501 50,000 857,903 

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 1,585,831 — — 1,585,831 

Total Budgetary Resources $ 2,094,290 $ 537,943 $ 55,851 $ 2,688,084 

STATUS OF BUDGETARY RESOURCES:

New Obligations and Upward Adjustments (Total) $ 2,041,732 $ 231,575 $ 49,723 $ 2,323,030 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 44,883 154,275 — 199,158 

Exempt from Apportionment, Unexpired Accounts — — 6,128 6,128 

Unapportioned, Unexpired Accounts 7,675 152,093 — 159,768 

Unobligated Balance, End of Year (Total) 52,558 306,368 6,128 365,054 

Total Budgetary Resources $ 2,094,290 $ 537,943 $ 55,851 $ 2,688,084 

OUTLAYS, NET:

Outlays, Net (Discretionary and Mandatory) $ 435,669 $ 287,256 $ 54,863 $ 777,788 

Distributed Offsetting Receipts (59) (2,667) — (2,726)

Agency Outlays, Net (Discretionary and Mandatory) (Note 15) $ 435,610 $ 284,589 $ 54,863 $ 775,062 

The accompanying notes are an integral part of these financial statements.
116 | 2023 SEC AGENCY FINANCIAL REPORT

INVESTOR PROTECTION FUND 

FINANCIAL STATEMENTS

U.S. SECURITIES AND EXCHANGE COMMISSION

INVESTOR PROTECTION FUND

Balance Sheets

As of September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

ASSETS:

Intragovernmental:

Fund Balance with Treasury (Note 2) $ 448,625 $ 51,910 

Investments, Net (Note 3) 358,140 416,753 

Total Intragovernmental 806,765 468,663 

Total Assets $ 806,765 $ 468,663 

LIABILITIES (NOTE 4):

With the Public:

Accounts Payable 431,406 138,896 

Contingent Liabilities (Note 5) 111,988 530,695 

Total with the Public 543,394 669,591

Total Liabilities 543,394 669,591

Commitments and Contingencies (Note 5)

NET POSITION:

Cumulative Results of Operations – Funds from Dedicated Collections 263,371 (200,928)

Total Cumulative Results of Operations 263,371 (200,928)

Total Net Position $ 263,371 $ (200,928) 

Total Liabilities and Net Position $ 806,765 $ 468,663 

The accompanying notes are an integral part of these financial statements.

U.S. SECURITIES AND EXCHANGE COMMISSION

INVESTOR PROTECTION FUND

Statements of Net Cost

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

PROGRAM COSTS:

Awards to Whistleblowers $ 195,336 $ 630,277

Employee Suggestion Program 28 43 

Total Program Costs 195,364 630,320 

Net Cost of Operations (Note 7) $ 195,364 $ 630,320

The accompanying notes are an integral part of these financial statements.
FINANCIAL SECTION | 117

U.S. SECURITIES AND EXCHANGE COMMISSION

INVESTOR PROTECTION FUND

Statements of Changes in Net Position

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

CUMULATIVE RESULTS OF OPERATIONS:

Beginning Balances $ (200,928) $ 40,087

Non-Exchange Revenue 659,663 389,305 

Net Cost of Operations 195,364 630,320 

Net Change in Cumulative Results of Operations 464,299 (241,015)

Cumulative Results of Operations: Ending 263,371 (200,928)

Net Position $ 263,371 $ (200,928)

The accompanying notes are an integral part of these financial statements.

U.S. SECURITIES AND EXCHANGE COMMISSION

INVESTOR PROTECTION FUND

Statements of Budgetary Resources

For the years ended September 30, 2023 and 2022

(DOLLARS IN THOUSANDS) 2023 2022

BUDGETARY RESOURCES:

Unobligated Balance from Prior Year Budget Authority, 

Net (Mandatory)

$ 306,469 $ 144,442

Appropriations (Mandatory) 645,410 393,501

Total Budgetary Resources $ 951,879 $ 537,943

STATUS OF BUDGETARY RESOURCES (NOTE 6):

New Obligations and Upward Adjustments (Total) $ 614,171 $ 231,575

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 309,679 154,275 

Unapportioned, Unexpired Accounts 28,029 152,093 

Unobligated Balance, End of Year (Total) 337,708 306,368 

Total Budgetary Resources $ 951,879 $ 537,943

OUTLAYS, NET:

Outlays, Net (Total) (Mandatory) 321,561 287,256 

Distributed Offsetting Receipts (16,333) (2,667)

Agency Outlays, Net (Mandatory) (Note 7) $ 305,228 $ 284,589

The accompanying notes are an integral part of these financial statements.
118 | 2023 SEC AGENCY FINANCIAL REPORT

A. Reporting Structure 

The U.S. Securities and Exchange Commission (SEC) 

is an independent agency of the U.S. Government 

established pursuant to the Securities Exchange Act 

of 1934 (Exchange Act), charged with regulating 

this country’s capital markets. The Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 2010 

(Dodd-Frank Act) established the Securities and 

Exchange Commission Investor Protection Fund. The 

Investor Protection Fund provides funding for the 

Dodd-Frank Whistleblower Program and finances the 

operations of the Office of Inspector General Employee 

Suggestion Program. The Investor Protection Fund is 

a fund within the SEC, and these financial statements 

present a segment of the SEC’s financial activity. 

B. Basis of Presentation and Accounting 

These notes are an integral part of the Investor Protection 

Fund’s financial statements, which present the financial 

position, net cost of operations, changes in net position, 

and budgetary resources of the Investor Protection Fund 

as required by Exchange Act Section 21F(g)(5). The 

Act requires a complete set of financial statements that 

includes a balance sheet, income statement, and cash 

flow analysis. The legislative requirements to prepare an 

income statement and cash flow analysis are addressed 

by the Statement of Net Cost and Note 2, Fund Balance 

with Treasury, respectively. 

The SEC’s books and records serve as the source of the 

information presented in the accompanying financial 

statements. The SEC is a federal reporting entity, in 

accordance with the provisions of the Accountability of 

Tax Dollars Act of 2002. The SEC’s financial statements 

NOTES TO THE INVESTOR PROTECTION FUND 

FINANCIAL STATEMENTS

U.S. SECURITIES AND EXCHANGE COMMISSION

As of September 30, 2023 and 2022

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

are prepared in conformity with generally accepted 

accounting principles (GAAP) for the federal government, and are presented in conformity with the Office 

of Management and Budget (OMB) Circular A-136, 

Financial Reporting Requirements.

Audited financial statements are a special-purpose 

report required by legislation. As a stand-alone entity, 

the Investor Protection Fund does not meet the criteria 

provided in the CFO Act and the Accountability of Tax 

Dollars Act to constitute a “federal reporting entity.” 

In addition, federal GAAP and OMB Circular A-136 

do not provide for either an income statement or a cash 

flow analysis. However, the Investor Protection Fund 

financial statements are consistent with the SEC financial 

statements, except for additional elements, such as cash 

flow analysis, that are required by legislation. 

The agency classifies assets, liabilities, revenues, and 

costs in these financial statements according to the type 

of entity associated with the transactions. Intragovernmental assets and liabilities are those due from or to 

other federal entities, including other funds within the 

SEC. Intragovernmental revenues and costs result from 

transactions with other federal entities, including other 

funds within the SEC. 

The Balance Sheet, Statement of Net Cost, and Statement 

of Changes in Net Position are prepared using the 

accrual basis of accounting. Accordingly, revenues are 

recognized when services are provided, and expenses are 

recognized when incurred without regard to the receipt 

or payment of cash. These principles differ from the 

budgetary accounting and reporting principles on which 
FINANCIAL SECTION | 119

the Statement of Budgetary Resources is prepared. 

A reconciliation of differences, if any, between the 

accrual-based Statement of Net Cost and the budgetarybased Statement of Budgetary Resources is presented in 

Note 7, Reconciliation of Net Cost of Operations to 

Net Outlays. 

Accounting standards require all reporting entities to 

disclose that accounting standards allow certain presentations and disclosures to be modified, if needed, to 

prevent the disclosure of classified information. 

C. Use of Estimates 

The preparation of financial statements on the accrual 

basis of accounting requires management to make 

estimates and assumptions that affect the reported 

amounts of assets, liabilities, revenues, and costs. These 

estimates are based on management’s best knowledge 

of current events, historical experience, actions that the 

SEC may undertake in the future, and various other 

assumptions. The estimates include, but are not limited 

to, the recognition and disclosure of potential future 

whistleblower award payments as of the date of the 

financial statements. Actual results may differ from 

these estimates. 

D. Intra- and Inter-Agency Relationships 

Transactions with Other SEC Funds 

The Investor Protection Fund is comprised of a single 

Treasury Appropriation Fund Symbol. The Investor 

Protection Fund is the recipient of non-exchange 

revenues collected by the SEC. Amounts transferred to 

the Investor Protection Fund are classified as “retained 

by the SEC” because the Investor Protection Fund is a 

fund within the SEC. These intra-agency transfers are 

required because the Investor Protection Fund finances 

the operations of the Office of Inspector General 

Employee Suggestion Program. 

Transactions with Other Federal Agencies 

Whistleblower payments may be made from the Investor 

Protection Fund as a result of monetary sanctions paid 

to other federal agencies in related actions, but only 

if there has been a Commission enforcement action 

resulting in sanctions of over one million dollars and the 

Commission has determined that the whistleblower is 

eligible for an award and recommended the percentage. 

In those instances, the SEC remains liable for paying the 

whistleblower. The SEC also may pay whistleblower 

awards for certain actions brought by other entities, 

including designated federal agencies, in cases where 

those awards might otherwise be paid under the other 

entity's whistleblower program, where the other action 

has a more direct or relevant connection to the SEC’s 

whistleblower program. The SEC will pay on the other 

action, even if the action does not have a more direct or 

relevant connection to the SEC’s whistleblower program, 

when the other entity’s program is not comparable to the 

Commission’s own program or if the maximum award 

that the Commission could pay on the related action 

would not exceed $5 million. 

E. Funds from Dedicated Collections

A fund from dedicated collections is financed by specifically identified revenues, provided to the government 

by non-federal sources, often supplemented by other 

financing sources, which remain available over time. 

These specifically identified revenues and other financing 

sources are required by statute to be used for designated 

activities, benefits, or purposes, and must be accounted 

for separately from the government’s general revenues. 

Investor Protection Fund resources are funds from 

dedicated collections and may only be used for the 

purposes specified by the Dodd-Frank Act. 

F. Entity Assets

Assets that an agency is authorized to use in its operations are entity assets. The SEC is authorized to use all 

funds in the Investor Protection Fund for the purposes 

specified by the Dodd-Frank Act. Accordingly, all assets 

are recognized as entity assets. 
120 | 2023 SEC AGENCY FINANCIAL REPORT

The Dodd-Frank Act and the SEC implementing regulations establish the eligibility criteria for whistleblower 

awards. Refer to Note 5, Commitments and Contingencies, for additional information regarding the disclosure 

and recognition of actual and contingent liabilities for 

whistleblower awards. 

J. Program Costs

The Investor Protection Fund finances payments to 

whistleblowers under Section 21F of the Exchange Act. 

The Investor Protection Fund also reimburses the SEC’s 

Salaries and Expenses account (X0100) for expenses 

incurred by the Office of Inspector General to administer 

the Employee Suggestion Program. 

K. Non-Exchange Revenue

Disgorgement and Penalty Transfers 

Non-exchange revenue arises from the government’s 

ability to demand payment. The Investor Protection 

Fund is financed through the receipt of monetary 

sanctions collected by the SEC in judicial or administrative actions brought by the SEC under the securities laws 

that are not either: (1) added to the disgorgement fund 

or other fund under Section 308 of the Sarbanes-Oxley 

Act of 2002 (15 U.S.C. 7246), or (2) otherwise distributed to victims of a violation of the securities laws. 

Section 21F of the Exchange Act provides that monetary 

sanctions collected by the SEC are deposited into the 

Investor Protection Fund if the balance in the Fund is 

below $300 million on the day of collection. The Investor Protection Fund recognizes non-exchange revenue 

for monetary sanctions that are transferred into the 

Fund. Additional details regarding Investor Protection 

Fund funding are provided in Note 5, Commitments 

and Contingencies.

G. Fund Balance with Treasury 

Fund Balance with Treasury reflects amounts the Investor 

Protection Fund holds in the U.S. Treasury that have not 

been invested in federal securities. The SEC conducts 

all of its banking activity in accordance with directives 

issued by the U.S. Department of the Treasury’s Bureau 

of the Fiscal Service. 

H. Investments 

The SEC has authority to invest amounts in the Investor 

Protection Fund in overnight and short-term marketbased Treasury securities. The interest earned on the 

investments is a component of the Investor Protection 

Fund and is available to be used for expenses of the 

Fund. Additional details regarding Investor Protection 

Fund investments are provided in Note 3, Investments. 

I. Liabilities 

The SEC records liabilities for probable future outflows 

or other sacrifices of resources as a result of events that 

have occurred as of the Balance Sheet date. The Investor 

Protection Fund’s liabilities consist of amounts payable 

to whistleblowers and amounts recognized as contingent 

liabilities for whistleblower awards. 

The SEC recognizes liabilities that are covered by budgetary resources and liabilities that are not covered by 

budgetary resources. Budgetary and financial statement 

reporting requirements sometimes differ on the timing 

for the required recognition of an expense. Liabilities that 

are covered by budgetary resources are liabilities incurred 

for which budgetary resources are available to the SEC 

without further congressional action. Refer to Note 

4, Liabilities Covered and Not Covered by Budgetary 

Resources, for detailed information regarding liabilities 

covered and not covered by budgetary resources.
FINANCIAL SECTION | 121

Interest Earnings on Investments with Treasury 

Interest earned from investments in U.S. Treasury 

securities is classified in the same way as the predominant 

source of revenue to the fund. The Investor Protection 

Fund is financed through the receipt of non-exchange 

revenues and thus interest earnings are also recognized 

as non-exchange revenues.

L. Budgets and Budgetary Accounting 

The Investor Protection Fund (X5567) is a special fund 

established with permanent authority to retain revenues 

and other financing sources not used in the current 

period for future use. The Dodd-Frank Act provides that 

the Fund is available to the SEC without further 

appropriation or fiscal year limitation for the purpose 

of paying awards to whistleblowers and funding the 

activities of the Office of Inspector General Employee 

Suggestion Program. However, the SEC is required to 

request and obtain apportionments from OMB to use 

these funds. 

The resources of the Investor Protection Fund are 

apportioned under Category B authority, which means 

that the funds represent budgetary resources distributed 

by a specified project and are not subject to quarterly 

apportionment. Thus, all obligations incurred as 

presented on the Statement of Budgetary Resources 

are derived from Category B funds. 

NOTE 2. FUND BALANCE WITH TREASURY 

The status of Fund Balance with Treasury as of September 30, 2023 and 2022 consisted of the following: 

(DOLLARS IN THOUSANDS) 2023 2022

Status of Fund Balance with Treasury:

Unobligated Balance

Available $ (20,378) $ (110,385)

Unavailable 37,598 23,399 

Obligated Balance not Yet Disbursed 431,405 138,896 

Total Status of Fund Balance with Treasury $ 448,625 $ 51,910 

Unobligated balances reported for the status of Fund 

Balance with Treasury do not agree with the amounts 

reported in the Statement of Budgetary Resources due 

to the fact that funds for unobligated balances are held 

in investments as well as in Fund Balance with Treasury. 

Investor Protection Fund investments are reversed from 

the unobligated available amount in order to account 

for Fund Balance with Treasury only, resulting in the 

negative balance for that line. 

There were no differences between the Fund Balance 

with Treasury reflected in the Investor Protection 

Fund financial statements and the balance in the 

Treasury accounts. 

Cash Flow

The Investor Protection Fund cash flows during 

FY 2023 consisted of: 

• Net cash inflows from investment redemptions of 

$58.7 million; 

• Net cash inflows from investment interest of 

$16.3 million (which include $16.3 million of 

interest collections);

• Net cash inflows from fund replenishment required 

under the Dodd-Frank Act of $643.3 million; and

• Net cash outflows for payment of whistleblower 

awards totaling $135 million for amounts that 

were awarded prior to FY 2023, $186.5 million 

for amounts that were awarded during FY 2023, 

and payment of expenses of operating the Office of 

Inspector General Employee Suggestion Program of 

$28 thousand.
122 | 2023 SEC AGENCY FINANCIAL REPORT

Cash flows during FY 2022 consisted of: 

• Net cash outflows for purchases of investments of 

$158.6 million; 

• Net cash inflows from investment interest of 

$2.7 million (which include $2.7 million of 

interest collections);

• Net cash inflows from fund replenishment required 

under the Dodd-Frank Act of $387.2 million; and

• Net cash outflows for payment of whistleblower 

awards totaling $71.8 million for amounts that 

were awarded prior to FY 2022, $215.4 million 

for amounts that were awarded during FY 2022, 

and payment of expenses of operating the Office of 

Inspector General Employee Suggestion Program of 

$43 thousand.

NOTE 3. INVESTMENTS 

The SEC invests funds in overnight and short-term 

non-marketable market-based Treasury bills. The SEC 

records the value of its investments in Treasury securities 

at cost. Premiums and discounts are amortized on a 

straight-line (S/L) basis for market-based Treasury bills 

and on the effective interest basis for market-based 

Treasury notes. Amortization is calculated through 

the maturity date of these securities. Non-marketable 

market-based Treasury securities are issued by the 

U.S. Department of the Treasury’s Bureau of the 

Fiscal Service to federal agencies. They are not traded 

on any securities exchange but mirror the prices of 

similar Treasury securities trading in the government 

securities market. 

At September 30, 2023, investments consisted of the following: 

(DOLLARS IN THOUSANDS) Cost

Amortization 

Method

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investment, 

Net

Market Value 

Disclosure

Non-Marketable Market-Based Securities

Investor Protection Fund – Entity

One-Day Certificates $ 358,086 N/A $ — $ 54 $ 358,140 $ 358,086 

Total $ 358,086 $ — $ 54 $ 358,140 $ 358,086 

At September 30, 2022, investments consisted of the following: 

(DOLLARS IN THOUSANDS) Cost

Amortization 

Method

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investment, 

Net

Market Value 

Disclosure

Non-Marketable Market-Based Securities

Investor Protection Fund – Entity

One-Day Certificates $ 416,753 N/A $ — $ — $ 416,753 $ 416,753 

Total $ 416,753 $ — $ — $ 416,753 $ 416,753 
FINANCIAL SECTION | 123

Intragovernmental Investments in 

Treasury Securities 

Market-based Treasury securities are debt securities that 

the U.S. Treasury issues to federal entities without statutorily determined interest rates. Although the securities 

are not marketable, the terms (prices and interest rates) 

mirror the terms of marketable Treasury securities. 

The federal government does not set aside assets to pay 

future benefits or other expenditures associated with the 

investment by federal agencies in non-marketable federal 

securities. The balances underlying these investments 

are deposited in the U.S. Treasury, which uses the cash 

for general government purposes. Treasury securities are 

issued to the SEC as evidence of these balances. Treasury 

securities are an asset of the SEC and a liability of the 

U.S. Treasury. Because the SEC and the U.S. Treasury 

NOTE 4. LIABILITIES COVERED AND NOT COVERED BY 

BUDGETARY RESOURCES

The SEC recognizes liabilities that are covered by 

budgetary resources and liabilities that are not covered 

by budgetary resources. Budgetary and financial 

statement reporting requirements sometimes differ on 

the timing for the required recognition of an expense.

At September 30, 2023, liabilities consisted of the following:

(DOLLARS IN THOUSANDS)

Liabilities Covered by 

Budgetary Resources

Liabilities Not Covered by 

Budgetary Resources Total

Accounts Payable $ 431,406 $ — $ 431,406 

Contingent Liabilities — 111,988 111,988 

Total Liabilities $ 431,406 $ 111,988 $ 543,394 

At September 30, 2022, liabilities consisted of the following:

(DOLLARS IN THOUSANDS)

Liabilities Covered by 

Budgetary Resources

Liabilities Not Covered by 

Budgetary Resources Total

Accounts Payable $ 138,896 $ — $ 138,896

Contingent Liabilities — 530,695 530,695 

Total Liabilities $ 138,896 $ 530,695 $ 669,591

are both components of the government, these assets 

and liabilities offset each other from the standpoint 

of the government as a whole. For this reason, the 

investments presented by the SEC do not represent 

an asset or a liability in the U.S. Government-wide 

financial statements.

Treasury securities provide the SEC with authority to 

draw upon the U.S. Treasury to make future payments 

from these accounts. When the SEC requires redemption 

of these securities to make expenditures, the government 

finances those expenditures out of accumulated cash 

balances, by raising taxes or other receipts, by borrowing 

from the public or repaying less debt, or by curtailing 

other expenditures. This is the same manner in which the 

government finances all expenditures. 
124 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 5. COMMITMENTS AND CONTINGENCIES 

Commitments: Dodd-Frank 

Whistleblower Program 

As discussed in Note 1.I, Liabilities, the Investor Protection Fund is used to pay awards to whistleblowers if they 

voluntarily provide original information to the SEC and 

meet other conditions. Approved awards are between 

10 and 30 percent of the monetary sanctions collected 

in the covered action (and when applicable, in a related 

action), with the actual percentage being determined 

at the discretion of the SEC using criteria provided in 

the legislation and the related rules to implement the 

legislation adopted by the SEC.

A Preliminary Determination is a first assessment, made 

by the Claims Review staff appointed by the Director 

of the Division of Enforcement, as to whether the claim 

should be allowed or denied, and if allowed, what the 

proposed award percentage amount should be. 

Contingent liabilities are reported as follows:

• A contingent liability is recognized when (a) a positive 

Preliminary Determination has been made by the 

Claims Review staff, (b) collection has been made, 

and (c) the percentage to be paid can be reasonably 

estimated. A contingent liability is also disclosed as 

a range for the minimum and maximum totals of 

whistleblower awards, using 10 percent and 

30 percent of collections, respectively.

• A potential liability is disclosed but not recognized 

when a positive Preliminary Determination is expected 

and collection has been received, using 10 percent 

and 30 percent of collections as the minimum and 

maximum award amounts, respectively. 

At September 30, 2023, commitments and contingencies consisted of the following:

(DOLLARS IN THOUSANDS) Accrued Liabilities

Estimated Range of Loss

Lower End Upper End

2023 Whistleblower Awards:

Probable $ 111,988 $ 44,002 $ 132,007 

Reasonably Possible — 312,361 937,083 

At September 30, 2022, commitments and contingencies consisted of the following:

(DOLLARS IN THOUSANDS) Accrued Liabilities

Estimated Range of Loss

Lower End Upper End

2022 Whistleblower Awards:

Probable $ 530,695 $ 242,702 $ 728,105 

Reasonably Possible — 103 310 

A liability (accounts payable) is recognized when 

a Final Determination has been approved by the 

Commission and collection has been received. In 

all cases, the whistleblower award is not paid until 

amounts have been collected, a final order is issued by 

the Commission, and the appeal rights of all claimants 

on the matter have been exhausted. 
FINANCIAL SECTION | 125

In the event that whistleblower awards reduce the 

Investor Protection Fund unobligated balance below 

$300 million, the Investor Protection Fund will be 

replenished as described in the “Disgorgement and 

Penalty Transfers” section of Note 1.K, Non-Exchange 

Revenue. The unobligated balances of the Investor 

Protection Fund at September 30, 2023 and 2022 were 

$337 million and $306 million, respectively. Since 

the contingent liabilities balance does not exceed the 

unobligated balance at September 30, 2023, additional 

replenishments will not be needed before these liabilities 

are awarded and paid.

NOTE 6. STATEMENT OF BUDGETARY RESOURCES 

AND OTHER BUDGETARY DISCLOSURES

A. Explanation of Differences between the 

Statement of Budgetary Resources and the 

Budget of the U.S. Government 

A comparison between the FY 2023 Statement of 

Budgetary Resources and the actual FY 2023 data in 

the Budget of the U.S. Government (Budget) cannot be 

presented, as the FY 2025 Budget, which will contain 

FY 2023 actual data, is not yet available. The comparison 

will be presented in next year’s financial statements. The 

FY 2025 Budget, with actual amounts for FY 2023, will 

be available at a later date at whitehouse.gov/omb/budget/. 

There are no differences between the FY 2022 

Statement of Budgetary Resources and the FY 2022 

data in the Budget. 

B. Other Budgetary Disclosures 

There were no budgetary resources obligated for 

undelivered orders as of September 30, 2023 and 2022.

There are no legal arrangements affecting the use of 

unobligated balances of budget authority, such as time 

limits, purpose, and obligation limitations. 
126 | 2023 SEC AGENCY FINANCIAL REPORT

NOTE 7. RECONCILIATION OF NET COST OF OPERATIONS 

TO NET OUTLAYS 

Budgetary and financial accounting information differ. 

Budgetary accounting is used for planning and control 

purposes and relates to both the receipt and use of 

cash, as well as reporting the federal deficit. Financial 

accounting is intended to provide a picture of the 

government's financial operations and financial position 

so it presents information on an accrual basis. The 

accrual basis includes information about costs arising 

from the consumption of assets and the incurrence of 

liabilities. The reconciliation of net outlays, presented 

on a budgetary basis, and the net cost, presented 

on an accrual basis, provides an explanation of the 

relationship between budgetary and financial accounting 

information. The reconciliation serves not only to 

identify costs paid for in the past and those that will be 

paid in the future, but also to assure integrity between 

budgetary and financial accounting. The analysis below 

illustrates this reconciliation by listing the key differences 

between net cost and net outlays.

Components of net cost that are not part of net outlays 

consist of increases and decreases in liabilities, such as 

accounts payable and contingent liabilities. For the year 

ended September 30, 2023, the SEC paid $321.5 million 

to whistleblowers, including $186.5 million awarded 

during FY 2023. Refer to Note 4, Liabilities Covered 

and Not Covered by Budgetary Resources, and Note 5, 

Commitments and Contingencies, for more information 

about accounts payable and contingent liabilities.

The primary component of net outlays that is not 

part of net cost is the collection of non-exchange 

interest. Non-exchange interest deposited to the U.S. 

Treasury General Fund is reported on the Statement of 

Budgetary Resources as distributed offsetting receipts. 

Distributed offsetting receipts are collections that 

typically offset the outlays of the agency that conducts 

the activity generating the receipts. Refer to Note 1.K, 

Non-Exchange Revenue, for more information about 

non-exchange interest.
FINANCIAL SECTION | 127

For the year ended September 30, 2023: 

(DOLLARS IN THOUSANDS) Intragovernmental With the Public Total

Net Cost of Operations $ 28 $ 195,336 $ 195,364 

Components of Net Cost That Are Not Part of Net Outlays:

(Increase)/Decrease in Liabilities:

Accounts Payable — (292,509) (292,509)

Other Liabilities (Contingent Liabilities) — 418,706 418,706 

Total Components of Net Cost That Are Not Part of Net Outlays — 126,197 126,197 

Components of Net Outlays That Are Not Part of Net Cost:

Non-Exchange Interest Receipts Reported as Distributed 

Offsetting Receipts (16,333) — (16,333)

Total Components of Net Outlays That Are Not Part of Net Cost (16,333) — (16,333)

Net Outlays $ (16,305) $ 321,533 $ 305,228 

For the year ended September 30, 2022: 

(DOLLARS IN THOUSANDS) Intragovernmental With the Public Total

Net Cost of Operations $ 43 $ 630,277 $ 630,320 

Components of Net Cost That Are Not Part of Net Outlays:

(Increase)/Decrease in Liabilities:

Accounts Payable — 55,682 55,682 

Other Liabilities (Contingent Liabilities) — (398,746) (398,746)

Total Components of Net Cost That Are Not Part of Net Outlays — (343,064) (343,064)

Components of Net Outlays That Are Not Part of Net Cost:

Non-Exchange Interest Receipts Reported as Distributed 

Offsetting Receipts (2,667) — (2,667)

Total Components of Net Outlays That Are Not Part of Net Cost (2,667) — (2,667)

Net Outlays $ (2,624) $ 287,213 $ 284,589 
cryp·​to as·​set

'krip-(')tō 'a-'set

A digital asset that is issued and/or 

transferred using distributed ledger or 

blockchain technology, including, but not 

limited to, so-called “virtual currencies,” 

“cryptocurrencies,” “coins,” and “tokens.” 

A crypto asset may or may not meet the 

definition of a “security” under the federal 

securities laws.

dis·gorge·ment

dis-'g rj-ment 

The act of returning or repaying 

ill-gotten gains obtained from fraudulent 

activities. When disgorgement is 

ordered, the judge or the Commission 

may also order that any money collected, 

including penalties paid, be placed in a 

Fair Fund for distribution to investors 

who were the victims of the violation.

ze·ro trust 'ar· chi·tec·ture 

zir-(')ō 'trəst 'är-kə-'tek-chər 

A security approach based on system 

design principles that avoids implicit trust of 

elements, components, nodes, or services 

based on an acknowledgment that threats 

exist both inside and outside traditional 

network boundaries. 
OTHER INFORMATION | 129

This section provides additional information related to the SEC’s financial and performance 

management.

OTHER INFORMATION

Inspector General’s Statement on 

Management and Performance 

Challenges

Summarizes the most significant management and 

performance challenges facing the SEC, as identified 

by management and the Office of Inspector General 

in accordance with the Reports Consolidation Act of 

2000. Also included is a response from the SEC Chair 

outlining the agency’s progress toward addressing 

these challenges.

Summary of Financial Statement Audit 

and Management Assurances

Reveals each material weakness and non-conformance 

found and/or resolved during the U.S. Government 

Accountability Office’s audit, as well as those found by 

management during the evaluation of internal control 

and financial systems, as required by the Federal 

Managers’ Financial Integrity Act of 1982. 

Payment Integrity Reporting Details 

Provides information about the SEC’s commitment 

to, and progress with, reducing improper payments, 

and outlines the efforts taken to recapture improperlymade payments.

Civil Monetary Penalty Adjustment 

for Inflation

Provides inflationary adjustments to civil monetary 

penalties, as required by the Federal Civil Penalties 

Inflation Adjustment Act of 1990, as amended.
130 | 2023 SEC AGENCY FINANCIAL REPORT

T

he Reports Consolidation Act of 2000 requires the U.S. Securities and Exchange Commission 

(SEC), Office of Inspector General (OIG), to issue a report summarizing what we determine 

to be the most serious management and performance challenges facing the agency. The SEC is 

required to include this report in its annual agency financial report. This report represents the 

SEC OIG’s independent perspective on the top management challenges facing the SEC in fiscal year 

2024 and beyond. 

To identify this year’s top management challenges, we reviewed our Fiscal Year (FY) 2023 Top 

Management Challenges report and related progress made by the SEC, as well as the SEC’s 

strategic plan and objectives. We also considered our recent oversight work (audits, evaluations, 

and investigations); general knowledge of the SEC’s operations; and the reports of others, including 

the U.S. Government Accountability Office (GAO). Further, we conducted significant outreach to 

the SEC’s leadership team and senior officials across the agency and considered their comments 

on a draft version of this report to leverage and incorporate their knowledge, experience, and 

perspectives regarding the SEC’s progress to date and the challenges that the agency continues to 

face. Not surprisingly, some of the SEC’s top management and performance challenges are shared 

by other federal agencies and institutions. 

Similar to prior years, the SEC’s top management and performance challenges are: 

 Meeting Regulatory and Oversight Responsibilities

 Recruiting and Retaining a Skilled Workforce

 Protecting Systems and Data

 Synopsis and Trends in Contracting

The SEC OIG is committed to providing independent, objective, and comprehensive oversight of 

the SEC’s programs and operations, to provide transparency for the public and to assist agency 

management in meeting the challenges to fulfill the SEC’s mission on behalf of the American people. 

In FY 2024, we will continue to conduct work that focuses on the SEC’s ongoing efforts to address 

these and other challenges.

INSPECTOR GENERAL’S STATEMENT ON 

MANAGEMENT AND PERFORMANCE 

CHALLENGES
Challenge Meeting Regulatory and Oversight 

Responsibilities

T

he U.S. Securities and Exchange Commission (SEC, agency, or Commission) is charged 

with protecting investors, maintaining fair, orderly, and efficient markets, and facilitating 

capital formation. This includes regulating and overseeing more than $100 trillion in annual 

securities trading in the nation’s equity markets, as well as the activities of more than 29,000 

registered entities, including investment advisers, mutual funds, exchange-traded funds, brokerdealers, and transfer agents; ten credit rating agencies; and 24 national securities exchanges. 

The SEC also oversees the Public Company Accounting Oversight Board, the Financial Industry 

Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investor Protection 

Corporation, and the Financial Accounting Standards Board. 

With its three-part mission, the SEC plays an integral role in the nation’s economy. Healthy capital 

markets support economic growth. And with 61 percent of Americans owning stocks or mutual 

funds, robust equity markets and investor protection are critical to the financial security of most 

individual Americans. It is essential that the SEC performs well and operates efficiently and with 

integrity. Agency management and the OIG recognize that the SEC’s ability to fulfill its mission 

becomes more challenging as the markets, investment products, and participants within the SEC’s 

purview increase in size, number, and complexity. We describe below the continuing challenges of 

(1) managing resources while meeting the SEC’s regulatory agenda; (2) keeping pace with changing 

markets and innovations; and (3) leveraging technology and analytics to meet mission requirements 

and respond to significant developments and trends. 

Managing Resources While Meeting the Regulatory Agenda

Last year, we identified challenges and risks posed by the SEC’s substantial rulemaking agenda. 

Rulemaking is the public notice and comment process by which the SEC develops and promulgates 

regulations that govern the securities markets, and it is a key component in the agency’s three-part 

mission. The SEC’s strategic plan calls for developing and implementing “a robust regulatory 

framework that keeps pace with evolving markets, business models, and technologies.”1

Rulemaking typically involves developing a proposal to address a perceived issue, including 

analyzing the proposed rule’s potential benefits and costs; publishing the proposal for public 

comment; considering the comments received; and finalizing agency action. Depending on the 

rulemaking, this work is largely accomplished by managers and staff from the divisions of Trading 

and Markets, Investment Management, Corporation Finance, and Economic and Risk Analysis, 

as well as personnel from the Office of the General Counsel, the Office of the Secretary, and the 
Chair’s policy team. Commissioners, supported by their staff, vote on placing proposed rules before 

the public for comment and on the adoption of final rules. 

Our October 2022 report on the SEC’s management and performance challenges2 identified 

challenges and risks posed by the SEC’s rulemaking agenda. By the end of 2022, the SEC had 

proposed 27 new rules, one of which was adopted.3 As of September 2023, the SEC finalized 11 

rules and proposed 12 more, most with planned final action dates between October 2023 and 

April 2024.

At the start of the current Chair’s tenure, 12 rules mandated by the 2010 Dodd-Frank Wall 

Street Reform and Consumer Protection Act (Dodd-Frank) and the Holding Foreign Companies 

Accountable Act had not yet been issued. As of September 2023, seven of these rules had been 

finalized, four were at the proposed stage, and the remaining one was awaiting action. 

We reported last year the concerns that some SEC managers shared about the strains that this pace 

and workload posed for the workforce, and Congress explored these issues in hearings.4 The SEC, 

in its FY 2024 Congressional Budget Justification,5 requested 25 additional positions associated 

with the rulemaking agenda and 12 positions to support rulemaking roles.6 The requested positions 

include attorneys, economists, and data analysts, to be spread over the SEC’s rulemaking divisions 

and other offices. 

Since last fall when we first identified rulemaking as a top management challenge, we initiated an 

audit of key rulemaking issues. Specifically, we are reviewing the SEC’s processes for (1) giving 

interested persons an opportunity to participate in rulemaking; and (2) assessing and documenting 

the impact(s) of proposed rules on competition, efficiency, and capital formation. We are also 

reviewing agency actions to ensure staff with sufficient and appropriate skills, experience, and 

expertise are involved in formulating and reviewing proposed rules. This work speaks to the SEC’s 

rulemaking capacity and ability to sustain the current workload. We anticipate completing this work 

and reporting our results, together with any recommendations, in 2024. 

The workload associated with rulemaking does not necessarily end upon the adoption of a rule. 

New rules may be challenged in court, demanding resources from the SEC’s Appellate Litigation 

team. As cases work their way through the legal system, it may take a year or more to secure a 

definitive judgment about the validity of a given rule. Thus, the size of the rulemaking agenda may 

have longer-term implications for the SEC’s litigation workload. 

Keeping Pace with Changing Markets and Innovations 

As we have reported in prior years, the SEC’s ability to remain an effective regulator requires that 

it continuously monitor the market environment, and as appropriate, adjust and modernize its 

expertise, rules, regulations, and oversight tools and activities. In this regard, two emerging areas 

present certain challenges for the SEC: crypto assets and artificial intelligence (AI). Given the rapid 

rise in these and other innovations, the SEC must continuously adapt and build new expertise and 

capabilities. 
CRYPTO ASSETS

The SEC recognizes the rapid growth in crypto assets as one of several “evolutionary risks.”7 Its 

FY 2024 Congressional Budget Justification asserts that crypto asset markets lack fundamental 

disclosures about both the assets and the firms that execute investor trades. The Chair has 

commented repeatedly on widespread noncompliance with existing securities laws by crypto asset 

market participants. The SEC has brought widely reported enforcement actions related to crypto 

assets, many of which are being vigorously contested by the defendants. 

Nevertheless, as reported by the Financial Stability Oversight Council (FSOC)8 and GAO,9 gaps 

exist in the regulation of crypto asset activities in the United States. Specifically, no federal financial 

regulator has comprehensive authority to regulate the spot market for crypto assets that are not 

securities, and there are regulatory gaps in the oversight of certain stablecoins (crypto assets that 

aim to maintain a stable price and whose values typically are pegged to a reference asset, such as a 

fiat currency or an exchange-traded commodity). Accordingly, FSOC (which includes the Chair of 

the SEC) and GAO recommended that Congress consider legislation for federal oversight of these 

issues.10 Among other things, FSOC recommended bolstering its members’ capacities related to data 

and analysis, monitoring, supervision, and regulation of crypto asset activities. GAO has further 

recommended that the seven federal financial regulators establish or adapt an existing coordination 

mechanism.11 The SEC’s comments on GAO’s draft report noted ongoing efforts to coordinate 

across federal financial regulators through FSOC, the President’s Working Group on Financial 

Markets, the Financial Literacy and Education Commission, joint participation in international 

bodies, and other bi-lateral and multi-lateral efforts. 

For FY 2024, the SEC requested additional positions for the divisions of Examinations, Trading 

and Markets, and Enforcement, in part, to address critical and evolving risks associated with 

crypto assets. The Office of the General Counsel and the Office of International Affairs also 

sought additional positions to focus on crypto asset regulation, policy, and related matters. We 

address difficulties related to the recruitment of staff knowledgeable regarding crypto asset issues in 

connection with the SEC’s human capital management challenges, discussed later in this report.12

Additionally, caselaw concerning the application of the securities laws to crypto assets is limited 

and still developing. As recent decisions have illustrated, even judges in the same district can reach 

inconsistent decisions on similar facts or issues.13 It may take years before the law in this area 

crystalizes to the point where outcomes are reasonably predictable. This uncertainty may affect the 

SEC’s enforcement decisions and priorities. 

ARTIFICIAL INTELLIGENCE

In his July 2023 remarks before the National Press Club, the SEC Chair noted that, “In finance, AI 

already is being used for call centers, account openings, compliance programs, trading algorithms, 

sentiment analysis, and more. . . . AI may heighten financial fragility . . . It also could exacerbate 

the inherent network interconnectedness of the global financial system.”14 Concerns about market 

integrity include the possibility that AI-generated recommendations may place adviser or broker 

interests ahead of their investors’ interests. 
The SEC’s Investor Advisory Committee has shared its perspectives on the importance of 

establishing an ethical AI framework specifically for investment advisers. In an April 2023 letter to 

the SEC Chair, the Investor Advisory Committee encouraged any new AI guidance to investment 

advisers to follow the key tenets of equity, consistent and persistent testing, and governance and 

oversight. In the Committee’s view, doing so would support better financial outcomes for all. 

Finally, the Investor Advisory Committee encouraged the SEC to: 

 consider best practices with which advisory firms may comply while maintaining some degree 

of flexibility to respond to technological advances related to AI;

 use information and input gathered from an agency request for information and comment and 

from investment adviser examinations to draft best practices regarding the ethical use of AI; 

 continue adding staff with AI and machine learning expertise; and

 task the Division of Examinations with monitoring compliance with the new ethical AI 

framework.15

In July 2023, the SEC proposed new requirements to address risks to investors from conflicts 

of interest associated with the use of predictive data analytics by broker-dealers and investment 

advisers.16 The goal is to prevent firms from placing their interests ahead of investors’ interests. 

Public comments on this proposed rule were due October 10, 2023. 

Although AI has great potential to improve capital markets, AI and “deep fake” audio and 

video technologies may also be used by malicious actors for fraudulent purposes, including 

impersonation. For example, generative AI can imitate the tone and substance of a legitimate 

investment professional and may thereby dupe prospective and existing customers into transferring 

funds or providing personal financial information. The difficulty in identifying perpetrators, some 

of whom may be overseas, can hinder bringing these actors to justice or recovering funds for 

victims. In FY 2024, we will continue to monitor the SEC’s efforts with respect to the use of AI by 

SEC-regulated entities.

Use of Technology and Analytics to Meet Mission Requirements 

and Respond to Significant Developments and Trends

We acknowledge the SEC’s continued efforts to use technology and analytics to improve efficiency 

and effectiveness and respond to significant developments and trends in the evolving capital 

markets. The SEC’s strategic plan and technology target reflect the importance of these efforts and 

affirm the agency’s commitment to continue investing in data analytics and new technologies, such 

as AI and machine learning. To that end, the SEC has hosted numerous seminars and information 

sessions for its staff, including through an AI/machine learning community of practice, to discuss 

topics related to analytics and AI/machine learning tools and projects, and to learn about recent 

advances from industry and academic experts.
One example of improvement through data analytics is the automation of the process by which 

the Division of Enforcement’s (Enforcement) Office of Market Intelligence analyzes the thousands 

of tips, complaints, and referrals (TCRs) alleging violations of the federal securities laws or 

conduct that poses a risk of harm to investors. Enforcement continues to use analytics to bulk 

process incoming TCRs, specifically deprioritizing those categories of allegations that tend to lack 

merit. Enforcement worked with the Division of Economic and Risk Analysis to automate review 

of certain TCRs, helping staff to focus on high value submissions, better manage TCRs, and 

alleviate a backlog. 

As Figure 1 shows, however, the number of TCRs received continues to increase, which may stress 

the agency’s capabilities. TCRs have increased from 23,347 in 2020 to 35,897 in 2022, and 2023 

is on track to meet or exceed the prior year numbers. In late May/early June 2024, the SEC plans 

to launch a modernized TCR system with enhanced processing capabilities. We have previously 

reported on challenges the SEC faced when attempting to modernize its TCR system,17 and we have 

encouraged management to leverage lessons learned to help inform decision-making and meet cost 

and schedule goals, avoiding the overruns and delays previously experienced.18

FIGURE 1. Number of TCRs Received (Quarterly, from FY 2020)

2,000

4,000

6,000

8,000

10,000

12,000

Source: OIG-generated based on data provided by Enforcement. FY 2021 totals exclude 12,935 TCRs related to 

a market volatility event, and totals exclude TCRs submitted as test TCRs to validate the system.

4,359

Q2

6,628

8,143

8,878

7,328

10,150

8,795 9,437

8,159 8,340

10,349

8,734 8,612

9,986

Q3 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1

2020 2021

Q2 Q2

2022 2023

Q3

4,217

Q1 Q4

Likewise, the number of whistleblower complaints has increased steadily since the Office of the 

Whistleblower (OWB) was established in 2011. As Figure 2 shows, the number of whistleblower 

tips received annually more than quadrupled over the last ten years. Whistleblower complaints for 

FY 2023 received through the month of August have increased more than 30 percent above the 

totals for FYs 2021 and 2022. In January 2022, OWB implemented a new system to modernize, 

standardize, and automate the tracking and management of whistleblower program information. 
FIGURE 2. Number of Whistleblower Tips Received (FY 2013 – August 2023)

10,000

12,000

14,000

16,000

18,000

8,000

6,000

4,000

2,000

Source: OIG-generated based on OWB’s 2022 annual report to Congress, and data provided by Enforcement. 

This data is limited to whistleblower tips and does not reflect all tips or complaints received by the Commission 

during the fiscal year.

3,620

FY 2014

3,923

FY 2015

4,218

FY 2016

4,484

FY 2017

5,282

FY 2018

5,212

FY 2019

6,911

FY 2020

12,210

FY 2021

12,322

FY 2022

16,055

FY 2023 

through 

August 

2023

FY 2013

3,238

In a December 2022 report,19 we noted that OWB was experiencing a significant backlog in 

processing whistleblower claims, which increased the amount of time whistleblowers waited 

before receiving the Commission’s Final Order. Prior to our report, the SEC took steps to improve 

whistleblower claims processing and tracking procedures, including (1) implementing an initiative 

to more efficiently develop the initial drafts of attorney declarations, (2) adopting certain rule 

amendments, and (3) implementing a modernized claims tracking system. Management’s efforts 

notwithstanding, we determined, among other findings, that OWB lacked effective controls over 

manually inputted data entries, resulting in inaccurate or incomplete data.

We made eight recommendations to help further increase efficiencies in the SEC’s whistleblower 

program, better prepare for future whistleblower program growth, reduce risk, and improve 

controls over whistleblower program data and communication with external parties. Management 

concurred with our recommendations and has taken actions sufficient to close all of them. 

ONGOING AND ANTICIPATED OIG WORK

In FY 2024, we will initiate reviews of the SEC’s strategic approach to AI and machine learning 

(pending Government-wide guidance), investment company filings, and the Division of Corporation 

Finance disclosure operations. We will also complete our ongoing audit of aspects of the SEC’s 

rulemaking process and related internal controls. Furthermore, we will follow-up on open 

recommendations intended to expedite Enforcement investigations. 
Challenge Recruiting and Retaining a Skilled 

Workforce

L

ong recognized as one of the Best Places to Work in the Federal Government,20 the SEC seeks 

to hire the best and brightest candidates to join its talented workforce by offering rewarding 

careers at an innovative organization. The agency considers people to be its most important 

asset and includes as one its top strategic goals supporting a skilled workforce that is diverse, 

equitable, inclusive, and fully equipped to advance agency objectives.21 Nevertheless, like many 

federal agencies, the SEC faces challenges in recruiting and retaining highly skilled staff.

Vacancies and Attrition 

As of September 30, 2023, 491 of the SEC’s 5,303 authorized positions were unfilled, a vacancy rate 

of 9.3 percent. The vacancy rate has increased steadily over the past four years, as the agency added 

new slots, as shown in Figure 3. The SEC added 379 new positions in FY 2023, and its 2024 budget 

request seeks another 170 slots, 25 of which are directly associated with the rulemaking agenda, 

with 12 additional positions tied to supporting rulemaking roles.22

FIGURE 3. Vacant Positions as Percentage of Authorized Positions (FY 2020 – FY 2023)

5,000

4,500

4,000

3,500

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Source: Based on personnel onboard at FY end data provided by OHR and Enacted FY Authorizations provided 

by the Office of Financial Management.

FY 2020 FY 2021 FY 2022 FY 2023

4.8%

6.0%

8.3%

Prior Year Authorization

Personnel Onboard

Current Year Authorization

Percent of Vacant Positions

9.3%
Attrition also contributes to the vacancy rate. Although the SEC has hired an average of over 300 

staff members from external sources annually over the past four years, Figure 4 shows that, until 

2023, most of those gains were offset by staff departures. 

FIGURE 4. Net Gains in Personnel Onboard at Year-End (FY 2020 – FY 2023)

300

350

400

450

500

150

100

50

0

250

200

FY 2020 FY 2021 FY 2022 FY 2023

137

47

254

31

External Hires External Losses Net Gains

Source: Based on FY year end data provided by OHR.

Attrition rose at the SEC from 3.8 percent in FY 2020 to 6.3 percent in FY 2022, before declining 

to 4.7 percent in FY 2023, as shown in Figure 5. Although the SEC’s attrition rate increased prior to 

declining in FY 2023, it remained below the government-wide attrition rate through FY 2021, the 

most recent year for which government-wide attrition rates are publicly available.23

FIGURE 5. SEC Attrition Rate Compared to Government-Wide Attrition Rate (FY 2018 – FY 2023)

150

200

250

300

350

100

50

0

10.0%

8.0%

9.0%

6.0%

4.0%

5.0%

7.0%

2.0%

3.0%

1.0%

0.0%

Source: Based on SEC attrition data provided by OHR and available government-wide attrition data from the 

Partnership for Public Service.

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

4.4%

6.0% 6.1%

5.5%

6.1%

3.9% 3.8%

4.7%

5.5%

6.3%

Total SEC Attrition SEC Attrition Rate Government-Wide Attrition Rate

Staffing shortages do not hit evenly across the agency. The Division of Enforcement, responsible for 

investigating and prosecuting fraud and other violations of the securities laws, has a vacancy rate 

of 8.1 percent, and the Division of Examinations, which, among other things, conducts risk-based 

reviews of mutual funds, exchange traded funds, and broker/dealers, has a vacancy rate of 9.3 
percent, and thus the agency cannot examine or investigate as many matters as it could if fully 

staffed. In the Division of Trading and Markets, which, for example, provides day-to-day oversight 

of self-regulatory organizations (such as the national securities exchanges and clearing agencies), the 

vacancy rate is 15.6 percent. 

While the leaders of these divisions assure us that they are meeting their core missions, they 

acknowledge that they must curtail work because of unfilled slots. Vacancies can reduce the scope 

of their work, cause delays and may require them to forgo work that they would undertake if fully 

staffed. Division leaders also told us that staffing shortages impose higher workloads on existing 

staff. A triennial review of SEC personnel management completed by GAO in December 2022 

estimated that over half of the SEC’s workforce believed that their division or office did not have 

enough staff to manage the volume of work that needs to be completed.24 Our evaluation of the 

timeliness of Enforcement investigations reported in February 2023 that 277 of 412 staff who 

responded—67 percent—disagreed or strongly disagreed that the Enforcement Division’s human 

capital resources were sufficient to handle the investigative workload.25 Those who responded cited 

a need for investigative and trial attorneys, accountants, paralegals, and other support staff and 

stated that they were spread too thin to move cases forward on a timely basis. Division management 

agreed that increased staffing was needed. Some agency officials cited staff shortages and increasing 

workloads as a reason that staff members are leaving the SEC. 

The vacancy rate at the SEC is unlikely to be reduced significantly in the short term. On September 

28, 2023, the SEC paused most hiring actions until further notice, due to the uncertainty 

surrounding the SEC’s FY 2024 appropriations. We will continue to monitor how the hiring pause 

impacts the SEC’s ability to continue to meet its mission priorities.

Hiring Flow and Volume

While the Office of Human Resources (OHR) administers key aspects of the agency’s recruiting 

and staffing process, including consulting with management, establishing and administering human 

capital programs and policies, and ensuring compliance with federal laws and regulations and 

negotiated agreements,26 each component within the SEC plays an important role in the hiring 

process. 

The SEC undertook an intensive effort to fill the 379 new positions authorized for FY 2023, as well 

as backfill losses due to attrition. Indeed, OHR maintained an average of 500 or more hiring actions 

in process at any given time throughout FY 2023. The agency filled 850 positions in FY 2023, 

significantly more than in the preceding three years.27 While this led to a net gain of 254 positions, 

the rate of vacancies also increased, from 8.3 percent to 9.3 percent. This occurred in part because 

internal hires accounted for 44.6 percent of the SEC positions filled in FY 2023, which created 379 

additional vacancies. OHR also noted that staffing and workloads among hiring officials within 

agency components can create practical limitations on the amount of time that can be devoted 

to completing hiring actions in a given year, and that the necessary pre-employment checks also 

prolong the hiring cycle. Senior officials across the agency agreed that reducing attrition would help 

to lower the current vacancy rate. In FY 2024, we will assess the SEC’s strategies for recruiting and 

retaining employees and filling vacancies.
Chair Gensler has acknowledged that the SEC’s workforce must contend with increasingly complex 

markets, a significant growth in registrants, and more involvement in the markets from individual 

investors. As the size, scale, and complexity of capital markets grow, it is critical that the SEC is 

adequately staffed to protect investors, maintain fair, orderly, and efficient markets, and facilitate 

capital formation so that its ability to meet these demands is not reduced or delayed. 

Specialized Recruiting Challenges

As described above, the SEC also faces challenges in recruiting specialists in crypto assets, which 

Enforcement considers critical to strengthening its capabilities to investigate new and emerging 

issues in crypto-asset markets.28 Officials in several SEC divisions cited a small candidate pool of 

qualified experts and high competition from private sector recruitment as challenges in filling crypto 

asset-related positions. Officials also reported that many qualified candidates hold crypto assets, 

which the Office of the Ethics Counsel has determined would prohibit them from working on 

particular matters affecting or involving crypto assets. This prohibition, according to SEC officials, 

has been detrimental to recruiting, as candidates are often unwilling to divest their crypto assets to 

work for the SEC. 

Other Recruiting and Attrition Drivers

One of the most significant drivers in both recruitment and attrition is competition with the private 

sector, particularly on wages. The SEC employs highly skilled professionals, including attorneys, 

economists, and accountants. Private sector wages can be substantially higher than the SEC’s pay 

scale, making private sector positions attractive to both new and seasoned professionals.29

While agency officials we spoke with believed that the recently finalized collective bargaining 

agreement—which expands telework to eight days per pay period for most employees and extends 

certain work-life balance flexibilities, as well as other benefits—will be a significant positive factor 

for recruiting and retaining professional talent, competition with private sector compensation will 

continue to pose a challenge. 

Opportunities for advancement are another important factor in attrition and retention decisions. 

Relatively few promotion opportunities are available above the SK-14 level, which may lead staff 

to pursue career options elsewhere. The SEC has made an effort to reduce its external professional 

hiring at the SK-14 level, dropping it from 74.8 percent in FY 2021 to 63.5 percent in FY 2022. 

With respect to positions at the lower levels, our recent report on the Upward Mobility Program, 

which was originally intended to provide promotional opportunities for selected staff at the SK-7-9 

levels, found that 30 percent of the program positions went to SK-11 staff who took voluntary 

downgrades and were then promoted to SK-12 within months.30 While this practice did not violate 

SEC rules or regulations, it did call into question the Upward Mobility Program design, including 

whether SK-11 employees were intended beneficiaries. SEC management said that it would work 

with the National Treasury Employees Union (NTEU)—the union that represents more than 

two-thirds of the SEC workforce—to formalize policies and document the intended grade levels of 

program participants. 
Performance management is another opportunity for improvement, though the likely effect on 

attrition is not clear. GAO’s December 2022 report31 found that in general employees viewed the 

SEC’s performance management system unfavorably, and over half felt that the two-tier rating 

system (“accomplished performer” or “unacceptable”) did not create meaningful distinctions in 

performance or incentivize high performance. Additionally, while many employees reported they 

believed performance appraisals under the current system were fair and it was easier for supervisors 

to rate staff, an estimated 74 percent of employees believed that receiving meaningful performance 

feedback depended more on individual supervisors than on the structure of the performance 

management system.32

Surveys of departing employees conducted by the SEC generally bear out the salience of 

compensation, promotion, recognition, and career opportunities, as well as retirement eligibility, as 

significant reasons for leaving the SEC. However, the exit surveys are not a mandatory part of the 

off-boarding process. With a response rate of only about 40 percent in FYs 2019 through 2022, the 

SEC may be missing valuable information and insights regarding retention and attrition. To remedy 

this, officials in OHR told us that they are updating the off-boarding process so exit surveys are 

sent to departing employees in a separate email (independent of other off-boarding process items), 

with automated reminder emails to encourage departing employees to complete the exit survey. 

More comprehensive and granular data may assist the SEC to develop targeted responses for the 

contributing factors that are within the agency’s power to mitigate. 

Transition to a Hybrid Workplace

With the conclusion of the COVID-19 pandemic,33 the SEC has moved to a hybrid workplace, in 

which most employees are required to work in the office at least two days per two-week pay period 

and may telework the remainder of their time. In the agency’s view, this balances the benefits of 

extended telework that accrued during the pandemic, while promoting in-person collaboration and 

culture-building,34 including “community days,” when all members of a work unit are together in 

the office. This telework policy is included in the 2023 Collective Bargaining Agreement between the 

SEC and NTEU. Training in supervising staff in a telework environment, which covers the specifics 

of telework and work schedule policies within the SEC, has been made available to all managers. 

On August 4, 2023, the White House directed Cabinet-level officials to “aggressively execute” a 

shift to increase the in-office presence of federal employees this fall. This directive did not apply 

to the SEC as an independent agency. This issue is of great interest to Congress35 and the SEC 

workforce and we will continue to monitor any developments to increase the in-office attendance of 

SEC employees. 

This post-pandemic telework posture has had a favorable impact on the agency’s budget. The SEC 

has reduced its headquarters footprint by more than 200,000 square feet, at an annual savings of 

at least $14 million, with further space reductions possible. The SEC is in the process of reviewing 

space needs across its regional offices to determine whether further space reductions and related cost 

savings can be achieved. The projected level of future telework will also affect the SEC’s remaining 

headquarters lease extensions, which contain options to cancel at certain milestones, as well as the 

space needs for the new headquarters to which the SEC will relocate later this decade. 
Both the SEC and NTEU have recognized the substantial benefits of telework, such as protecting the 

environment, improving employees’ work-life balance, improving the SEC’s ability to recruit and 

retain talent, and providing for continuity of operations during emergencies. Both parties also noted 

that performance expectations are the same for both teleworking and non-teleworking employees. 

Moreover, telework can be suspended for an employee in the event of time and attendance issues, a 

decline in performance, or a failure to truthfully report time worked. 

Managing telework effectively requires substantial commitment from agency leaders and 

supervisors, to find new ways to maintain positive employee engagement, mentoring and informal 

learning, which may not occur organically when staff are not physically together. Supervisors must 

also maintain an awareness of staff productivity and the quality of their work, to guard against 

inattention/distraction and the possibility of time and attendance fraud. 

Even if some adjustments are made, expanded telework will likely continue at the SEC. The 

leadership believes that the availability of telework is an important recruitment inducement. 

Supervisors and staff need the technology, tools, and training to collaborate effectively in a hybrid 

environment to accomplish the SEC’s mission. 

ONGOING AND ANTICIPATED OIG WORK 

In FY 2024, we will complete (1) an assessment of the operations and controls over the SEC’s 

equal employment opportunity program, and (2) a review of agency actions to ensure staff 

with sufficient and appropriate skills, experience, and expertise are involved in formulating and 

reviewing proposed rules. We will assess the SEC’s strategies for recruiting and retaining employees 

and filling vacancies. We will also continue to monitor the SEC’s progress in addressing any new 

recommendations related to human capital management. 
Challenge Protecting Systems and Data

I

nformation security in the financial sector is a significant focus of public and private entities 

alike, with particular attention to market systems, customer data protection, disclosure of 

material cybersecurity risks and incidents, and compliance with legal and regulatory obligations 

under the federal securities laws. The seriousness of the threats and the potential consequences to 

investors, issuers, and other securities market participants, and the financial markets and economy 

more generally, are substantial and increasing. Cybersecurity risk management has become essential. 

Federal agencies are not immune to these challenges. The Cybersecurity and Infrastructure Security 

Agency (CISA) is constantly adding new Known Exploited Vulnerabilities to their catalog, including 

vulnerabilities of major software products. These types of vulnerabilities are frequent attack vectors 

for malicious cyber actors and pose significant risks to federal enterprises and systems. CISA has 

issued an Advisory warning36 that cyber actors routinely exploit poor security configurations 

(either misconfigured or left unsecured), weak controls, and other poor cyber hygiene practices 

to gain access or as part of other tactics to compromise federal systems. Since many government 

information technology (IT) systems, including the SEC’s, contain vast amounts of sensitive 

information, it is important that the agency protect the confidentiality, integrity, and availability 

of this information—and effectively respond to data breaches and security incidents. 

SEC management has recognized that “efficient, effective, and responsible use of data and IT is 

a crucial focus of the agency.”37 In its FY 2024 Congressional Budget Justification, the agency 

requested additional funds to implement its multi-year IT strategy, which includes (1) the 

expansion of AI and machine learning into data accessibility and analysis; (2) the migration of 

applications to the cloud; (3) the implementation of a zero trust architecture and other compliance 

with new cybersecurity requirements; and (4) the development of an IT Supply Chain Risk 

Management program. The budget request includes plans to hire additional personnel to help 

implement these initiatives and to ensure the SEC’s IT investments yield the promised value and 

benefits for agency programs.

We discuss below recent IT events, as well as the overall security posture of the SEC’s systems 

and data. 
Insufficient User Access Controls Allowed Certain Enforcement 

Staff Access to Restricted Adjudicatory Information

Last year, we reported on a material weakness, disclosed by the agency in an April 2022 

Commission statement, associated with a lack of controls related to user access to a Commission 

system. Specifically, the SEC reported that the database maintained by the Office of the Secretary 

that contains information and documents related to Commission actions was not configured 

to restrict access to certain Enforcement staff, and thus unintentionally allowed Enforcement 

administrative staff to view and export information on the adjudication of administrative matters 

to which the Enforcement Division was a party. In June 2023, the SEC reported that 91 matters 

then pending before the Commission were implicated: two matters originally disclosed in April 

2022; 28 matters as to which one or more adjudication memoranda specific to the particular 

matter were accessed by Enforcement administrative staff (also referred to as “Affected Matters”); 

and 61 additional matters in which one or more adjudication memoranda broadly applicable 

to numerous pending matters were accessed by Enforcement administrative staff (referred to as 

“Omnibus Memoranda”). 

The Commission’s internal review found no evidence that access to adjudication memoranda 

regarding the Affected Matters impacted Enforcement filings or decision-making. The internal 

review likewise found no evidence that the administrative staff member who accessed the eight 

Omnibus Memoranda, which recommended procedural actions in then-pending administrative 

adjudicatory proceedings, contacted any Enforcement staff responsible for investigating and 

prosecuting the relevant matters about any of these memoranda. Nevertheless, as a matter of 

discretion, the Commission dismissed 42 pending matters found to be connected to the control 

deficiency and granted relief for persons subject to collateral bars in an additional 48 matters, to 

preserve the Commission’s resources. 

Our independent investigation into this matter confirmed that Enforcement administrative staff 

accessed the adjudication memoranda without appreciating their significance or the fact that 

they should not be shared with Enforcement staff generally. We identified lack of staff training, 

inadequate internal controls and the unanticipated use of a system designed to allow the recording 

of Commission votes on staff recommendations. The Commission has taken this lapse in controls 

seriously, taking steps to ensure that sensitive work products are appropriately safeguarded and 

committing to keeping the public informed about the scope of this issue.

Some Public Comments to SEC Rulemakings Submitted Online 

Were Not Received Due to a Technological Error 

In 2022, the SEC failed to receive 168 comments on 11 pending rulemakings due to a technological 

error in the agency’s online comment system.38 As a result, after working with the vendor to deploy 

a fix, the SEC reopened the comment periods for 11 affected rulemaking releases and one request 

for comment. The agency notified the public that the technological error might also have affected 

certain comments related to eight self-regulatory organization matters. 
As reported in our April 2023 management letter,39 we identified IT control weaknesses that delayed 

the SEC’s awareness of the technological error and magnified the error’s overall impact. Specifically, 

the responsible Information System Owner and system administrators did not configure alerts or 

regularly monitor system logs, which would have permitted agency personnel to timely identify 

and respond to the error. The SEC also did not back up some data submitted through the internet 

comment form, which delayed recovery of comments. As a result, among other information, we 

requested confirmation from the agency that it has posted to its public website comment letters not 

initially received but subsequently recovered and/or resubmitted, so that teams have the opportunity 

to consider these comments when preparing a recommendation to the Commission regarding a 

final rulemaking. We also identified another matter for management’s consideration regarding 

comments that are not posted to the SEC’s public website or promptly provided to rulemaking 

staff, and the overall efficiency of related processes. In May 2023, SEC management confirmed for 

us that rulemaking teams were given the opportunity to consider the comments when preparing a 

recommendation to the Commission regarding a final rulemaking. 

In September 2023, SEC management confirmed for us that the SEC deployed a new comment 

letter system on April 30, 2023. The agency asserts that the new system has decreased the time that 

it takes for Office of the Secretary staff to review and approve comment letters and, in turn, transmit 

comment letters to rule-writers. The OIG has not independently assessed the corrective actions 

implemented by the agency or validated its assertions.

Strengthening the SEC’s Cybersecurity Posture

IMPLEMENTING A ZERO TRUST ARCHITECTURE

On May 12, 2021, President Biden issued Executive Order 14028, Improving the Nation’s 

Cybersecurity, initiating a government-wide effort to ensure that baseline security practices are in 

place and to migrate the federal government to a zero trust architecture. A zero trust approach to 

cybersecurity focuses on preventing and limiting damage in the event that a malicious actor gains 

access to a network. Zero trust operates on the principle to “never trust, [and] always verify,” with 

a goal to continuously authenticate and authorize users and devices that seek to obtain and maintain 

access to systems and data. 

In FY 2023, we conducted a review of the SEC’s progress toward implementing the zero 

trust architecture strategy and cybersecurity standards and objectives established in Office of 

Management and Budget (OMB) Memorandum M-22-09.40 Overall, the SEC has completed six of 

nine actions required to be implemented within the first year (i.e., by January 27, 2023). However, 

at the time of our review, three of the nine tasks had not been completed. The SEC appears to 

be on track to meet the longer term zero trust requirements by OMB’s September 30, 2024, 

deadline; however, actions are needed to address outstanding tasks and prevent delaying the SEC’s 

achievement of specific zero trust security goals and extending implementation beyond FY 2024.
Failure to timely and effectively implement government-wide zero trust cybersecurity principles 

may result in the SEC being more susceptible to threat campaigns that target the agency’s IT 

infrastructure, threaten privacy, damage the American economy, and weaken trust in government.

To help us determine whether further action by the OIG is warranted regarding this issue, we 

requested that management provide the OIG, no later than November 13, 2023, a description of 

actions the SEC has taken or plans to take to:

1. Configure all SEC public-facing systems that support multi-factor authentication to give users 

the option of using phishing-resistant authentication.

2. Remove password policies that require special characters.

3. Establish a goal for monitoring and potentially restricting how sensitive electronic documents 

are shared.

Maturing the SEC’s Information Security Program

We annually evaluate the SEC’s implementation of the Federal Information Security Modernization 

Act of 2014 (FISMA).41 Since FY 2021, the SEC has made progress in improving its information 

security program by institutionalizing the use of advanced risk management technologies; 

developing a standard hardware taxonomy across the agency; and updating relevant components 

of the agency’s interconnection inventory. However, the agency faced challenges, including, but not 

limited to, documenting the results of privacy risk assessments, integrating formal lessons learned 

on the effectiveness of incident handling policies and procedures, and completing business impact 

analyses for its information systems. We contracted with Kearney & Company, P.C. (Kearney) to 

conduct the FY 2022 independent evaluation and, on November 15, 2022, issued the report titled, 

Fiscal Year 2022 Independent Evaluation of the SEC’s Implementation of the Federal Information 

Security Modernization Act of 2014 (Report No. 574).

Although the SEC strengthened its program, Kearney determined for FY 2022 that the agency’s 

information security program did not meet annual Inspector General FISMA reporting metrics’ 

definition of “effective,” which requires more than half of the domains to be rated as Level 4 

(“Managed and Measurable”).42 As stated in Report No. 574, the SEC’s maturity level for the 

five Cybersecurity Framework security functions (“identify,” “protect,” “detect,” “respond,” and 

“recover”) and related domains was primarily Level 3 (“Consistently Implemented”). As shown 

in Figure 6 below, there was a significant decrease in both the overall Security Training domain 

rating (from Optimized in FY 2021 to Defined in FY 2022) and the Contingency Planning domain 

rating (from Managed and Measurable in FY 2021 to Consistently Implemented in FY 2022). We 

determined that these decreases were primarily due to changes in the government-wide methodology 

(prescribed by OMB, along with the Council of the Inspectors General on Integrity and Efficiency, 

the Chief Information Security Officers Council, and CISA) for the FY 2022 assessment. 

Specifically, the FY 2022 assessment included fewer metrics overall than the FY 2021 evaluation.
FIGURE 6. Summary of SEC FISMA Ratings (FY 2021 and FY 2022)

Domain

Assessed Rating By FY

2022 2021

Risk Management Level 3: Consistently 

Implemented

Level 3: Consistently 

Implemented

Supply Chain Risk 

Management Level 1: Ad Hoc Level 1: Ad Hoc

Configuration Management Level 2: Defined Level 2: Defined

Identity and Access 

Management Level 2: Defined Level 2: Defined

Data Protection and Privacy Level 3: Consistently 

Implemented

Level 3: Consistently 

Implemented

Security Training Level 2: Defined Level 5: Optimized

Information Security 

Continuous Monitoring

Level 3: Consistently 

Implemented

Level 3: Consistently 

Implemented

Incident Response Level 4: Managed and 

Measurable

Level 4: Managed and 

Measurable

Contingency Planning Level 3: Consistently 

Implemented

Level 4: Managed and 

Measurable

Source: OIG-generated based on Exhibit 1 from Report No. 574 and 570. 

Report No. 574 included 13 new recommendations to strengthen the SEC’s information security 

program and highlighted opportunities to improve in all nine of FY 2022 Inspector General FISMA 

reporting metric areas. To date, the SEC has taken corrective action sufficient to close eight of these 

13 recommendations. However, one recommendation from a prior year FISMA report remains 

open (FY 2017).43 We commend agency management for the actions taken to date and encourage 

management to promptly act on all opportunities for improvement identified in previous FISMA 

reports to help minimize the risk of unauthorized disclosure, modification, use, and disruption of 

the SEC’s sensitive, nonpublic information, and to assist the agency’s information security program 

reach the next maturity level. 

ENSURING THE EFFECTIVENESS OF SEC’S DATA LOSS PREVENTION PROGRAMS

An effective data loss prevention (DLP) program reduces the risk of a data breach or a leak of 

sensitive SEC information by monitoring communication channels and preventing nonpublic data—

such as personally identifiable information, law enforcement sensitive data, or business identifiable 

data—from leaving the agency’s network without authorization. An unauthorized disclosure of 

sensitive SEC data could have significant adverse consequences on both the SEC and the financial 

sector due to the loss or compromise of confidential, protected, and/or proprietary information; 

harm to the SEC’s reputation; monetary loss; and disruptions to financial markets, critical systems, 

and/or services. 
We assessed DLP-related incident response controls during our FISMA evaluation, and since 

FY 2020, the SEC has been assessed an acceptable level 4, Managed and Measurable, for their 

overall incident response controls. Nevertheless, at least one agency official has expressed 

concerns regarding inefficiencies in the SEC’s DLP tool capabilities and the Office of Information 

Technology’s procedures for classifying and providing relevant and prompt information on a data 

loss breach. Untimely notification of data loss incidents to supervisors and interested parties could 

result in further avoidable losses and ineffective mitigation and remediation. 

Given the sensitivity of data within SEC systems, we believe that a detailed standalone review of the 

DLP program is warranted and intend to initiate such a review this year. 

SAFEGUARDS FOR SEC MOBILE DEVICES

In FY 2023, the SEC’s Office of Information Technology made progress by taking corrective action 

sufficient to close one cybersecurity-related recommendation from a previous report titled Opportunities Exist To Improve the SEC’s Management of Mobile Devices and Services, (Report No. 

562). However, the SEC has not yet completely addressed a recommendation from Report No. 562 

that the agency update existing policies and procedures to include additional controls addressing 

mobile device inventory, provisioning, applications, sanitization, and operating system updates. 

As of September 2023, the agency was still in the process of revising its mobile devices standard 

operating procedures.

ONGOING AND ANTICIPATED OIG WORK

In FY 2024, we will continue to assess the SEC’s efforts to secure its systems and data and mature 

its information security program. Specifically, we will complete ongoing reviews of the SEC’s FY 

2023 FISMA compliance and its efforts to establish a secure environment and applications to use 

consolidated audit trail data. We will also initiate the FY 2024 FISMA evaluation and an audit of 

the SEC’s DLP program. Finally, we will evaluate the SEC’s strategic approach to AI and machine 

learning.
Challenge Synopsis and Trends in 

Contracting

T

he SEC relies on contractors for technical and subject matter expertise, including IT support; 

professional litigation and investigation-related services; support in areas of analytics and 

examinations; and human resources support services. The portion of the SEC’s budget 

devoted to contract services continues to rise, representing about one-third of the agency’s 

expenditures in FY 2022. (See Figure 7.) For FY 2024, the agency has requested nearly $741 million 

for contractual services and supplies, about 30 percent of the total $2.436 billion requested for 

agency operations. 

FIGURE 7. SEC Annual Contractual Services and Supplies Obligations, in Thousands, as a Percentage 

of Total Annual Budget Authority (FY 2017 – FY 2022)

$2,100,000

$140,000

$700,000

Source: OIG-generated based on annual actual obligations by object class as reported in the SEC’s 

Congressional Budget Justifications for FY 2019 through FY 2024.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

23.75% 25.46% 27.86%

32.52%

30.39% 32.25%

Total Budget Authority Annual Contractual Services and Supplies Obligations

$0
Contract management challenges are common across the federal government. From December 2022 

through July 2023, federal agencies issued reports detailing inadequate procurement management; 

inadequate specialized training for contracting officers; problems addressing prohibited telecom 

items offered on multiple award schedule contracts; lack of adherence to existing acquisition and 

procurement procedures; and lack of adherence to acquisition policies and procedures. The SEC 

is not immune to such issues and must ensure that its acquisition workforce remains vigilant and 

manages contract resources effectively.

As in prior years, the SEC spends the majority of its contract dollars on IT services. These services 

include application management and development, business solutions delivery, IT infrastructure and 

operations management, information security, IT governance, and data management. 

Of the nearly $700 million obligated for contracts in FY 2023, the SEC obligated about 70 percent 

(or about $491 million) to vendors doing business in two categories:44 one for computer systems 

design and related services, and another for computing infrastructure providers, data processing, 

web hosting, and related services. (See Figure 8.) 

FIGURE 8. SEC’s Top Contract Categories (Industry Codes) in FY 2023

5415—Computer Systems Design and Related 

Services ($458.4 M)

5416—Management, Scientific, and Technical 

Consulting Services ($73.7 M)

5182—Computing Infrastructure Providers, Data 

Processing, Web Hosting, and Related Services 

($32.8 M)

5171—Wired and Wireless Telecommunications 

(Except Satellite) ($21.7 M)

All other NAICS Codes ($112.2 M)

66%

16%

5%

10%

3%

Source: OIG-generated from data retrieved from SAM.gov on October 2, 2023. 

This high concentration of IT contracting affects the SEC’s risks. Since 2015, GAO has designated 

IT acquisitions and operations as a high-risk area, in need of improvement and attention by the 

executive branch and by Congress:

[F]ederal IT investments too frequently fail to deliver capabilities in a timely manner. 

They also incur cost overruns or schedule slippages while contributing little to missionrelated outcomes. These investments often lack disciplined and effective management 

in areas such as project planning, requirements definition, and program oversight and 

governance.45
Focus on Diversity, Equity, and Inclusion in Contracting

Recent OMB guidance implements President Biden’s commitments to increase the share of contracts 

awarded to small disadvantaged businesses to 15 percent by 2025.46 To do this, OMB directs federal 

agencies to take specific management actions, including increasing the number of such new entrants 

to the federal marketplace and reversing the general decline in the small business supplier base.

To support diversity, equity, and inclusion goals, the Offices of Acquisitions (OA) and Minority and 

Women Inclusion (OMWI) continue to collaborate to voluntarily implement the requirements of 

Executive Order 13895, which states that the federal government should pursue a comprehensive 

approach to advancing equity for all, including people of color and others who have been 

historically underserved, marginalized, and adversely affected by persistent poverty and inequality.47

OA and OMWI have committed to developing processes to ensure underserved groups have the 

opportunity to provide feedback on the SEC’s existing Supplier Diversity Program and are afforded 

opportunities to participate in SEC business opportunities. 

The SEC procures many of its IT services through its OneIT enterprise contract vehicle, which has 

a 10-year ordering period, a contract ceiling of $2.5 billion, and separate pools for acquisitions 

from small businesses. As of October 2, 2023, 22 of the 27 task orders under the OneIT contract 

vehicle went to small businesses, representing 47 percent of the total $827 million obligated. 

In March 2022, we initiated an audit to (1) assess the SEC’s processes for encouraging small 

business participation in agency contracting, in accordance with federal laws and regulations; 

and (2) determine whether, in FY 2020 and FY 2021, the SEC accurately reported small business 

awards. In our February 2023 report,48 we noted that the SEC exceeded government-wide statutory 

small business contracting goals for prime contract awards and took steps to encourage small 

business contracting and supplier diversity and inclusion. However, the SEC, we found, could better 

identify and, as appropriate, respond to trends in its small business contracting activities by: 

 analyzing its small business contracting data at the transaction level; 

 leveraging supplier diversity data, as appropriate; 

 evaluating the effectiveness of vendor outreach events and data collected from such events; and

 monitoring and reporting subcontracting achievements for socioeconomic subgroups.

We also identified opportunities to better leverage the role of the SEC’s Office of Small and 

Disadvantaged Business Utilization. Lastly, we found that OA could maintain better records to 

support and enhance the accuracy of the SEC’s reported small business awards and improve the 

completeness of contract files. We made eight recommendations for improvement. Management 

concurred with our recommendations and has taken actions sufficient to close seven of them 

to date. The remaining recommendation will be closed upon completion and verification of 

proposed actions. 
Time and Materials Contracts

Time and materials (T&M) contracts are to be used when it is not possible at the time of placing 

the contract to estimate accurately the extent or duration of the work or to anticipate costs with 

any reasonable degree of confidence. As recognized in the Federal Acquisition Regulation, T&M 

contracts do not reward a contractor for cost control or labor efficiency. T&M and labor-hour 

(LH) contracts49 are generally considered riskier than fixed price contracts because contractors 

bill the government by the hour and could conceivably work less efficiently so that they could 

charge more hours. As a result, GAO recommended that agencies use lower-risk contract vehicles 

where possible, including assessing ongoing use of T&M contracts in their acquisition portfolios.50

Similarly, the Federal Acquisition Regulation encourages contracting officers to assess contract types 

periodically, after experience obtained during the performance of a T&M contract provides a basis 

for firmer pricing.

Last year, we reported that the SEC’s use of T&M contracts had increased from about 40 percent 

in FY 2018 to about 53 percent in FY 2022. In response, Agency management stated that the SEC 

continues to closely monitor its use of T&M contracts, exercises rigorous oversight of these types of 

contracts, and has made improvements, including an updated independent government cost estimate 

guide and an automated determination and findings workflow.51

Since last fall, we have initiated an audit to assess the SEC’s controls over T&M contracts 

(including LH contracts) and determine whether those controls ensure compliance with applicable 

laws, regulations, and SEC policies and procedures. Specifically, we will assess (1) the factors OA 

considered when awarding T&M contracts; (2) the measures taken to reduce the SEC’s use of T&M 

contracts when possible and appropriate; and (3) the surveillance of T&M contracts, including 

through use of a Quality Assurance Surveillance Plan, and coordination between contracting 

officers, contracting officer representatives, and program offices. Our audit will include T&M 

contracts awarded during FY 2021 and FY 2022. We anticipate completing this work and reporting 

our results in 2024, at which time we may offer recommendations for improvement. 

ONGOING AND ANTICIPATED OIG WORK

In FY 2024, we will monitor the SEC s contract management and acquisition processes through 

the work of our Acquisitions Working Group. We will also report on any acquisition-related 

matters identified as a result of other ongoing and planned reviews of SEC programs and operations 

and continue to support the SEC s efforts to train contracting officers and contracting officer’s 

representatives about the potential for procurement-related fraud.
Endnotes

1 U.S. Securities and Exchange Commission, 

Strategic Plan Fiscal Years 2022-2026 (Goal 2); 

November 23, 2022.

2 U.S. Securities and Exchange Commission, Office 

of Inspector General, The Inspector General’s 

Statement on the SEC’s Management and 

Performance Challenges; October 13, 2022.

3 The SEC’s rulemaking index for 2022 shows 

a total of 36 rules: the 27 new proposals, plus 

nine other items, including rules that were 

relisted because their comment periods were 

re-opened. Historically, the 36 rules listed on the 

rulemaking index in 2022 is the highest number 

in a single year since 2012. In 2008, during 

the financial crisis, the SEC proposed 36 rules, 

while in 2010 and 2011, it proposed 40 and 51 

rules, respectively many in connection with the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act.

4 https://financialservices.house.gov/calendar/

eventsingle.aspx?EventID=408624

https://appropriations.house.gov/legislation/

hearings/budget-hearing-fiscal-year-2024-requestus-securities-and-exchange-commission 

https://www.appropriations.senate.gov/hearings/

review-of-the-fy-2024-budget-for-the-ussecurities-and-exchange-commission

https://www.banking.senate.gov/

hearings/09/06/2023/oversight-of-the-ussecurities-and-exchange-commission

https://financialservices.house.gov/calendar/

eventsingle.aspx?EventID=408978

5 U.S. Securities and Exchange Commission, Fiscal 

Year 2024 Congressional Budget Justification 

and Annual Performance Plan; Fiscal Year 2022 

Annual Performance Report; March 13, 2023.

6 For FY 2024, the SEC requested an overall 

increase of 170 positions.

7 U.S. Securities and Exchange Commission, 

Strategic Plan Fiscal Years 2022-2026 (Strategic 

Initiative 2.2) November 23, 2022.

8 Financial Stability Oversight Council, Report 

on Digital Asset Financial Stability Risks and 

Regulation; October 3, 2022.

9 U.S. Government Accountability Office, 

BLOCKCHAIN IN FINANCE Legislative 

and Regulatory Actions Are Needed to Ensure 

Comprehensive Oversight of Crypto Assets

(GAO-23-105346; June 22, 2023).

10 As noted by GAO, several lawmakers have 

proposed legislation that would provide 

for federal oversight of spot markets for 

crypto assets and address the prudential risks 

associated with stablecoins. Additionally, in 

July 2023, H.R. 4763, Financial Innovation 

and Technology for the 21st Century Act, was 

introduced and referred to the House Financial 

Services Committee and the House Committee 

on Agriculture to “provide for a system of 

regulation of digital assets by the Commodity 

Futures Trading Commission and the Securities 

and Exchange Commission, and for other 

purposes.” 

11 In response to GAO’s draft report, the SEC 

did not agree with all of the report’s positions 

regarding the crypto asset industry’s risks and 

the applicability of the federal securities laws to 

various aspects of the crypto asset industry. The 

SEC’s response also highlighted existing efforts 

to coordinate, including with other financial 

regulators. 

12 Our review of Division of Enforcement staffing 

included measures to expedite and ensure 

timely completion of investigations, including 

in crypto asset enforcement actions and to 

address the causes of delays. We are awaiting 

documentation that our recommendations have 

been implemented.

13 SEC v. Ripple Labs, Inc., No. 20-10832 

(S.D.N.Y. July 13, 2023) (order granting in part 

and denying in part cross-motions for summary 

judgment); SEC v. Terraform Labs Pte. Ltd., No. 

23-1346 (S.D.N.Y. July 31, 2023) (order denying 

motion to dismiss). 

14 SEC Chair Gary Gensler, “Isaac Newton to AI” 

Remarks before the National Press Club; July 17, 

2023.

15 Investor Advisory Committee letter to SEC 

Chair Gary Gensler, Establishment of an Ethical 

Artificial Intelligence Framework for Investment 

Advisors; April 6, 2023.

16 U.S. Securities and Exchange Commission 

17 C.F.R. Parts 240 and 275 [Release Nos. 

34–97990; IA–6353; File No. S7–12–23] RIN 

3235–AN00; 3235–AN14, Conflicts of Interest 

Associated With the Use of Predictive Data 

Analytics by Broker-Dealers and Investment 

Advisers; SEC Issue Date: July 26, 2023; Federal 

Register Publish Date: August 9, 2023. 
17 U.S. Securities and Exchange Commission, Office 

of Inspector General, Final Management Letter: 

Observations Noted During TCR System Audit 

Support Engagement (May 20, 2015); and U.S. 

Securities and Exchange Commission, Office of 

Inspector General, Final Management Letter: 

Progress on the SEC’s Tips, Complaints, and 

Referrals Intake and Resolution System Redesign 

and Vulnerability Remediation Efforts (May 31, 

2017).

18 U.S. Securities and Exchange Commission, Office 

of Inspector General, The SEC Can Further 

Strengthen the Tips, Complaints, and Referrals 

Program (Report No. 566; February 24, 2021).

19 U.S. Securities and Exchange Commission, Office 

of Inspector General, SEC’s Whistleblower 

Program: Additional Actions Are Needed To 

Better Prepare for Future Program Growth, 

Increase Efficiencies, and Enhance Program 

Management (Report No. 575; December 19, 

2022).

20 Partnership for Public Service, 2022 Best Places 

to Work in the Federal Government. Effective 

management of an entity’s workforce, its human 

capital, is essential to achieving results and an 

important part of internal control. 

21 U.S. Securities and Exchange Commission, 

Strategic Plan Fiscal Years 2022–2026 (Goal 3); 

November 23, 2022. See also U.S. Securities 

and Exchange Commission, Diversity, Equity, 

Inclusion, and Accessibility Strategic Plan Fiscal 

Years 2023–2026; September 18, 2023.

22 U.S. Securities and Exchange Commission, Fiscal 

Year 2024 Congressional Budget Justification 

and Annual Performance Plan; Fiscal Year 2022 

Annual Performance Report; March 13, 2023.

23 Partnership for Public Service, Who is Quitting 

and Retiring: Important Fiscal 2021 Trends 

in the Federal Government (last accessed on 

October 4, 2023).

24 U.S. Government Accountability Office, 

SECURITIES AND EXCHANGE 

COMMISSION Employee Views of Personnel 

Management Improved, but Action Needed 

on Measuring Diversity and Inclusion Goals

(GAO-23-105459; December 22, 2022). 

25 U.S. Securities and Exchange Commission, 

Office of Inspector General, Enforcement 

Investigations: Measures of Timeliness Showed 

Some Improvement But Enforcement Can 

Better Communicate Capabilities for Expediting 

Investigations and Improve Internal Processes

(Report No. 576; February 15, 2023).

26 U.S. Securities and Exchange Commission, Office 

of Inspector General, The SEC Can Improve in 

Several Areas Related to Hiring (Report No. 572; 

February 28, 2022).

27 This data, provided by OHR, includes all hiring 

and loss data except for SEC scholars and 

hardship reassignments.

28 U.S. Securities and Exchange Commission, 

Office of Inspector General, Enforcement 

Investigations: Measures of Timeliness Showed 

Some Improvement But Enforcement Can 

Better Communicate Capabilities for Expediting 

Investigations and Improve Internal Processes

(Report No. 576; February 15, 2023).

29 Some professionals join the SEC with the 

intention of serving for a limited time, in order 

to gain skills that enhance their value to private 

employers. 

30 U.S. Securities and Exchange Commission, Office 

of Inspector General, Final Management Letter: 

Review of Upward Mobility Program (May 1, 

2023). 

31 Section 962 of Dodd-Frank includes a 

provision for GAO to report triennially on the 

SEC’s personnel management, including the 

competence of professional staff; the effectiveness 

of supervisors; and issues related to employee 

performance assessments, promotion, and 

intra-agency communication. See Pub. L. No. 

111-203, 124 Stat. 1376, 1908-1909 (2010) 

(codified at 15 U.S.C. § 78d-7). 

32 U.S. Government Accountability Office, 

SECURITIES AND EXCHANGE 

COMMISSION Employee Views of Personnel 

Management Improved, but Action Needed 

on Measuring Diversity and Inclusion Goals

(GAO-23-105459; December 22, 2022).

33 To view our work related to the agency’s 

pandemic response, see U.S. Securities and 

Exchange Commission, Office of Inspector 

General, The SEC Took Appropriate Workplace 

Safety Actions in Accordance With Pandemic 

Guidance But Could Improve Communications

(Report No. 579; July 25, 2023).

34 U.S. Securities and Exchange Commission, 

Strategic Plan Fiscal Years 2022-2026 (Goal 3); 

November 23, 2022.

35 See, e.g., House Committee on Oversight 

and Accountability, Subcommittee Hearing, 

Oversight of Federal Agencies’ Post-Pandemic 

Telework Policies (September 14, 2023). 
36 Cybersecurity & Infrastructure Security Agency, 

Cybersecurity Advisory, Weak Security Controls 

and Practices Routinely Exploited for Initial 

Access, AA22-137A, December 8, 2022.

37 U.S. Securities and Exchange Commission, Fiscal 

Year 2024 Congressional Budget Justification 

and Annual Performance Plan; Fiscal Year 2022 

Annual Performance Report; March 13, 2023.

38 The SEC was ultimately able to recover all but 

one of the comments affected by the error.

39 U.S. Securities and Exchange Commission, 

Office of Inspector General, Final Management 

Letter: Review of SEC Controls Over Public 

Comments Submitted Online and Actions Taken 

in Response to a Known Error; April 14, 2023.

40 U.S. Securities and Exchange Commission, 

Office of Inspector General, Final Management 

Letter: Readiness Review—The SEC’s Progress 

Toward Implementing Zero Trust Cybersecurity 

Principles; September 27, 2023. 

41 Pub. L. No. 113-283, § 3555, 128 Stat. 3073 

(2014).

42 OMB Office of the Federal Chief Information 

Officer FY22 Core IG Metrics Implementation 

Analysis and Guidelines (last accessed on 

October 4, 2023). 

43 U.S. Securities and Exchange Commission, 

Office of Inspector General, Audit of the SEC’s 

Compliance With the Federal Information 

Security Modernization Act for Fiscal Year 2017

(Report No. 546; March 30, 2018).

44 The categories are established under the North 

American Industry Classification System 

(NAICS), a comprehensive industry classification 

system that covers all economic activities and 

groups establishments into industries based on 

the similarity of their production processes. 

Among other things, U.S. statistical agencies use 

NAICS to provide uniformity and comparability 

in the presentation of statistical data describing 

the U.S. economy. Federal Acquisition 

Regulation 19.102(b) requires contracting 

officers to assign one NAICS code to all 

government solicitations, contracts, and task and 

delivery orders based on the product or service 

being acquired and its principal purpose.

45 U.S. Government Accountability Office, High 

Risk Series: Efforts Made to Achieve Progress 

Need to Be Maintained and Expanded to Fully 

Address All Areas (GAO-23-106203; April 20, 

2023).

46 Office of Management and Budget, 

Memorandum M-22-03, Advancing Equity in 

Federal Procurement; December 2, 2021.

47 Executive Order 13895, Advancing Racial 

Equity and Support for Underserved 

Communities through the Federal Government; 

January 20, 2021. Independent agencies, such as 

the SEC, are strongly encouraged to comply with 

the provisions of this Executive Order.

48 U.S. Securities and Exchange Commission, Office 

of Inspector General, The SEC Supported Federal 

Small Business Contracting Objectives, Yet 

Could Make Better Use of Data and Take Other 

Actions To Further Promote Small Business 

Contracting (Report No. 577; February 28, 

2023).

49 As stated in Federal Acquisition Regulation 

16.602, Labor-hour contracts, LH contracts are 

a variation of T&M contracts and differ only in 

that materials are not supplied by the contractor.

50 U.S. Government Accountability Office, 

FEDERAL CONTRACTING: Opportunities 

Exist to Reduce Use of Time-and-Materials 

Contracts (GAO-22-104806; June 7, 2022). 

GAO included in its review four Department 

of Defense agencies and field activities (the Air 

Force, Army, Defense Finance and Accounting 

Service, and Washington Headquarters Services), 

and three civilian agencies (the Social Security 

Administration, the Department of Homeland 

Security, and the Department of State).

51 U.S. Securities and Exchange Commission, Fiscal 

Year 2022 Agency Financial Report (November 

15, 2022). 
156 | 2023 SEC AGENCY FINANCIAL REPORT

MANAGEMENT’S RESPONSE TO INSPECTOR 

GENERAL’S STATEMENT

November 1, 2023

Ms. Deborah J. Jeffrey 

Inspector General

U.S. Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Dear Ms. Jeffrey:

Thank you for your “Statement on the SEC’s Management and Performance 

Challenges,” (Statement) dated October 25, 2023. We remain committed to enhancing the 

financial and operational effectiveness of the SEC. We value the Office of Inspector 

General’s (OIG) important role in this effort, including through its audits and evaluations.

OIG identified four areas where the SEC faces management and performance challenges 

as we work to fulfill our mission. We continue to build on our progress thus far in these areas, 

and OIG’s suggestions will help inform our decision-making. 

In the enclosed “SEC Management Response” section, we describe some specific actions 

we are taking in the areas OIG highlighted. I believe this information helps to demonstrate our 

commitment to improve our agency’s performance and address areas that OIG identified. 

We look forward to working with you to enhance our ability to serve the investing and 

issuing public.

Sincerely,

Gary Gensler

Chair

Enclosure
OTHER INFORMATION | 157

RESPONSES TO IDENTIFIED CHALLENGES

OIG Challenge 1 – Meeting Regulatory 

and Oversight Responsibilities 

The SEC regulates and oversees the more than $100 

trillion capital markets, more than 30,000 registered 

entities, ten credit rating agencies, 24 national securities 

exchanges, the Public Company Accounting Oversight 

Board, the Financial Industry Regulatory Authority, 

the Securities Investor Protection Corporation, and the 

Financial Accounting Standards Board. We also review 

the disclosures and financial statements of more than 

8,700 reporting companies and engage and interact 

with the investing public daily through activities ranging 

from investor education programs to events to alerts on 

SEC.gov. The execution of our mission would not be 

possible without the dedication of our remarkable staff. 

Our staff continue to produce extraordinary work even 

while operating with limited resources. We continue to 

recognize this challenge and are taking steps to address 

it, such as critical investments in information technology, 

data architecture and standards, and key modernizing 

initiatives, to further improve our ability to meet our 

mission and strategic goals efficiently and effectively. 

As an agency, we remain dedicated to our critical 

regulatory responsibilities while remaining abreast of 

the everchanging and dynamic financial markets. As 

your Statement notes, the SEC has taken proactive 

steps to fulfill directives from Congress, including rules 

required by the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 and the Holding 

Foreign Companies Accountable Act. In addition, 

the SEC recognizes the rapid growth in crypto assets 

and use of artificial intelligence (AI) and the risks 

each poses to investors and the financial system. In 

2024, the SEC’s Division of Examinations (EXAMS) 

will continue to focus on broker-dealers and advisers 

offering new products and services or employing new 

practices, particularly technological and online solutions 

that service online accounts. The SEC remains focused 

on certain services, including automated investment 

tools, AI, and trading algorithms or platforms, and the 

risks associated with the use of emerging technologies 

and alternative sources of data. The SEC will also 

continue to monitor and, when appropriate, conduct 

examinations of registrants focused on the offer, sale, 

recommendation of, advice regarding, trading in, and 

other activities in crypto assets or related products. 

The SEC also continues to take proactive steps to 

protect investors and market integrity, including by 

policing in the area of crypto asset securities. During 

FY 2023, we brought important enforcement actions 

to hold wrongdoers accountable in the crypto asset 

space, charging violations including fraud, touting, 

unregistered offers and sales of securities, and operating 

as unregistered exchanges, among other charges.

The SEC will continue to leverage technology and 

analytics to focus its limited resources on meeting its 

mission. EXAMS continues to leverage technology 

to collect and analyze large sets of data to help 

identify risks. This data analysis helps EXAMS 

identify examination candidates and monitor and 

identify potentially problematic activities, as well as 

determine how best to scope examinations of those 

activities and firms. In addition, and as the Statement 

notes, the Division of Enforcement’s (ENF) Office 

of Market Intelligence uses data analytics to vet the 

tips, complaints, and referrals (TCRs) it receives 
158 | 2023 SEC AGENCY FINANCIAL REPORT

and to prioritize those that have merit. These efforts 

have improved our ability to effectively manage the 

increasing number of TCRs. In 2022, TCRs increased 

by more than 10,000 to 35,897. We anticipate even 

greater processing capabilities with the launch of the 

modernized TCR system in the late spring or early 

summer of 2024. Similarly, as the Statement notes, 

ENF has modernized its system for processing and 

tracking whistleblower tips and has improved claims 

processing and tracking to address the steady growth 

of these critical tips.

OIG Challenge 2 – Recruiting and 

Retaining a Skilled Workforce

Effective management of the agency’s human capital 

is a top SEC priority, as reflected in one of our strategic goals. We are committed to supporting a skilled 

workforce that is diverse, equitable, inclusive, and fully 

equipped to advance our mission. A range of areas 

impact our human resources management program, 

including hiring, turnover, recruitment, and telework. In 

the area of recruitment and hiring, the SEC successfully 

met the challenge of hiring for hundreds of new positions 

authorized by Congress in FY 2023. During the fiscal 

year, the agency filled a total of 845 positions (including 

both new positions and backfills for staff who departed 

the agency). As a result, the agency achieved the largest 

net increase in its staffing levels in many years.

In the area of attrition, the agency continues to carefully 

monitor its annual turnover rate, which in FY 2023 

dropped by 1.6 percent to a level of 4.7 percent—

significantly below the most recent comparative 

government-wide data. We are also monitoring other 

data sources, such as Federal Employee Viewpoint 

Survey results, which can help provide insights into 

key drivers of retention and engagement. Other 

significant factors impacting recruitment and retention 

and the agency’s ability to compete with private sector 

compensation include access to telework, work-life 

balance, and pay and benefits. We continue to attend 

to these areas to help ensure we maintain our ranking 

as one of the best places to work in the federal 

government and offer a valuable employment 

opportunity for both current employees and those 

who might join us in the future.

OIG Challenge 3 – Protecting Systems 

and Data

Protecting information systems and data from more 

frequent and constantly evolving cyberattacks on both 

the SEC and the federal government remains a top 

priority for the agency.

In FY 2023, the SEC made significant progress in 

addressing and mitigating cybersecurity risks. The 

agency successfully completed remediation efforts 

to close a total of 25 technology-related audit 

recommendations from the OIG and the Government 

Accountability Office. The Office of Information 

Technology (OIT) also made improvements to security 

monitoring and logging to support ongoing efforts 

to comply with OMB M-21-31, Improving the 

Federal Government’s Investigative and Remediation 

Capabilities Related to Cybersecurity Incidents, and 

deployed tools and techniques for enhancing application 

security, vulnerability scanning, and asset inventory. 

As noted by the OIG, the SEC also made significant 

progress in meeting OMB requirements related to 

establishing a zero trust architecture. In the year ahead, 

OIT will continue pursuing zero trust architecture 

initiatives in accordance with OMB M-22-09, Moving 

the U.S. Government Toward Zero Trust Cybersecurity 

Principles, and post-quantum cryptography preparatory 

steps in accordance with OMB M-23-02, Migrating to 

Post-Quantum Cryptography.
OTHER INFORMATION | 159

OIG Challenge 4 – Synopsis and Trends 

in Contracting

In FY 2023, the SEC completed several steps to 

strengthen its contract management. These include 

conducting multiple training sessions throughout the 

year on various contracting-related topics for SEC 

Contracting Officers, Contracting Officer’s Representatives, and other members of the acquisition workforce; 

implementing new Acquisition Plan and Market 

Research Report templates to improve the support for 

contract sourcing decisions; and implementing a new 

Electronic Subcontract Reporting System (eSRS) process 

to promote timely processing of reports and reduce 

the eSRS backlog to zero. The SEC has committed 

to maximizing small business participation in agency 

contracting and to advancing diversity and inclusion 

in its supplier base. The SEC continues to conduct 

monthly Vendor Outreach Day (VOD) sessions, where 

companies can meet with SEC representatives to present 

corporate capabilities and discuss potential business 

opportunities. In FY 2023, the SEC met with 35 companies through VOD sessions, 24 of which self-reported 

as small and/or minority-owned or women-owned 

businesses. The SEC also worked to ensure SEC contractors demonstrate good faith efforts toward the fair 

inclusion of minorities and women in their workforces 

for SEC services contracts valued at $100,000 or more. 

As further evidence of this commitment toward small 

and diverse business in agency contracting, the SEC is 

pleased to note that, for the 11th consecutive fiscal year, 

the agency exceeded all government-wide small business 

prime contracting goals.

Among the steps the SEC has taken to mitigate risks 

associated with time and materials contracts, the 

agency uses third-party compliance reviews of SEC 

contract actions to evaluate the completeness of contract 

documentation, among other objectives. The SEC also 

has increased the use of automated filing and tracking of 

contract deliverables to support contract management 

surveillance. We look forward to receiving the OIG’s 

findings and recommendations from its audit of the 

SEC’s policies and practices in this important area.
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OTHER INFORMATION | 161

SUMMARY OF FINANCIAL STATEMENT AUDIT 

AND MANAGEMENT ASSURANCES

Table 1.7 | Summary of Financial Statement Audit

Audit Opinion: Unmodified

Restatement: No

Material Weaknesses

Beginning

Balance New Resolved Consolidated

Ending

Balance

Total Material Weaknesses — — — — —

Table 1.8 | Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weaknesses

Beginning

Balance New Resolved Consolidated Reassessed

Ending

Balance

Total Material Weaknesses — — — — — —

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weaknesses

Beginning

Balance New Resolved Consolidated Reassessed

Ending

Balance

Total Material Weaknesses — — — — — —

Conformance with Financial Management System Requirements (FMFIA § 4)

Statement of Assurance: Federal Systems Conform

Non-Conformances

Beginning

Balance New Resolved Consolidated Reassessed

Ending

Balance

Total Non-Conformances — — — — — —

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. Federal Financial Management System Requirements No lack of substantial 

compliance noted

No lack of substantial 

compliance noted

2. Applicable Federal Accounting Standards No lack of substantial 

compliance noted

No lack of substantial 

compliance noted

3. USSGL at Transaction Level No lack of substantial 

compliance noted

No lack of substantial 

compliance noted
162 | 2023 SEC AGENCY FINANCIAL REPORT

PAYMENT INTEGRITY REPORTING DETAILS

The Payment Integrity Information Act of 2019 

(PIIA) updated government-wide improper payment 

reporting requirements by repealing and replacing the 

Improper Payments Information Act of 2002 (IPIA), 

the Improper Payments Elimination and Recovery Act 

of 2010 (IPERA), the Improper Payments Elimination 

and Recovery Improvement Act of 2012 (IPERIA), and 

the Fraud Reduction and Data Analytics Act of 2015 

(FRDAA). 

PIIA requires agencies to review all programs and 

activities they administer to identify those that may 

be susceptible to significant erroneous payments. For 

all programs and activities in which the risk of erroneous payments is significant, agencies are to estimate 

the annual amount of erroneous payments made in 

those programs. 

Guidance provided by the Office of Management and 

Budget (OMB) in Circular A-136, Financial Reporting 

Requirements, and Appendix C of Circular A-123,

Requirements for Payment Integrity Improvement, 

requires agencies to report specific details about the 

SEC’s Improper Payments Elimination Program, which 

are below. Additionally, the following link further 

explains improper payments and the information 

reported in previous AFRs that is not included in the 

FY 2023 AFR: paymentaccuracy.gov/.

Risk Assessment

PIIA guidelines state that if an agency deems a program 

to be low risk for improper payments, the agency 

will re-assess that program’s risk at least every three 

years. An agency is only required to conduct a formal 

risk assessment earlier than three years if the program 

experiences a significant change in legislation, a significant increase in funding level, or a determination of 

possible significant improper payments in the following 

year. The SEC conducted its latest risk assessment in 

FY 2022. The SEC’s determination that all of its 

evaluated programs are low risk is based upon the 

results of this assessment, in which none of its programs 

and activities were deemed susceptible to significant 

improper payments at or above the threshold levels set 

by OMB. These programs have historically had low 

volumes and risks of improper payments given the 

controls and processes in place. The SEC recognizes the 

importance of maintaining adequate internal controls to 

ensure the accuracy and integrity of payments made by 

the agency, and the SEC maintains a strong commitment 

to continuous improvement in the overall disbursement 

management process.

To perform its risk assessment, the SEC used a 

systematic method of reviewing each program and 

activity by considering risk factors likely to contribute 

to significant improper payments. The risk assessment 

encompassed a review of existing data that included 

the Government Accountability Office and the SEC 

Office of Inspector General audit reports, prior internal 

controls over financial reporting assessments, and the 

results of improper payments testing performed in prior 

years. These risk assessments were performed for the 

following programs:

• Vendor payments;

• Disgorgement and penalty distributions (made by 

the SEC to fund tax administrators and directly to 

harmed investors);

• Returned deposits of registration filing fees under 

Section 6(b) of the Securities Act of 1933 and Sections 

13 and 14 of the Securities Exchange Act of 1934;

• Payroll and benefit payments (includes base pay, 

overtime pay, and agency contributions to retirement 

plans, health plans, and thrift savings plans);

• Supplemental retirement payments;

• Purchase Card payments;

• Travel payments; and

• Whistleblower payments.
OTHER INFORMATION | 163

Recapture of Improper Payments

The SEC determined that implementing a payment 

recapture audit is not cost-effective and notified OMB 

of this determination in September 2015. The benefits 

of recaptured amounts associated with implementing 

and overseeing the program do not exceed the costs— 

including staff time and payments to contractors—of 

a payment recapture audit program. In making this 

determination, the SEC considered its low improper 

payment rate based on testing conducted over several 

years. The SEC also considered whether sophisticated 

software and other cost-efficient techniques could be 

used to identify significant overpayments at a low cost 

per overpayment, or if labor intensive manual reviews 

of paper documentation would be required. In addition, 

the SEC considered the availability of tools to efficiently 

perform the payment recapture audit and minimize 

payment recapture audit costs.

The SEC will continue to monitor its improper 

payments across all programs and activities it administers and assess whether implementing payment 

recapture audits for each program is cost-effective. If the 

SEC determines, through future risk assessments, that a 

program is susceptible to significant improper payments 

and implementing a payment recapture program may be 

cost-beneficial, the SEC will implement a pilot payment 

recapture audit to gauge whether such audits would be 

cost-effective on a larger scale.
164 | 2023 SEC AGENCY FINANCIAL REPORT

CIVIL MONETARY PENALTY ADJUSTMENT 

FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act 

of 1990 (FCPIA), 28 U.S.C. 2461 note, as amended 

by the Debt Collection Improvement Act of 1996, and 

the Federal Civil Penalties Inflation Adjustment Act 

Improvements Act of 2015 (2015 Act), requires agencies 

to annually adjust for inflation any civil monetary 

penalties that are assessed or enforced by that agency. 

This adjustment must be performed for any penalty 

where either the amount of the penalty or the maximum 

penalty is set by law. The 2015 Act replaces the 

inflation adjustment mechanism previously contained 

in the FCPIA and all previous inflation adjustments 

made pursuant to the FCPIA with a new mechanism 

for calculating the inflation-adjusted amount of civil 

monetary penalties. The 2015 Act implemented this 

change by first requiring that each agency perform a 

“catch-up adjustment” to be published by July 1, 2016. 

Thereafter, agencies are to adjust their penalty amounts 

every January, starting in January 2017.

The FCPIA also directs the Commission to include in 

its Agency Financial Report information about the civil 

monetary penalties within the jurisdiction of the agency, 

including the adjustment of civil monetary penalties 

for inflation under the FCPIA. Further, the FCPIA 

directs the Comptroller General of the United States to 

annually submit to Congress a report assessing agencies’ 

compliance with the inflation adjustments required by 

the FCPIA. 

The SEC administers four statutes that provide for civil 

monetary penalties: 

• The Securities Act of 1933;

• The Securities Exchange Act of 1934; 

• The Investment Company Act of 1940; and 

• The Investment Advisers Act of 1940. 

In addition, the Sarbanes-Oxley Act of 2002 provides 

the Public Company Accounting Oversight Board 

(PCAOB) authority to levy civil monetary penalties in 

its disciplinary proceedings. These penalties are established by federal law and are enforced by the Commission for purposes of the FCPIA because the Commission 

may by order affirm, modify, remand, or set aside civil 

monetary penalties imposed by the PCAOB and may 

enforce the PCAOB’s civil monetary penalty orders in 

federal district court. 

The Commission will adjust for inflation the maximum 

penalty amounts provided in these statutes as required 

by the FCPIA and will publish these adjustments in the 

Federal Register. The catch-up adjustment in July 2016 

was published in the Federal Register, Volume 81, 

No. 127, on July 1, 2016 (81 FR 43042). Annual 

adjustments have been performed for:

• 2017 (Federal Register, Volume 82, No. 11, 

on January 18, 2017 (82 FR 5367)); 

• 2018 (Federal Register, Volume 83, No. 8, 

on January 11, 2018 (83 FR 1396)); 

• 2019 (Federal Register, Volume 84, No. 34, 

on February 20, 2019 (84 FR 5122));

1

• 2020 (Federal Register, Volume 85, No. 8, 

on January 13, 2020 (85 FR 1833)); 

• 2021 (Federal Register, Volume 86, No. 8, 

on January 13, 2021 (86 FR 2716)); 

• 2022 (Federal Register, Volume 87, No. 8, 

on January 12, 2022 (87 FR 1808)); and 

• 2023 (Federal Register, Volume 88, No. 7, 

on January 11, 2023 (88 FR 1614)).

1 This adjustment was performed in February 2019 instead of January 2019 due to a lapse in appropriations that caused the SEC’s normal operations to be 

suspended from December 27, 2018, through January 25, 2019.
APPENDICES | 165

APPENDICES

Appendix A: Chair and Commissioner Biographies

Appendix B: Divisions and Offices 

Appendix C: Glossary of Selected Terms

Appendix D: Acronyms and Abbreviations
Every day that I’m blessed to 

serve at the SEC, I’m going to 

be animated by thinking about 

working families: How can we 

help them invest for their future 

and prepare for the inevitable 

bumps along the way? How can 

those same working families, 

when taking out a mortgage or 

a car loan, indirectly tap into the 

capital markets? How can the 

markets help companies innovate, 

hire folks into good jobs, and 

contribute to economic growth?

CHAIR GARY GENSLER

“

“
APPENDICES | 167

APPENDIX A: CHAIR AND 

COMMISSIONER BIOGRAPHIES

Gary Gensler, CHAIR

Gary Gensler was nominated by President Joseph 

R. Biden to serve as Chair of the U.S. Securities and 

Exchange Commission on February 3, 2021, confirmed 

by the U.S. Senate on April 14, 2021, and sworn into 

office on April 17, 2021.

Before joining the SEC, Gensler was professor of the 

Practice of Global Economics and Management at the 

MIT Sloan School of Management, co-director of MIT’s 

Fintech@CSAIL, and senior advisor to the MIT Media 

Lab Digital Currency Initiative. From 2017–2019, he 

served as chair of the Maryland Financial Consumer 

Protection Commission.

Gensler was formerly chair of the U.S. Commodity 

Futures Trading Commission, leading the Obama 

Administration’s reform of the $400 trillion swaps 

market. He also was senior advisor to U.S. Senator 

Paul Sarbanes in writing the Sarbanes-Oxley Act (2002), 

and was undersecretary of the Treasury for Domestic 

Finance and assistant secretary of the Treasury from 

1997–2001.

In recognition for his service, he was awarded the 

Alexander Hamilton Award, the U.S. Treasury’s 

highest honor. He is a recipient of the 2014 Frankel 

Fiduciary Prize.

Prior to his public service, Gensler worked at Goldman 

Sachs, where he became a partner in the Mergers & 

Acquisition department, headed the firm’s Media 

Group, led fixed income & currency trading in Asia, 

and was co-head of Finance, responsible for the firm’s 

worldwide Controllers and Treasury efforts.

A native of Baltimore, Md., Gensler earned his 

undergraduate degree in economics in 1978 and 

his MBA from The Wharton School, University of 

Pennsylvania, in 1979. He has three daughters.
168 | 2023 SEC AGENCY FINANCIAL REPORT

Hester M. Peirce, COMMISSIONER

Hester M. Peirce was appointed by President Donald J. 

Trump to the U.S. Securities and Exchange Commission 

and was sworn in on January 11, 2018.

Prior to joining the SEC, Commissioner Peirce 

conducted research on the regulation of financial 

markets at the Mercatus Center at George Mason 

University. She was a Senior Counsel on the U.S. Senate 

Committee on Banking, Housing, and Urban Affairs, 

where she advised Ranking Member Richard Shelby 

and other members of the Committee on securities 

issues. Commissioner Peirce served as counsel to SEC 

Commissioner Paul S. Atkins. She also worked as a 

Staff Attorney in the SEC’s Division of Investment 

Management. Commissioner Peirce was an associate 

at Wilmer, Cutler & Pickering (now WilmerHale) and 

clerked for Judge Roger Andewelt on the Court of 

Federal Claims.

Commissioner Peirce earned her bachelor’s degree in 

Economics from Case Western Reserve University and 

her JD from Yale Law School.
APPENDICES | 169

Caroline A. Crenshaw, COMMISSIONER

Caroline A. Crenshaw was unanimously confirmed by 

the U.S. Senate, and sworn into office as Commissioner 

of the U.S. Securities and Exchange Commission on 

August 17, 2020.

Commissioner Crenshaw brings to the SEC a range of 

securities law and policy experience and a commitment 

to public service and the SEC’s mission. In addition to 

serving as a career SEC staff attorney in the Division 

of Examinations (formerly the Office of Compliance 

Inspections and Examinations) and the Division of 

Investment Management, Commissioner Crenshaw 

served as Counsel to Commissioners Kara Stein and 

Robert Jackson, focusing on strengthening investor 

protections in our increasingly complex markets and 

helping to oversee the institutions that manage millions 

of Americans’ savings. In addition, Commissioner 

Crenshaw currently serves as a captain in the United 

States Army Reserve, Judge Advocate General’s Corps.

Prior to government service, Commissioner Crenshaw 

practiced law in the Washington, DC, office of 

Sutherland, Asbill and Brennan LLP. At Sutherland 

she represented public companies, broker-dealers, 

and investment advisers on complex securities law 

investigations and enforcement matters.

Commissioner Crenshaw graduated cum laude from 

Harvard College and received a law degree magna cum 

laude from the University of Minnesota.
170 | 2023 SEC AGENCY FINANCIAL REPORT

Mark T. Uyeda, COMMISSIONER

Mark T. Uyeda was sworn into office on June 30, 

2022, after being nominated by President Joseph 

Biden and confirmed by the U.S. Senate.

Commissioner Uyeda has served on the staff of the 

SEC since 2006, including as Senior Advisor to 

Chairman Jay Clayton, Senior Advisor to Acting 

Chairman Michael S. Piwowar, Counsel to 

Commissioner Paul S. Atkins, and various staff 

positions in the Division of Investment Management. 

He most recently served on detail from the SEC to the 

Senate Committee on Banking, Housing, and Urban 

Affairs as a securities counsel to the committee’s 

minority staff.

Prior to joining the SEC, Commissioner Uyeda served 

as Chief Advisor to the California Corporations 

Commissioner, the state’s securities regulator. He also 

worked as an attorney at the law firms of K&L Gates 

(formerly known as Kirkpatrick & Lockhart LLP) in 

Washington, DC, and O’Melveny & Myers LLP in 

Los Angeles.

Commissioner Uyeda earned his bachelor’s degree 

in business administration at Georgetown University 

and his law degree with honors at the Duke University 

School of Law.

He is the first Asian Pacific American to serve as a 

Commissioner at the SEC.
APPENDICES | 171

Jaime Lizárraga was sworn into office on July 18, 2022. 

He was nominated by President Joe Biden and unanimously confirmed by the U.S. Senate.

Commissioner Lizárraga most recently served as Senior 

Adviser to House Speaker Nancy Pelosi. In that role, 

he oversaw issues related to financial markets, small 

business, housing, international finance, and immigration. He also served as Speaker Pelosi's liaison to the 

Congressional Hispanic Caucus.

Throughout his 32-year career in public service, 

Commissioner Lizárraga has advised Congressional 

leaders and heads of executive agencies on policy 

and legislative strategy. He previously served on the 

Democratic staff of the House Financial Services 

Committee and as a presidential appointee at the 

U.S. Department of the Treasury and the U.S. 

Securities and Exchange Commission.

Commissioner Lizárraga earned his bachelor’s degree 

with high honors from the University of California 

San Diego and earned a master's degree from the 

Lyndon B. Johnson School of Public Affairs at the 

University of Texas.

Jaime Lizarraga, COMMISSIONER
172 | 2023 SEC AGENCY FINANCIAL REPORT

Headquarters

DIVISION OF CORPORATION FINANCE

Erik Gerding, Director

DIVISION OF ECONOMIC AND RISK ANALYSIS

Jessica Wachter, Director/Chief Economist

DIVISION OF ENFORCEMENT

Gurbir S. Grewal, Director

DIVISION OF EXAMINATIONS

Richard Best, Director

DIVISION OF INVESTMENT MANAGEMENT

William A. Birdthistle, Director

DIVISION OF TRADING AND MARKETS

Haoxiang Zhu, Director 

EDGAR BUSINESS OFFICE

Jed Hickman, Director

OFFICE OF ACQUISITIONS

Vance Cathell, Director 

OFFICE OF ADMINISTRATIVE LAW JUDGES

Vacant, Chief Administrative Law Judge

OFFICE OF THE ADVOCATE FOR 

SMALL BUSINESS CAPITAL FORMATION

Vacant, Director 

OFFICE OF THE CHIEF ACCOUNTANT

Paul Munter, Chief Accountant

OFFICE OF THE CHIEF OPERATING OFFICER

Kenneth A. Johnson, Chief Operating Officer

OFFICE OF CREDIT RATINGS

Lori H. Price, Director

OFFICE OF EQUAL EMPLOYMENT OPPORTUNITY

Rita Sampson, Director

OFFICE OF THE ETHICS COUNSEL

Danae Serrano, Director/Designated Agency 

Ethics Official

OFFICE OF FINANCIAL MANAGEMENT

Caryn Kauffman, Director/Chief Financial Officer 

OFFICE OF THE GENERAL COUNSEL

Megan Barbero, General Counsel 

OFFICE OF HUMAN RESOURCES

Mark Reinhold, Director/Chief Human Capital Officer 

OFFICE OF INFORMATION TECHNOLOGY

David Bottom, Chief Information Officer

OFFICE OF INSPECTOR GENERAL

Deborah J. Jeffrey, Inspector General 

OFFICE OF INTERNATIONAL AFFAIRS

YJ Fischer, Director

OFFICE OF THE INVESTOR ADVOCATE

Cristina Martin Firvida, Director 

OFFICE OF INVESTOR EDUCATION 

AND ADVOCACY

Lori Schock, Director

OFFICE OF LEGISLATIVE AND 

INTERGOVERNMENTAL AFFAIRS 

Kevin Burris, Director

OFFICE OF MINORITY AND WOMEN INCLUSION 

Allison Wise, Acting Director 

OFFICE OF MUNICIPAL SECURITIES

Dave A. Sanchez, Director 

OFFICE OF PUBLIC AFFAIRS

Scott Schneider, Director 

APPENDIX B: DIVISIONS AND OFFICES
APPENDICES | 173

OFFICE OF THE SECRETARY

Vanessa Countryman, Secretary 

OFFICE OF SUPPORT OPERATIONS

Olivier Girod, Director/Chief FOIA Officer

STRATEGIC HUB FOR INNOVATION 

AND FINANCIAL TECHNOLOGY

Valerie A. Szczepanik, Director

Regional Offices

ATLANTA REGIONAL OFFICE

Nekia Hackworth Jones, Regional Director 

950 East Paces Ferry Road NE, Suite 900

Atlanta, GA 30326

email: atlanta@sec.gov

BOSTON REGIONAL OFFICE

Silvestre A. Fontes, Regional Director

33 Arch Street, 24th Floor

Boston, MA 02110

email: boston@sec.gov

CHICAGO REGIONAL OFFICE

Daniel Gregus, Regional Director

175 W. Jackson Boulevard, Suite 1450

Chicago, IL 60604

email: chicago@sec.gov

DENVER REGIONAL OFFICE

Jason Burt, Regional Director

1961 Stout Street, Suite 1700 

Denver, CO 80294

email: denver@sec.gov

FORT WORTH REGIONAL OFFICE

Eric R. Werner, Regional Director

801 Cherry Street, Suite 1900, Unit 18 

Fort Worth, TX 76102 

email: dfw@sec.gov

LOS ANGELES REGIONAL OFFICE

Vacant, Regional Director 

444 South Flower Street, Suite 900 

Los Angeles, CA 90071

email: losangeles@sec.gov

MIAMI REGIONAL OFFICE

Eric I. Bustillo, Regional Director 

801 Brickell Avenue, Suite 1950

Miami, FL 33131

email: miami@sec.gov

NEW YORK REGIONAL OFFICE

Antonia M. Apps, Regional Director 

100 Pearl Street, Suite 20-100

New York, NY 10004

email: newyork@sec.gov

PHILADELPHIA REGIONAL OFFICE

Nicholas P. Grippo, Regional Director

One Penn Center

1617 John F. Kennedy Boulevard, Suite 520

Philadelphia, PA 19103

email: philadelphia@sec.gov

SALT LAKE REGIONAL OFFICE

Tracy S. Combs, Regional Director 

351 S. West Temple Street, Suite 6.100

Salt Lake City, UT 84101

email: saltlake@sec.gov

SAN FRANCISCO REGIONAL OFFICE

Monique Winkler, Regional Director

44 Montgomery Street, Suite 2800 

San Francisco, CA 94104

email: sanfrancisco@sec.gov
174 | 2023 SEC AGENCY FINANCIAL REPORT

APPENDIX C: GLOSSARY OF SELECTED TERMS 

Accountability of Tax Dollars Act of 2002

A federal law requiring most federal agencies that are 

not subject to the Chief Financial Officers Act of 1990 

to prepare annual audited financial statements.

Agency Financial Report (AFR)

An annual report that provides financial and high-level 

performance results that enable the President, Congress, 

and the public to assess an agency’s accomplishments 

each fiscal year (October 1 through September 30). The 

report is prepared in accordance with the requirements 

of Office of Management and Budget Circular A-136, 

Financial Reporting Requirements. 

Alternative Trading System (ATS) 

Any organization, association, person, group of persons, 

or system that constitutes, maintains, or provides a 

market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing, 

with respect to securities, the functions commonly 

performed by a stock exchange. An ATS does not 

set rules governing the conduct of subscribers other 

than the conduct of such subscribers’ trading on such 

organization, association, person, group of persons, or 

system, or discipline subscribers other than by exclusion 

from trading.

Annual Performance Report (APR)

Outlines the goals and intended outcomes of an agency’s 

programs and initiatives.

Appropriations

Budget authority to incur obligations and to make 

payments from the Treasury for specified purposes. 

Asset

A resource that embodies economic benefits or services 

that the reporting entity controls.

Best Execution Standard

While not used or defined in the Exchange Act or 

Commission rules, the Commission proposed a best 

execution standard on December 14, 2022, which 

states: “In any transaction for or with a customer, 

or a customer of another broker, dealer, government 

securities broker, government securities dealer, or 

municipal securities dealer (collectively, for purposes of 

Regulation Best Execution, ‘broker or dealer’), a broker 

or dealer, or a natural person who is an associated 

person of a broker or dealer, shall use reasonable 

diligence to ascertain the best market for the security, 

and buy or sell in such market so that the resultant 

price to the customer is as favorable as possible under 

prevailing market conditions (for purposes of Regulation 

Best Execution, ‘most favorable price’).”

Bitcoin

A digital asset created in January 2009 and based on a 

white paper called, “Bitcoin: A Peer-to-Peer Electronic 

Cash System,” attributed to a person or persons using 

the name “Satoshi Nakamoto.”

Blockchain

A type of distributed ledger, or peer-to-peer database 

spread across a network, that records all transactions 

in the network in theoretically unchangeable, digitally 

recorded data packages called blocks. Each block 

contains a batch of records of transactions, including 

a timestamp and a reference to the previous block, 

linking the blocks together in a chain. The system relies 

on cryptographic techniques for secure recording of 

transactions. A blockchain can be shared and accessed 

by anyone with appropriate permissions. 
APPENDICES | 175

Broker-Dealer

A broker is any person engaged in the business of 

effecting transactions in securities for the account of 

others. A dealer is any person engaged in the business 

of buying and selling securities for his or her own 

account, through a broker or otherwise. 

Chief Financial Officers Act of 1990

Legislation focused on improving the government’s 

financial management, performance, and disclosure. 

Clawback

The recovery of compensation. In the case of a clawback under Exchange Act Rule 10D-1 and the related 

exchange listing standards, compensation is recoverable 

if it was erroneously awarded due to being originally 

calculated based on a financial reporting measure that 

was subject to a subsequent restatement.

Clearing Agencies

Clearing agencies that are registered with the 

Commission are self-regulatory organizations that 

typically come in two types: central counterparties 

and securities depositories. Central counterparties

compare member transactions (or report to members the 

results of exchange comparison operations); clear those 

trades and prepare instructions for automated settlement 

of those trades; and often act as intermediaries in 

making those settlements. Securities depositories hold 

securities certificates in bulk form for their participants, 

maintain ownership records of the securities on their 

own books, and may otherwise permit or facilitate the 

settlement of securities without physical delivery of 

securities certificates.

Climate and Sustainability Oversight 

Committee (CSOC)

An oversight body that monitors and provides recommendations to management on the SEC’s operational 

responses to climate-related risks and opportunities. 

Collective Bargaining Agreement

An agreement negotiated between an employer and a 

union to come to an agreement over employment terms.

Commodity Futures Trading Commission

An independent government agency that regulates the 

U.S. derivatives markets, which includes futures, swaps, 

and certain kinds of options.

Consolidated Audit Trail (CAT)

A single, comprehensive database of orders to trade 

in the National Market System securities and overthe-counter equities that enables regulators to more 

efficiently and thoroughly track all trading activity 

in the U.S. equity and options markets.

Contingent Liability

A liability that may occur depending on the outcome 

of an uncertain future event. Contingent liabilities is 

recorded if the contingency is likely and the amount of 

the liability can be reasonably estimated.

Continuous Diagnostic and Mitigation 

Dashboard Program

A Congressionally established program to provide 

adequate, risk-based, and cost-effective cybersecurity 

assessments and more efficiently allocate cybersecurity 

resources targeted at federal civilian organizations.
176 | 2023 SEC AGENCY FINANCIAL REPORT

Crypto Asset

A digital asset that is issued and/or transferred using 

distributed ledger or blockchain technology, including, 

but not limited to, so-called “virtual currencies,” 

“cryptocurrencies,” “coins,” and “tokens.” A crypto 

asset may or may not meet the definition of a “security” 

under the federal securities laws.

Crypto Asset Intermediaries

Persons and entities that conduct a wide range 

of activities relating to crypto assets for market 

participants, including but not limited to, admission 

to trading, trading (as agent or principal), operating a 

market, custody, and other activities such as services 

related to lending/staking of crypto assets and the 

promotion, marketing, and distribution of crypto 

assets on behalf of others. This includes persons and 

entities that conduct activities commonly conducted 

by registered exchanges, brokers, dealers, investment 

advisers, and clearing agencies, among others, in the 

securities markets. 

Cryptocurrency 

A term used by some to describe a digital asset that 

relies on cryptography and that purports to act as a 

substitute for real currency in certain distributed ledger 

technology ecosystems. However, a so-called cryptocurrency does not necessarily have any or all of the three 

economic functions associated with money, namely a 

medium of exchange, a store of value, and a unit of 

account, and does not have all the attributes of “real” 

currency, as defined in 31 C.F.R. Section 1010.100(m), 

including legal tender status.

Custodial Activity

Revenue that is collected, and its disposition, by a 

federal agency on behalf of other entities is accounted 

for as a custodial activity of the collecting entity. 

SEC custodial collections include amounts collected 

from violators of securities laws as a result of enforcement proceedings. 

Cybersecurity

The steps taken to prevent illegal or unauthorized access 

to a computer system or network.

Cybersecurity and Information Security 

Agency (CISA)

An agency within the Department of Homeland 

Security, CISA conducts and maintains cybersecurity 

and critical infrastructure security programs, operations, 

and associated policy, including national cybersecurity 

asset response activities. CISA coordinates with federal 

entities to carry out CISA’s cybersecurity and critical 

infrastructure activities. 

Data Privacy Week

A campaign sponsored by the Office of Information 

Technology to bring awareness to online privacy, which 

includes reviewing online safety and requirements for 

safeguarding information.

Data Quality Plan (DQP)

Required to be developed and maintained by agencies 

subject to DATA Act reporting that considers the 

incremental risks to data quality in federal spending 

data and any controls that would manage such risks 

in accordance with OMB Circular A-123.
APPENDICES | 177

Decentralized Finance (DeFi) 

Financial products, services, arrangements and activities 

for crypto assets that are colloquially referred to as 

“decentralized” depend on distributed ledger technology 

(such as “smart contract” provisioned blockchains—

self-executing code run on distributed ledgers that carry 

out “if/then” type computations) and typically also 

include aspects of more traditional technology (such 

as web-based systems that accept and display trading 

interest and servers that store trading interest).

Deposit Fund

Consists of funds that do not belong to the federal 

government such as disgorgement, penalties, and interest 

collected and held on behalf of harmed investors, registrant monies held temporarily until earned by the SEC, 

and collections awaiting disposition or reclassification.

Digital Accountability and Transparency 

Act of 2014 (DATA Act)

Aims to make information on federal expenditures 

more easily accessible and transparent. 

Disclosure 

Information about a company’s financial condition, 

results of operations, and business that it makes public. 

Investors can use this information to make informed 

investment decisions about the company’s securities. 

Disgorgement

The act of returning or repaying ill-gotten gains 

obtained from fraudulent activities. When disgorgement is ordered, the judge or the Commission may 

also order that any money collected, including penalties paid, be placed in a Fair Fund for distribution to 

investors who were the victims of the violation. 

Distributed Ledger Technology

Refers to the technological infrastructure and protocols 

that allow simultaneous access, validation, and record 

updating in an immutable manner across a network 

that is spread across multiple entities or locations.

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 

(Dodd-Frank Act)

Legislation that enforces transparency and accountability 

while implementing rules for consumer protection.

E-Discovery Systems 

Systems that collect, manage, search, review, and 

maintain a repository of electronic images relating to 

case files in investigations and litigation (e.g., transcripts, 

documents, trial exhibits, other enforcement- and 

court-related data).

E-Government Act of 2002

Establishes policies to support IT standards and 

guidelines, encourage collaboration, and enhance 

understanding of best practices. The Act aims to promote 

the use of the Internet and electronic government 

services; make the federal government more transparent 

and accountable; and provide enhanced access to 

government information and services in a manner 

consistent with laws regarding protection of personal 

privacy, national security, records retention, access for 

persons with disabilities, and other relevant laws.

Electronic Data Gathering, Analysis, 

and Retrieval (EDGAR) System

The system that public companies and others use to 

electronically submit required filings to the SEC. 
178 | 2023 SEC AGENCY FINANCIAL REPORT

Entity Accounts Receivable

Monies owed to the SEC generated from securities 

transaction fees and filing fees paid by registrants.

Entity Assets

Assets that an agency is authorized to use in 

its operations. 

Exchange Revenue

Inflows of earned resources to an entity. Exchange 

revenues arise from exchange transactions, which 

occur when each party to the transaction sacrifices 

value and receives value in return. Examples include 

the sale of goods and services, entrance fees, and most 

interest revenue.

Exchange-Traded Fund (ETF)

SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in 

stocks, bonds, or other assets. ETFs combine features 

of a mutual fund, which can only be purchased or 

redeemed at the end of each trading day at its net asset 

value per share, with the ability to trade throughout the 

day on a national securities exchange at market prices. 

Exchanges

A place (physical or virtual) where securities traders 

come together to decide on the price of securities.

Fair Fund

A fund created by the SEC to return money to 

harmed investors.

Federal Civil Penalties Inflation Adjustment 

Act of 1990 (FCPIA)

Requires agencies to adjust its civil monetary penalties 

for inflation and make adjustments at least once every 

four years thereafter.

Federal Employee Viewpoint Survey (FEVS)

An annual survey administered by the U.S. Office of 

Personnel Management that measures federal government employees' perceptions of whether, and to what 

extent, conditions characterizing successful organizations are present in their agencies. 

Federal Financial Management Improvement 

Act of 1996 (FFMIA)

Provides for the establishment of uniform financial 

systems, standards, and reporting.

Federal Information Security 

Modernization Act of 2014 (FISMA)

Requires federal agencies to conduct annual assessments 

of their information security and privacy programs; 

develop and implement remediation efforts for identified 

weaknesses and vulnerabilities; and report on compliance to the Office of Management and Budget.

Federal Managers’ Financial Integrity 

Act of 1982 (FMFIA) 

Establishes management’s responsibility to 

assess and report on internal accounting and 

administrative controls.

Federal Records Act

Requires all federal agencies to maintain records that 

document their activities, file records for safe storage 

and efficient retrieval, and dispose of records according 

to agency schedules.

Federal Register

The official journal of the federal government of the 

United States that contains government agency rules, 

proposed rules, and public notices. 

Financial Data Transparency Act

Aims to improve the value, quality, and availability of 

federal financial information to the public.
APPENDICES | 179

Financial Industry Regulatory 

Authority (FINRA)

A registered securities association and self-regulatory 

organization. Generally, all registered broker-dealers 

that deal with the public must become members of 

FINRA. 

Form PF

A confidential reporting form for certain SEC-registered 

investment advisers to private funds.

Fraud Reduction and Data Analytics 

Act of 2015

Requires agencies to implement the Government 

Accountability Office’s A Framework to Managing 

Fraud Risks in Federal Programs, which is: (1) commit 

to creating an organization that is conductive to 

manage fraud risk; (2) assess the fraud risks within 

the organization; (3) design and implement controls 

that reduce risk of fraud; and (4) evaluate and adapt 

assessment outcomes.

Freedom of Information Act (FOIA)

Allows for any person to request federal agency records 

or information, with the exception of protected items 

that qualify under the nine exemptions of the law.

Fund Balance with Treasury

The amount of funds in the entity’s accounts with the 

U.S. Treasury for which the entity is authorized to make 

expenditures and pay liabilities, and that have not been 

invested in federal securities.

Funds from Dedicated Collections

Accounts containing specifically identified revenues— 

often supplemented by other financing sources—that are 

required by statute to be used for designated activities, 

benefits, or purposes, and must be accounted for 

separately from the government’s general revenues.

G-Invoicing Platform

Part of the Bureau of Fiscal Service’s solution to manage 

intragovernmental buy/sell transactions between trading 

partners (i.e., federal program agencies). Agencies will 

use this to method to negotiate and accept agreements in 

an effort to help with data transparency.

Gatekeepers

Professionals—such as attorneys, accountants, and 

other consultants—who are enlisted to help protect 

investors through the detection and prevention of 

compliance breakdowns and fraudulent schemes that 

cause investor harm.

General Services Administration (GSA) 

Acts as a central point for agencies to procure and/or 

build office space, products, and other workspace items. 

Generally Accepted Accounting 

Principles (GAAP)

A framework of accounting standards, rules, and procedures defined by the professional accounting industry.

Governance, Risk, and Compliance (GRC) 

Management System

Helps organizations to structure and manage, track, 

and monitor GRC, including policies, controls, and 

other activities.

Government Accountability Office (GAO)

An independent, non-partisan agency that works for 

Congress, GAO examines how tax payers’ dollars 

are spent and aims to improve the government as its 

“congressional watchdog.” 

Government Performance and Results Act

Requires federal agencies and departments to develop 

annual performance plans describing the year’s goals 

and performance reports indicating if those goals 

were met.
180 | 2023 SEC AGENCY FINANCIAL REPORT

Government-Wide Acquisition Contract 

A task-order or delivery-order contract for information 

technology established by one agency for governmentwide use that is operated: (1) By an executive agent 

designated by the Office of Management and Budget 

pursuant to 40 U.S.C. 11302(e); or (2) Under a 

delegation of procurement authority issued by the 

General Services Administration prior to August 7, 1996. 

Gross Domestic Product

A monetary measure of the market value of all the final 

goods and services produced and sold in a specific time 

period by countries. 

Holding Foreign Companies Accountable 

Act (HFCAA)

Requires the Commission to identify registrants that 

have retained a registered public accounting firm to issue 

an audit report where that registered public accounting 

firm has a branch or office that: (1) is located in a foreign 

jurisdiction; and (2) the Public Company Accounting 

Oversight Board has determined that it is unable to 

inspect or investigate completely because of a position 

taken by an authority in the foreign jurisdiction. 

Once identified, the HFCAA requires such a registrant 

to submit documentation to the Commission establishing that it is not owned or controlled by a governmental 

entity in that foreign jurisdiction. Moreover, if the 

registrant is a foreign issuer, it is subject to specified 

disclosure requirements. Finally, if a registrant is 

identified for three consecutive years (or one year if there 

has been a previous trading prohibition), the registrant 

would subject to a trading prohibition until such time 

that it can certify that it has retained an inspectable 

auditor (and for a minimum of five years if there has 

been a previous trading prohibition). 

Imputed Financing

Financing provided to the reporting entity by another 

federal entity covering certain costs incurred by the 

reporting entity. 

Inclusion

Refers to a culture that connects each employee to the 

organization; encourages collaboration, flexibility, and 

fairness; and leverages diversity throughout the organization so that all employees are able to participate and 

contribute to their full potential.

Initial Public Offering

The first time a company offers its shares of capital stock 

to the general public. Under the federal securities laws, 

a company may not lawfully offer or sell shares unless 

the transaction has been registered with the SEC or an 

exemption applies.

Insider Trading

The purchase or sale of a security by someone who 

has access to material, nonpublic information about 

the security. 

International Organization of 

Securities Commissions

An international body consisting of the world’s securities regulators. Members are typically primary securities 

and/or derivatives regulators in a national jurisdiction 

or the main financial regulator from each country.

Intragovernmental Costs

Costs that arise from the purchase of goods and services 

from other components of the federal government.
APPENDICES | 181

Investment Adviser

A firm or person that, for compensation, engages in 

the business of providing investment advice to others 

about the value of, or investing in, securities—stocks, 

bonds, mutual funds, exchanged-traded funds, and 

certain other investment products—and/or in issuing 

reports or analyses regarding securities as part of a 

regular business.

Investment Advisers Act of 1940 

Created to regulate the actions of investment advisers, 

this federal law requires that firms or sole practitioners 

compensated for advising others about securities 

investments must register with the SEC and conform 

to regulations designed to protect investors (with 

certain exceptions).

Investment Company Act of 1940

Regulates the organization of companies, including 

mutual funds, that engage primarily in investing, 

reinvesting, and trading in securities, and whose own 

securities are offered to the investing public. It requires 

these companies to disclose their financial condition and 

investment policies to investors when stock is initially 

sold and, subsequently, on a regular basis.

Investor Advisory Committee (IAC)

Established by Section 911 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 

2010, this committee advises the SEC on regulatory 

priorities, the regulation of securities products, trading 

strategies, fee structures, the effectiveness of disclosure, 

and on initiatives to protect investor interests and to 

promote investor confidence and the integrity of the

securities marketplace.

Investor Alert

Educational content published by the Office of Investor 

Education and Advocacy to warn retail investors of 

possible fraudulent schemes.

Investor Bulletin

Educational content published by the Office of Investor 

Education and Advocacy to educate retail investors 

about timely investing topics.

Investor Protection Fund (IPF)

A fund established by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 2010 to pay 

awards to eligible whistleblowers who voluntarily 

provide the Commission with original information 

about a violation of federal securities laws. 

Liquidity

The ease with which an asset, or security, can be 

converted into ready cash without affecting its 

market price.

Liquidity Rule

Requires funds, including exchange-traded funds, to 

establish liquidity risk management programs. As part 

of the rule, funds are required to assess, manage, and 

periodically review their liquidity risk. Liquidity risk is 

the risk that a fund could not meet requests to redeem 

shares issued by the fund without significant dilution of 

remaining investors’ interests in the fund.

Lit and Dark Markets

Lit markets, such as registered stock exchanges, 

publicly disseminate their best bids and offers on the 

consolidated tapes, while dark markets, such as single 

dealer platforms and dark pools, do not.

Market-Based Treasury Securities

Debt securities that the U.S. Treasury issues to federal 

entities without statutorily determined interest rates.
182 | 2023 SEC AGENCY FINANCIAL REPORT

Marketing Rule

Prohibits advisers from engaging in certain advertising 

practices including, for example, making untrue 

statements of material fact or omitting a material fact 

necessary to make a statement not misleading. The 

rule captures communications that meet the definition 

of “advertisements” and other general solicitations. 

Moreover, the rule also requires advisers to standardize 

certain parts of a performance presentation in order 

to help investors evaluate and compare investment 

opportunities, and will include tailored requirements 

for certain types of performance presentations.

Miscellaneous Receipt Account

A fund used to collect non-entity receipts from custodial 

activities that the SEC cannot deposit into funds under 

its control or use in its operations. These amounts are 

forwarded to the U.S. Treasury General Fund and are 

considered to be non-entity assets of the SEC.

Money Market Fund (MMF)

A type of mutual fund registered under the Investment Company Act of 1940 and regulated pursuant 

to Rule 2a-7 under the Act. MMFs generally limit 

their investments to short-term, high-quality debt 

securities that fluctuate very little in value under 

normal market circumstances.

Municipal Advisor

A person (not a municipal entity or an employee of 

a municipal entity) who: (1) provides advice to or on 

behalf of a municipal entity or obligated person with 

respect to municipal financial products or the issuance 

of municipal securities, including advice with respect 

to the structure, timing, terms, and other similar 

matters concerning such financial products or issues; 

or (2) undertakes a solicitation of a municipal entity. 

This definition includes financial advisors, guaranteed 

investment contract brokers, third-party marketers, 

placement agents, solicitors, finders, and swap advisors 

who provide municipal advisory services, unless they 

are statutorily excluded.

Municipal Securities Rulemaking Board

The self-regulatory organization for the U.S. municipal securities market that writes rules regulating 

broker-dealers and banks that transact in municipal 

securities and municipal advisors. 

National Institute of Standards and 

Technology (NIST)

Develops cybersecurity standards, guidelines, best 

practices, and other resources to meet the needs of 

U.S. industry, federal agencies, and the broader public. 

The Office of Management and Budget mandates that 

all federal agencies implement NIST’s cybersecurity 

standards and guidance for non-national security.

National Market System (NMS) 

The system for trading equities in the United States, 

which includes all facilities and entities that are used 

by broker-dealers to fulfill trade orders for securities.

National Securities Exchange 

An exchange registered as such under Section 6 of the 

Exchange Act of 1934, national securities exchanges are 

self-regulatory organizations (SROs) and must comply 

with regulatory requirements applicable to both national 

securities exchanges and SROs.

National Treasury Employees Union

Created in 1938 to ensure all federal employees are 

treated with dignity and respect, it is the nation’s largest 

independent union of federal employees, representing 

150,000 workers in 34 departments and agencies.

Nationally Recognized Statistical 

Rating Organization (NRSRO)

Credit rating agencies that have registered with 

the Commission and meet certain disclosure, 

governance, internal controls, conflict of interest, 

and recordkeeping requirements. 
APPENDICES | 183

Non-Entity Assets

Assets that are held by an entity but are not available 

to the entity. Examples of non-entity assets are 

disgorgement, penalties, and interest collected and 

held on behalf of harmed investors.

Office of Inspector General Employee 

Suggestion Program

As required by Section 966 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 2010, 

this program allows employees to submit suggestions 

concerning improvements in the SEC’s work efficiency, 

effectiveness, productivity, and use of its resources. The 

Office of Inspector General also receives allegations by 

employees of waste, abuse, misconduct, or mismanagement within the SEC through the program. 

Office of Management and Budget (OMB)

Helps the President oversee the federal budget and 

supervise federal agencies. 

Office of Personnel Management (OPM)

Manages the civil service of the federal government, 

coordinates recruiting of new government employees, 

and manages their health insurance and retirement 

benefits programs. 

OMB Circular A-11, Preparation, Submission, 

and Execution of the Budget

Provides an overview of the budget process, the 

basic laws that regulate the budget process, and the 

development of the President’s budget, including how 

to prepare and submit materials required for agency 

budget requests and instructions on budget execution.

OMB Circular A-123 Appendix A, Management 

of Reporting and Data Integrity Risk (OMB 

Memorandum 18-16)

Revises the 2004 A-123, Appendix A, Internal Controls 

Over Financial Reporting. The revision was necessary 

due to the 2016 update to OMB Circular No. A-123 

and the 2014 update to the U.S. Government Accountability Office Standards for Internal Control in the 

Federal Government. A reexamination was also necessary in light of the implementation of recent statutory 

requirements, including the Data Accountability and 

Transparency Act. The revised memorandum goals are 

to provide updated guidance to: (1) effectively manage 

taxpayer assets, including government data; (2) improve 

data quality; and (3) reduce burdens on agencies by 

shifting away from compliance activities and toward 

actions that will support the reporting of high-quality 

data in support of data-driven decisions, federal government-wide management analyses, and transparency. 

OMB Circular A-123 Appendix C, 

Requirements for Payment Integrity 

Improvement 

Guidance to assist federal agencies with compliance in 

payment integrity.

OMB Circular A-123 Appendix D, 

Management of Financial Management 

Systems–Risk and Compliance

Provides requirements for agencies to comply 

with the Federal Financial Management Improvement Act to “implement and maintain financial 

management systems” that comply with system 

and accounting requirements.
184 | 2023 SEC AGENCY FINANCIAL REPORT

OMB Circular A-123, Management’s 

Responsibility for Enterprise Risk 

Management and Internal Control

Defines management’s responsibilities for enterprise 

risk management and internal financial controls, 

including administrative and program activities as 

well as financial activities.

OMB Circular A-130, Managing Information 

as a Strategic Resource 

Establishes general policy for information governance, acquisitions, records management, open data, 

workforce, security, and privacy. 

OMB Circular A-136, Financial 

Reporting Requirements 

Establishes a central point of reference for all federal 

financial reporting guidance.

OMB M-21-31, Improving the Federal 

Government’s Investigative and 

Remediation Capabilities Related to 

Cybersecurity Incidents 

Establishes the requirements to increase visibility 

“before, during, and after a cybersecurity incident” by 

creating logging standards involving a tier system, a 

maturity level model, and retention periods. 

OMB M-22-09, Moving the U.S. Government 

Toward Zero Trust Cybersecurity Principles

Sets forth a federal zero trust architecture strategy 

and identifies agency-specific tasks against the 

Cybersecurity and Information Security Agency’s five 

pillars: Identify, Devices, Networks, Applications and 

Workloads, and Data.

OPEN Government Data Act

Requires data made available to the public to be 

machine-readable and each agency to establish a 

Chief Data Officer.

Open-End Fund Liquidity

A fundamental feature of open-end funds is that 

they allow investors to redeem their shares daily. 

Funds need to maintain sufficiently liquid assets in 

order to meet shareholder redemptions while also 

minimizing the impact of those redemptions on the 

fund’s remaining shareholders.

Paperwork Reduction Act of 1980

A United States federal law designed to reduce the total 

amount of paperwork burden the federal government 

imposes on private businesses and citizens. The Act 

imposes procedural requirements on agencies that wish 

to collect information from the public. 

Payment Integrity Information Act 

of 2019 (PIIA)

Requires agencies to review all programs and activities 

they administer to identify those that may be susceptible 

to significant erroneous payments. For all programs 

and activities in which the risk of erroneous payments is 

significant, agencies are to estimate the annual amount 

of erroneous payments made in those programs. PIIA 

updated government-wide improper payment reporting 

requirements by repealing and replacing the Improper 

Payments Information Act of 2002, the Improper 

Payments Elimination and Recovery Act of 2010, the 

Improper Payments Elimination and Recovery Act 

of 2012, and the Fraud Reduction and Data Analytics 

Act of 2015.
APPENDICES | 185

Payment Methods Modernization Rule

Modernized the payment methods for filing fees and 

revised fee-bearing forms to be structured. Features to 

pay by Automated Clearing House, debit, and credit 

card payment were added.

Performance and Accountability Report

An annual report that provides program performance 

and financial information that enables Congress, the 

President, and the public to assess an agency’s performance and accountability over entrusted resources.

Plan of Action and Milestones (POA&M)

A document that identifies tasks needing to be 

accomplished. POA&Ms detail resources required 

to accomplish the elements of the plan, any milestones 

for meeting the tasks, and scheduled milestone 

completion dates.

President's Working Group 

on Financial Markets

Created in 1988 to provide financial and economic 

policy recommendations to the President, this group 

is charged with enhancing the integrity, efficiency, 

orderliness, and competitiveness of our nation’s financial 

markets, and maintaining investor confidence. It is 

chaired by the Secretary of the Treasury and includes 

the Chair of the SEC, the Chairman of the Board of 

Governors of the Federal Reserve, and the Chairman 

of the Commodity Futures Trading Commission.

Privacy Act of 1974

Establishes a code of practices that govern the collection, 

maintenance, use, and dissemination of information that 

is maintained by federal agencies in records or systems. 

Public Company Accounting Oversight 

Board (PCAOB)

A nonprofit corporation established by Congress to 

oversee the audits of public companies in order to 

protect the interests of investors and further the public 

interest in the preparation of informative, accurate, and 

independent audit reports. The PCAOB also oversees the 

audits of broker-dealers, including compliance reports 

filed pursuant to federal securities laws, to promote 

investor protection.

Registered Index-Linked Annuities (RILA)

A kind of annuity contract insurance companies offer 

to retail investors in which an investor’s return is based 

at least in part on the performance of an index or other 

benchmark over a set period of time. RILAs typically 

include complex features relating to their risks and 

economic trade-offs, including limits on both potential 

gains and losses.

Regulation Best Interest

Requires broker-dealers to act in the best interest of 

their retail customers when making a recommendation 

without placing their financial or other interests ahead 

of the interests of the retail customer.

Regulation M

Designed to prevent manipulation by individuals with 

an interest in the outcome of an offering and prohibit 

activities and conduct that could artificially influence the 

market for an offered security.

Regulation NMS

A series of rules governing the National Market System

(NMS) for equities and options that are listed on a 

national securities exchange. The rules encompass a 

broad range of issues including the filing and amendment of NMS plans, the collection and distribution of 

market data, disclosure of order execution and order 

routing information, access to markets, order protection, 

and the consolidated audit trail.
186 | 2023 SEC AGENCY FINANCIAL REPORT

Regulation S-P 

Requires brokers, dealers, investment companies, 

and registered investment advisers to “adopt written 

policies and procedures that address administrative, 

technical, and physical safeguards for the protection of 

customer records and information” and to inform their 

customers about those privacy policies and practices. It 

also limits the circumstances in which these institutions 

may disclose nonpublic personal information about 

a customer to a nonaffiliated third party without first 

giving the customer an opportunity to opt out of the 

disclosure. In addition, it requires these institutions, as 

well as transfer agents registered with the Commission, 

to properly dispose of consumer report information.

Regulation Systems Compliance and Integrity 

(Regulation SCI)

Adopted in November 2014 to strengthen the 

technology infrastructure of the U.S. securities markets, 

reduce the occurrence of systems issues in those 

markets, improve their resiliency when technological 

issues arise, Regulation SCI is a set of rules establishing 

expectations for and the oversight of the technological 

systems of SCI entities. SCI entities are those determined 

by the Commission to play a significant role in the 

U.S. securities markets and/or have the potential to 

impact investors, the overall market, or the trading 

of individual securities in the event of certain types 

of systems problems. Today, SCI entities comprise 

the self-regulatory organizations (excluding securities 

futures exchanges); alternative trading systems meeting 

certain volume thresholds with respect to National 

Market System (NMS) stocks and non-NMS stocks; 

exclusive disseminators of consolidated market data; 

certain competing disseminators of consolidated market; 

and certain exempt clearing agencies. Updates to 

Regulation SCI, including expansion to other types of 

market participants, were proposed in March 2023 and 

remain under consideration.

Reports Consolidation Act of 2000

Streamlines reporting requirements by allowing each 

agency to combine its audited financial statements, as 

required by the Chief Financial Officers Act, and its 

performance reports, as required by the Government 

Performance and Results Act. Each consolidated report 

must include an assessment from the agency head 

verifying the reliability of the agency’s performance data 

and a summary from the inspector general addressing 

the agency’s management challenges.

Reserve Fund

A fund established by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 2010 that 

may be used by the SEC to obligate amounts up to 

$100 million in one fiscal year as the SEC determines 

is necessary to carry out its functions.

Retail Investor 

An individual who buys securities for personal 

benefit (e.g., to purchase a home, save for retirement, 

or send a child to college) rather than for the benefit 

of an organization.

Risk Management Oversight Committee 

(RMOC) 

Monitors the SEC enterprise risk environment 

and provides a forum for collaborative, risk-based 

decision-making.

Risk Profile

An inventory of the most significant risks identified 

and assessed through the risk assessment process versus 

a complete inventory of risks, identifies an agency or 

corporation’s acceptable level of risk, which ultimately 

impacts decision making.
APPENDICES | 187

Rule 605

As part of Regulation National Market System (NMS), 

Rule 605 generally requires a market center that trades 

NMS stocks to make available to the public monthly 

electronic execution reports that include uniform 

statistical measures of execution quality.

Rules 101 and 102 of Reg M

Govern the activities of issuers, selling security holders, 

underwriters, and other persons participating in a 

“distribution” of securities. Rule 101 governs the 

activities of underwriters, and other distribution 

participants, as well as their respective affiliated 

purchasers. Rule 102 governs the activities of issuers, 

selling security holders, and their respective affiliated 

purchasers. Both rules generally prohibit the relevant 

parties from bidding for, purchasing, or attempting 

to induce others to bid for or purchase the security 

being distributed or any “reference security” during a 

specified restricted period. Various exceptions to the 

rules’ general prohibitions are intended to permit an 

orderly distribution of securities and limit disruption to 

the market.

Sarbanes-Oxley Act of 2002

Legislation aimed at enhancing corporate responsibility 

and financial disclosures, and fighting corporate and 

accounting fraud that created the Public Company 

Accounting Oversight Board.

SEC University

Provides and assists SEC staff in obtaining learning, 

development, and training opportunities via classroom 

and/or virtual options.

Section 31 Fees

Transaction fees paid to the SEC based on the volume 

of securities that are sold on various markets. These fees 

recover the costs incurred while supervising and regulating the securities markets and securities professionals.

Secure Access Service Edge Technology

Combines software-defined wide area networking 

(SD-WAN) and Zero Trust security solutions into 

a converged cloud-delivered platform that securely 

connects users, systems, endpoints, and remote 

networks to apps and resources.

Securities

Fungible and tradable financial instruments used to raise 

capital in public and private markets. There are primarily three types of securities: equity—which provides 

ownership rights to holders; debt—essentially loans 

repaid with periodic payments; and hybrids—which 

combine aspects of debt and equity.

Securities Act of 1933 (Securities Act)

One of the primary federal securities laws, its basic 

objectives are to ensure investors receive financial and 

other significant information about securities being 

offered for public sale, and to prohibit deceit, misrepresentation, and other fraud in the sale of securities. 

Securities Exchange Act of 1934 

(Exchange Act)

A law governing the secondary trading of securities 

(stocks, bonds, and debentures) in the United States. It 

was this piece of legislation that established the SEC.

Security-Based Swap (SBS)

A swap is any agreement, contract, or transaction 

that provides for one or more payments based on the 

performance of underlying reference instrument, subject 

to certain exclusions, including exclusions for futures 

contracts, options on futures, forward contracts on 

non-financial commodities, and certain retail investments. An SBS is based on: (1) a narrow-based index; 

(2) a single (non-exempt) security or loan; or (3) a 

financial event relating to an issuer or issuers in 

points 1 or 2. 
188 | 2023 SEC AGENCY FINANCIAL REPORT

Security-Based Swap Dealer

Any person who holds itself out as a dealer in securitybased swaps (SBS); makes a market in SBS; regularly 

enters into SBS with counterparties as an ordinary 

course of business for its own account; or engages in 

any activity causing it to be commonly known in the 

trade as a dealer or market maker in SBS.

Self-Regulatory Organization (SRO)

An organization that exercises some degree of regulatory 

authority over an industry or profession. The regulatory 

authority could be applied in addition to some form of 

government regulation, or it could fill the vacuum of an 

absence of government oversight and regulation. The 

ability of an SRO to exercise regulatory authority does 

not necessarily derive from a grant of authority from 

the government.

Sequestration 

Automatic spending cuts that occur through the 

withdrawal of funding for certain (but not all) 

government programs.

Shell Company 

A corporation without active business operations or 

significant assets.

Short Sale

Any sale of a security that the seller does not own, 

or any sale that is consummated by the delivery of a 

security borrowed by, or for the account of, the seller.

Special Purpose Acquisition Company (SPAC)

A type of shell company created specifically to conduct 

an initial public offering (IPO) to raise funds for a 

merger or acquisition with an unidentified target 

company within a set timeframe. 

The merger or acquisition often occurs within two 

years after the SPAC has completed its IPO. Unlike an 

operating company that becomes public through a traditional IPO, however, a SPAC is a shell company when 

it becomes public. This means that it does not have an 

underlying operating business and does not have assets 

other than cash and limited investments, including the 

proceeds from the IPO. 

Stable Value Coins

Also called “stablecoins,” a type of digital asset that 

purport to maintain a stable value relative to a national 

currency or other reference asset. 

Standards for Internal Control in the 

Federal Government 

Published by the U.S. Government Accountability 

Office, this book, which is colloquially known as 

“Green Book” because of its green cover, sets the 

standards for an effective internal control system 

for federal agencies.

Strategic Plan

Defines an agency’s mission, long-term goals, strategies 

planned, and the approaches it will use to monitor its 

progress in addressing specific national problems, needs, 

challenges, and opportunities related to its mission.
APPENDICES | 189

Transfer Agent 

A trust company, bank, or similar financial institution assigned by a corporation to maintain records 

of investors and account balances; as such, the 

transfer agent issues and cancels certificates to reflect 

changes in ownership and handles lost, destroyed, 

or stolen certificates.

U.S. Treasury General Fund

Consists of assets and liabilities used to finance the daily 

and long-term operations of the U.S. Government as a 

whole. It also includes accounts used in management of 

the budget of the U.S. Government.

USASpending.gov

The official source for spending data for the U.S. 

Government, this website allows the American public 

to see how the federal government spends money. 

Variable Interest Entity

An organization in which consolidation is not based 

on a majority of voting rights.

Whistleblower

A person who, alone or jointly with others, provides 

the Commission with information related to a possible 

violation of the federal securities laws (including any 

rules or regulations thereunder) that has occurred, is 

ongoing, or is about to occur. 

World Investor Week

An annual global campaign promoted by the International Organization of Securities Commissions and 

supported by the SEC, Commodity Futures Trading 

Commission, Financial Industry Regulatory Authority, 

National Futures Association, North American Securities Administrators Association, and others to raise 

awareness about the importance of investor education 

and protection.

Zero Trust Architecture

A security approach based on system design principles 

that avoids implicit trust of elements, components, 

nodes, or services based on an acknowledgment 

that threats exist both inside and outside traditional 

network boundaries.
190 | 2023 SEC AGENCY FINANCIAL REPORT

AFR Agency Financial Report

AI Artificial Intelligence

APR Annual Performance Report

BD Broker-Dealer

CAT Consolidated Audit Trail

CF Division of Corporation Finance 

CFO Chief Financial Officer

CFR Code of Federal Regulations

CIO Chief Information Officer 

CISA Cybersecurity and Infrastructure 

Security Agency

COVID-19 Coronavirus Disease 2019 

CPA Certified Public Accountant 

CSOC Climate and Sustainability 

Oversight Committee 

CSRS Civil Service Retirement System

DeFi Decentralized Finance

DEIA Diversity, Equity, Inclusion, 

and Accessibility

DERA Division of Economic and Risk Analysis

DLP Data Loss Prevention

DQP Data Quality Plan

EAG Employee Affinity Group

EDGAR Electronic Data Gathering, Analysis, 

and Retrieval System

EEO Equal Employment Opportunity

EEOC Equal Employment Opportunity 

Commission

ENF Division of Enforcement

ERM Enterprise Risk Management

eSRS Electronic Subcontract Reporting System 

ETF Exchange-Traded Fund

EXAMS Division of Examinations

FAF Financial Accounting Foundation

FASB Financial Accounting Standards Board

FCPIA Federal Civil Penalties Inflation 

Adjustment Act

FECA Federal Employees’ Compensation Act

FERS Federal Employees Retirement System

FEVS Federal Employee Viewpoint Survey

FFMIA Federal Financial Management 

Improvement Act of 1996

FINRA Financial Industry Regulatory Authority

FISMA Federal Information Security 

Modernization Act of 2014

FMFIA Federal Managers’ Financial Integrity 

Act of 1982

FOIA Freedom of Information Act

FR Federal Register 

FRDAA Fraud Reduction and Data Analytics Act 

of 2015

FSOC Financial Stability Oversight Council 

FSSP Federal Shared Service Provider

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

GAO U.S. Government Accountability Office

GHG Greenhouse Gas

GSA U.S. General Services Administration

GTAS Government-Wide Treasury Account 

Symbol Adjusted Trial Balance System

HFCAA Holding Foreign Companies 

Accountable Act

IA Investment Adviser

IAC Investor Advisory Committee

IGT Intragovernmental Transactions

APPENDIX D: ACRONYMS AND ABBREVIATIONS 
APPENDICES | 191

IM Division of Investment Management

IPERA Improper Payments Elimination and 

Recovery Act of 2010

IPERIA Improper Payments Elimination and 

Recovery Improvement Act of 2012 

IPF Investor Protection Fund

IPIA Improper Payments Information Act 

of 2002 

IT Information Technology

LH Labor-Hour

NAICS North American Industry Classification 

System

NIST National Institute of Standards 

and Technology

NMS National Market System

NRSRO Nationally Recognized Statistical 

Rating Organization

NTEU National Treasury Employees Union

OA Office of Acquisitions 

OASB Office of the Advocate for Small 

Business Capital Formation

OCC Office of the Chief Counsel

OCRO Office of the Chief Risk Officer

OEEO Office of Equal Employment 

Opportunity

OHR Office of Human Resources 

OIAD Office of the Investor Advocate

OIEA Office of Investor Education

and Advocacy 

OIG Office of Inspector General 

OIR Office of Investor Research

OIT Office of Information Technology 

OMB Office of Management and Budget

OMWI Office of Minority and Women Inclusion 

OPM U.S. Office of Personnel Management

OWB Office of the Whistleblower 

PCAOB Public Company Accounting 

Oversight Board

PG Performance Goal

PII Personally Identifiable Information

PIIA Payment Integrity Information 

Act of 2019

PISA Privacy and Information 

Security Awareness 

POA&Ms Plan of Action and Milestones

RMOC Risk Management Oversight Committee 

S/L Straight-Line

SAOP Senior Agency Official for Privacy

SBR Statement of Budgetary Resources

SCI Systems Compliance and Integrity

SEC U.S. Securities and Exchange Commission

SIPA Securities Investor Protection 

Act of 1970

SIPC Securities Investor Protection Corporation

SPAC Special Purpose Acquisition Company

SRO Self-Regulatory Organization

T&M Time and Materials (contract)

TCR Tips, Complaints, and Referrals

TM Division of Trading and Markets 

TRENDS Tracking and Reporting Examination 

National Documentation System

TSP Thrift Savings Plan

U.S.C. United States Code

USSGL U.S. Standard General Ledger

VOD Vendor Outreach Day
At the SEC, we work together 

to make a positive impact on 

the U.S. economy, our capital 

markets, and people’s lives.

We are steadfast in our dedication 

to our longstanding three-part 

mission as we keep pace with 

our ever-evolving markets and 

inspire the full confidence of 

the investing public and market 

participants alike.

SEC.GOV/ABOUT/MISSION

“

“
THE SEC’S FY 2023 AGENCY FINANCIAL 

REPORT was successfully produced through the 

efforts of our talented staff. To these individuals, 

we offer our sincerest appreciation. We would 

also like to acknowledge the Government 

Accountability Office and the SEC’s Office of 

Inspector General for their professionalism.

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THIS REPORT TO

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U.S. Securities and Exchange Commission 

Office of Financial Management 

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