Fourth Report on the Implementation of SEC Organizational Reform Recommendations

As Required by Section 967 of the 

Dodd–Frank Wall Street Reform and Consumer Protection Act

This is a report prepared by the staff of the U.S. Securities and Exchange Commission. The 

Commission has expressed no view regarding the analysis, findings, or conclusions contained 

herein.

April 30, 2013
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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Explanatory Note

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) 

directed the U.S. Securities and Exchange Commission (SEC) to engage an independent 

consultant to conduct a broad and independent assessment of the SEC’s internal operations, 

structure, funding, and the agency’s relationship with Self-Regulating Organizations (SROs). 

Issued in March 2011, the consultant’s study provided recommendations designed to increase 

the SEC’s efficiency and effectiveness. This document is the last of four agency reports to 

Congress provided pursuant to the requirements of section 967(c) of the Dodd-Frank Act. 

Section 967(c) requires periodic reports on the “implementation of the regulatory and 

administrative recommendations contained in” the consultant’s report required by section 

967(b) of the Dodd-Frank Act. 

The Commission has expressed no view as to whether or how any recommendation contained in 

that consultant’s report should be implemented. Moreover, no Commissioner other than the 

former Chairman 1

has had any substantive involvement in the “Mission Advancement Program” 

(MAP) or the activities of the SEC staff and contractors outlined in this report. The Commission 

has not endorsed any assessment, determination, method, analysis, finding, or conclusion 

contained herein. The Commission was not consulted on the decision to hire the consultant 

advising as to the MAP project or the cost and scope thereof.

The MAP is the responsibility of the SEC’s Chief Operating Officer, who reports directly to the 

Chairman. The Commission has not made any determination that this report is accurate or 

complete. The Commission’s vote to provide this report to the Congress does not imply any 

concurrence in or endorsement of any aspect of this report or the activities it describes.

 1 Chairman Walter, previously acting in her capacity as Commissioner, had limited involvement until she assumed 

the Chairman’s Office on December 14, 2012. Chairman White was sworn in on April 9, 2013.
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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Table of Contents

Explanatory Note .........................................................................................................................................2

Introduction..................................................................................................................................................4

Completed Recommendations......................................................................................................................6

1. Workstream 2A: Reorganizing the Office of Administrative Services (OAS).............................6

2. Workstream 2A: Reorganizing the Office of Financial Management (OFM)..............................7

3. Workstream 2A: Reorganizing the Office of Human Resources (OHR)....................................11

4. Workstream 2A: Creating the Office of the Chief Data Officer (OCDO)..................................13

5. Workstream 2E: Implementing a Continuous Improvement Program (CIP)..............................14

6. Workstream 3A: Transforming the Office of Information Technology (OIT) and enhancing the 

SEC’s technology capabilities....................................................................................................15

7. Workstream 3C: Creating a Technology Center of Excellence ..................................................17

8. Workstream 3H: Hiring staff for priority positions ...................................................................18

9. Workstream 3G: Developing a capability to monitor and manage market risk..........................18

10. Workstream 2B: Conducting a Regional Organizational Assessment (ROA)............................20

Workstream Decision Process Completed Outside the ESC Governance Process..................................22

11. Workstream 2C: Seeking flexibility from Congress on Dodd-Frank-mandated Offices............22

12. Workstream 3E: Accelerating the roll-out of the SEC’s Evidence-Based Performance 

Management (EBPM) system.....................................................................................................22

13. Workstream 5A: Conducting an outcome-oriented performance measures feasibility study....23

14. Workstream 3H: Hire staff for priority skill positions – administrative skills............................24

15. Workstream 3G: Enhancing the SEC’s Operational Risk Management capabilities..................24

Analysis, Design and/or Recommendations in Process............................................................................25

16. Workstream 1A/B: Reprioritizing mission activities..................................................................26

17. Workstream 2D: Reviewing the Commission/staff interaction process and delegation of 

authority......................................................................................................................................26

18. Workstream 3D: Restructure OHR (Workforce Planning).........................................................26

19. Workstream 4ABC: Strengthen Oversight of Self-Regulatory Organizations (SROs); Centralize 

and Coordinate Self-Regulatory Organization Interactions........................................................27

Two-Year Program Summary....................................................................................................................29

Conclusion..................................................................................................................................................34

Appendix A: Acronym List ........................................................................................................................35
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Introduction

The SEC’s mission is to protect investors, maintain fair, orderly and efficient markets, and 

facilitate capital formation. Currently, the SEC oversees 11,000 investment advisers, close to 

4,600 broker-dealers with in excess of 160,000 branch Offices, and 9,700 mutual funds and 

exchange traded funds. The agency also is responsible for reviewing the disclosures and 

financial statements of more than 9,000 reporting companies, and reviewing certain filings by 

public issuers engaging in public offerings, business combinations, and proxy solicitation. In 

addition, the SEC oversees approximately 460 transfer agents, 17 national securities exchanges, 

9 nationally recognized statistical ratings organizations (NRSROs), as well as the Public 

Company Accounting Oversight Board (PCAOB), Financial Industry Regulatory Authority 

(FINRA), Municipal Securities Rulemaking Board (MSRB), the Securities Investor Protection 

Corporation (SIPC). The agency also currently has new or expanded responsibilities over the 

derivatives markets, hedge fund and other private fund advisers, municipal advisors, credit rating 

agencies and clearing agencies. 

In March 2011, the Boston Consulting Group (BCG) issued a report mandated by Section 967 of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) 

that recommended a number of improvement initiatives primarily focused on the agency’s 

support infrastructure.2 The BCG report discussed a variety of challenges facing the agency and 

suggested approaches to improve the SEC’s ability to carry out its mission, ensure the proper 

mix of skills in its workforce, and improve decision-making. 

To assess and make recommendations regarding the approaches outlined by the BCG report, the 

SEC established the Mission Advancement Program (MAP), which provided a framework for 

systematically evaluating and implementing change throughout the agency. The BCG

approaches were assigned to working groups composed of Division and Office executives and 

staff. Governed by an Executive Steering Committee (ESC) of senior SEC leaders, the working 

groups developed recommendations for review, comment, and preliminary approval by the ESC, 

and final approval by the Chairman prior to full implementation. 

 2 The BCG report is available online at http://www.sec.gov/news/studies/2011/967study.pdf.
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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As of March 2013, recommendations and implementation plans have been completed for 16 of 

the 20 initiatives examined, and the implementation phase is complete or in process for each. 

For the remaining four initiatives, the workstreams will continue to work through the analysis 

and provide recommendations for final approval where appropriate. This document is the last of 

four agency reports to Congress required pursuant to the requirements of section 967(c) of the 

Dodd-Frank Act. 

Figure 1 provides a summary and status of the MAP initiatives.

Figure 1: Summary & Status of MAP Initiatives

Overall Status Section Workstream

Workstream 

Decision Process 

Complete, and 

ESC Approved

1 2A: Redesign the Office of Administrative Services (OAS) 

2 2A: Redesign the Office of Financial Management (OFM)

3 2A: Redesign the Office of Human Resources (OHR)

4 2A: Stand-up the Office of the Chief Data Officer (OCDO)

5 2E: Implement a Continuous Improvement Program

6 3A: Transform OIT and Enhance Technology Capabilities

7 3C: Create a Technology Center of Excellence

8 3F: Create a surge capacity plan

9 3H: Hire Staff for Priority Positions 

10 3G: Enhance Market Risk Management

11 2B: Conduct a regional Organizational Assessment

Workstream 

Decision Process 

Completed 

Outside the ESC 

Governance 

Process

12 2C: Seek flexibility from Congress on Dodd-Frank-mandated 

Offices

13 3E: Accelerate roll out of the SEC's EBPM system

14 5A: Conduct an Outcome-Oriented Performance Measures 

Feasibility Study

15 3H: Hire Staff for Priority Positions – Administrative Skills

16 3G: Operational Risk Management
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Analysis, Design 

and/or 

Recommendations 

in Process

17 1A/B: Mission Activity Prioritization 

18 2D: Review Commission / staff interaction processes and 

Delegations of Authority

19 3D: Restructure OHR (Workforce Planning)

20 4ABC: Enhance Self Regulating Organizations (SRO) 

Oversight

Arranged by status, this report describes each initiative’s gains in efficiency, effectiveness, cost 

savings, or customer focus over the last six months. The report also includes a summary of the 

improvements the SEC has achieved over the past two years as a result of its implementation of 

the BCG recommendations.

Completed Recommendations

The workstream recommendations described below are complete and in various stages of 

implementation.

1. Workstream 2A: Reorganizing the Office of Administrative Services (OAS) 

In response to this working group’s recommendation, the OAS organization was split into two 

offices. The stand-alone Office of Acquisition (OA) was structured to improve senior 

management oversight and help strengthen the capacity and workforce of the acquisition 

function. Launched in June 2012, the new Office of Support Operations (OSO) was created to 

provide enhanced oversight of the remaining OAS functions as well as the Offices of Freedom of 

Information Act (FOIA)/Records Management and Security. Legacy OAS functions have been

absorbed into both offices’ operations. Progress since the last report includes the following:

• As a result of the OA restructure, the position of Director was created July 2012 as a 

direct report to the Chief Operating Officer (COO), and a Business Management Office

was established to provide infrastructure staffing support to the new Director 

position. The reorganization eliminated the need for contractor support that previously 

existed, resulting in $1.2 M cost avoidance in fiscal year 2013 (FY13). OA plans to 

further reduce contractor support toward the end of FY13. 
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• In December 2012, the SEC transitioned to an external vendor, PaperClips,etc., for its 

supply management function. This change has enabled reassignment of staff previously 

supporting this function, enabled repurposing of space previously used to store supplies, 

and has improved control over supplies consumed by the agency. Once fully operational, 

the agency estimates approximately $250K annual cost savings. 

• The General Services Administration (GSA) is now responsible for the procurement and 

administration of new SEC leases. The SEC works with GSA to plan for SEC Regional 

Office lease renewals, and to ensure the renewals are consistent with government-wide 

leasing practices. The following progress has been made over the last six months:

o GSA procured new leases for SEC Regional Offices in Dallas/Ft. Worth and 

Miami, effective March 1 and September 1, 2013, respectively.

o GSA is managing the transition of SEC Regional Offices in Denver and Salt Lake 

City to federal facilities in 2014 upon expiration of current leases.

o GSA awarded a lease for new space for the Philadelphia Regional Office in 

January 2013. The SEC plans to occupy this space in early 2014.

o Staffing reductions commensurate with the transition of leasing authority to GSA 

have been realized. Since the transition, the Leasing Specialist function has been 

reduced from five to two staff members.

2. Workstream 2A: Reorganizing the Office of Financial Management (OFM) 

The OFM reorganization was formally implemented on January 14, 2013. OFM completed 

transition of transactional financial management functions to a Federal Shared Service Provider 

(FSSP), implemented enhanced internal controls, and designed and implemented new business 

processes and technology improvements. These activities have enhanced the agency’s financial 

controls and improved efficiencies. Progress since the last report includes the following: 

Organizational Structure Changes

• OFM centralized the program receivables and financial reporting and monitoring 

functions. Each is governed by an assistant director. This structure enables supervisors 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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to focus on specific areas (i.e., enhanced review and monitoring to prevent and detect 

potential issues in a timely fashion), enhancing efficiency, and effectiveness. 

FSSP Transition

As discussed in the Third Report to Congress, the SEC’s migration to the Department of 

Transportation’s FSSP was undertaken to gain a modernized technology infrastructure and 

associated business function improvements. The transition enables the SEC to shift its focus 

from front-end data entry, system maintenance, and processing to more sophisticated monitoring 

and data analysis. Ten months into implementation, SEC improvements include the following:

• Several standard financial functions (e.g., invoice processing and monthly reporting of 

cash receipts and disbursements to Treasury) are now performed by the FSSP. Enhanced 

internal controls and streamlining of business processes have resulted in time savings for 

OFM staff and decreased the risk of error in these transactions. OFM formed an account 

analysis branch to enhance these functions.

• The SEC is integrating the FSSP system with other key data feeder systems. Using FSSP 

as an automated interface between the procurement and financial systems has 

strengthened the agency’s controls over the timeliness and accuracy of recording 

obligations. Further, the FSSP has a fully integrated purchase card program that 

increases the timeliness of – and reduces errors in – recording purchase card transactions.

Internal Controls

In FY12, the SEC achieved substantial financial management control improvements by 

successfully remediating three deficiencies previously identified by the General Accountability 

Office (GAO) as significant: (1) financial reporting and accounting processes, (2) information 

security, and (3) registrant deposits and filing fees. Initiatives are ongoing to enhance financial 

controls and improve efficiencies to remediate deficiencies in the areas of budgetary resources, 

property and equipment. Progress since the last report includes the following:

• OFM designated staff to focus solely on internal controls, enabling the SEC to 

proactively isolate and mitigate operational risks. 
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• With the transition to FSSP, the procurement system now interfaces with the financial 

system. A reconciliation process is in place to detect any interface errors between the two 

systems. 

• OFM enhanced the process for monitoring obligations to more effectively identify 

amounts to be de-obligated. 

• The SEC is implementing tighter control over the physical inventory and asset 

monitoring processes to ensure property and equipment asset records are accurate, 

complete, and timely. This includes a quarterly physical inventory and monthly 

monitoring of additions and disposals. 

In addition to addressing previously-identified deficiencies, the SEC began implementing more 

rigorous continuous monitoring and internal controls programs. In FY13, the SEC initiated a 

quarterly confirmation process of internal controls over financial reporting. This process will 

enable management to monitor the effectiveness of SEC’s controls more proactively, and to selfidentify and correct weaknesses in controls to prevent them from deteriorating over time.

Business Process and Technology Improvements

Filing Fees

OFM continues to implement significant business process and technology improvements in its 

filing fees program. These enhancements include the following:

• Conducting an outreach program to the largest EDGAR filers to provide clarity regarding 

more complex filing rules, thereby proactively reducing the number of filing errors.

• Promoting customer self-service support, such as filer account balance queries via the 

telephone and electronic refund requests via the EDGAR Filer application.

• Adding a metrics-driven workflow operation that eliminates all paper processing for 

reviewing filings, billing, and refunding registrants, resulting in more timely service to 

filers and improved operating efficiencies.
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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• Developing a comprehensive training program designed to address staff knowledge gaps 

identified from operational metrics and performance monitoring. 

Disgorgements and Penalties (D&P) 

OFM continues to partner with the Division of Enforcement (ENF) on initiatives to enhance the 

processes for collection and distribution of disgorgements and penalties resulting from SEC 

enforcement actions. As described in the Third Report to Congress, the Office of Collections

(OC) and Office of Distributions (OD) were created to handle all collection and distribution 

functions for the agency. OFM has made significant progress in implementing the following 

D&P improvements:

• Continued maturation of the new organizational environment: OC and OD are both fully 

established and operational, and the processes through which they interact with OFM 

have been defined in detailed process manuals. OFM has continued to refine its 

processes and continues to work closely with OC and OD to develop Service Level 

Agreements (SLAs) that will guide and structure important inter-organization 

interactions.

• Refinement of D&P-specific mission statements and performance metrics: D&P specific 

mission statements were refined for OFM, OC, and OD. These mission statements have 

been paired with supporting performance metrics that will track the efficiency and 

effectiveness of the three organizations in performing their core mission functions. 

• Development of new technology enhancements: With the transition to the FSSP, OFM 

fully migrated to Delphi, a financial system used and maintained by Department of 

Transportation (DOT) Enterprise Service Center. In response to feedback gathered from 

staff, OFM continues to train its staff and the staffs of OC and OD on use of Delphi. 

OFM also is tracking non-SEC payables in Delphi to centralize financial data. Additional 

planned technology enhancements (e.g., the HUB 2.0 upgrade, the acquisition of an 

interest calculator, and the deployment of ImageNow 2.0) will provide an even smoother 

interaction between OFM, OC, and OD, making financial management processes even 

more secure and reliable. 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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• Centralization of regional collections efforts: OC has successfully triaged regional office 

collections cases to prioritize and prepare them for litigation by the home 

office. Centralization provides greater insight into ongoing collections activity and 

ensures that important cases receive the necessary resources and support.

Benefits of the new D&P processes include the following:

• Streamlined business processes: The D&P project has more tightly integrated OC, OD, 

and OFM, and has successfully reduced the number of business processes from 75 to 60

and produced an efficiency gain of 20 percent. Early benefits of the streamlined process 

include less duplication of work, reduction in unnecessary or non-value added steps, and 

increased collaboration among impacted groups.

• Management insight into performance: SEC leadership now can gain unprecedented 

insight into the performance of OFM, OC, and OD through the development of outcomeoriented operational performance metrics. These metrics go well beyond those in the 

existing Annual Financial Report (AFR) to provide insight into day-to-day processes, and

enable SEC leadership to more readily identify and address any risks. 

3. Workstream 2A: Reorganizing the Office of Human Resources (OHR) 

In response to the BCG report recommendations, a working group conducted an assessment of 

OHR’s structure and its workforce controls, processes, and policies. OHR’s implementation of 

the resulting recommendations has encompassed multiple functions, including workforce 

analysis and planning, identification and development of high priority skills, human resource 

(HR) processes and policies, and Employee Based Performance Management (EBPM).3

Building on activities initiated last year, OHR continues to make enhancements that enable more 

efficient and effective human resource support. Progress since the last report includes the 

following:

 3 Due to the broad nature of the OHR reorganization, OHR activities are also discussed in the following 

workstreams: 3H: Hire Staff for Priority Positions, 3E: Accelerate the roll out of the SEC’s EBPM system, 3H: Hire 

staff for Priority Positions – Administrative Skills, and 3D: Restructure OHR (Workforce Planning). 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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• The SEC continues to improve its use of data on OHR employee skills to “upgrade the 

talent within the HR function,” as recommended in the BCG report. Strategic functions 

OHR had not previously performed or had performed only on a limited basis (e.g., data 

analytics, workforce planning, and compensation guidance) are now included in the new 

organizational structure and will enable OHR to help managers understand the dynamics 

of their current workforce, as well as plan for future workforce needs. 

• To enable Divisions and Offices to quickly obtain specialized talent, OHR is creating a 

policy and process for using the Excepted Service Hiring Authority (ESHA) in 

appropriate circumstances. 

• OHR is updating and developing new hiring policies to ensure consistency across HR 

practices. These hiring policies will be used by OHR managers to convert complex 

hiring authorities and civil service laws into practicable processes. They will also serve 

as a resource for employees and managers, thereby reducing inquiries to OHR and 

enabling staff to focus on core mission responsibilities. 

• SEC University (SECU) piloted a competency and skills database in OHR. The purpose 

of the database is to identify employees with unique skills (e.g., foreign language 

fluency) not typically associated with their current job roles that may be utilized as needs 

arise for them. The intent is to reduce the SEC’s reliance on outside contracting support 

by better leveraging internal talent. Next steps include assessing the pilot and rolling it 

out to other Divisions and Offices of the SEC.

• OHR has continued to expand its training in the following core competency courses:

writing, presentation, project management, SharePoint training, and specific missionrelated topics (e.g., FINRA Series 24, audit sampling, asset backed securities). In the 

first quarter of FY13, SECU offered 196 learning events to 6,344 participants, and 

conducted assessments for 75 supervisors and managers.

• OHR has made further progress with its business process re-engineering (BPR) project,

launched in August 2012, to streamline its business practices and many of its internal 

processes. OHR is coordinating closely with the SEC Office of Information Technology 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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(OIT) to design and develop scalable solutions to automate specific HR processes and 

forms, including Work Schedules, Transit Benefit Requests, Student Loan Repayment, 

and Awards Recommendations and Approval. 

• The Human Capital Management (HCM) group is designed to embed a human capital 

liaison into each program office to provide increased collaboration and support to each 

office’s program. Dedicated Human Capital Managers enable an in depth understanding 

of the hiring needs of assigned program offices, enhancing OHR’s ability to meet those

individual program needs. The HCM group met with each internal OHR group to discuss 

the role of the HCM. The HCM group also met with each of the key client points of 

contact for SEC organizations that have an assigned Human Capital Manager (Division 

of Enforcement, Office of Compliance, Inspections, and Examinations, and Division of 

Trading and Markets), to more fully communicate the role of the HCM group. The HCM 

group is now fully functional and continues to routinely assess the need to embed Human 

Capital Managers in other SEC organizations. 

• In October 2012, OHR launched the People Management portal, an intranet location 

which provides managers with people management tools and resources. The portal equips

managers with knowledge across a diverse spectrum of human capital subject matter and 

places their roles and responsibilities as managers and leaders in the context of SEC and 

federal guidelines and requirements. 

4. Workstream 2A: Creating the Office of the Chief Data Officer (OCDO)

Over the last six months, the Office of the Chief Data Officer (OCDO) within the Office of the 

Chief Operating Officer has continued to add infrastructure and capabilities to establish a more 

robust data program. Progress since the last report includes the following:

• OCDO has hired two Senior Data Analysts with significant backgrounds in Data 

Governance, EDGAR data, and Data Warehousing.

• OCDO awarded a Data Management Contract in January 2013 to help establish a robust 

data management program that will assist Divisions and Offices with their data initiatives 

and governance models.
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• OCDO created a consistent data architecture for SEC.Gov, EDGAR Modernization and 

Enterprise Data Warehouse (EDW) which will serve as a foundation for future 

development in these areas.

• To increase our ability to use advanced analytics tools, OCDO implemented a state of the 

art capability to do analytics on data coming in from multiple sources, including 

EDGAR, the Tips Complaints and Referrals System (TCR), the HUB, the National 

Relationship Search Index (NRSI), Blue Sheets, and eDiscovery. This is the first step of 

a multiphase project that will assist with automated triage, data visualization, and early 

detection of fraud or abuse with previously unachievable speed and accuracy. It also will 

enable seamless searches of data sets to examine activities, identify suspicious behavior,

and assist in quickly tracing the origin of the fraud or abuse. Installation and 

configuration of the tool in the development environment, as well as initial testing, is 

under way.

The SEC is in the process of designing an EDW to combine various streams of currently siloed 

data that will help the public gain easier access to more usable market data. Progress since the 

last report includes the following:

• OCDO is in the process of installing and configuring the EDW Appliance, an Extract, 

Transform, Load (ETL) (data movement) Tool to handle structured and unstructured 

data, and is installing a Data Security monitoring tool in development, stage, production 

and Continuity of Operations Planning (COOP) environments. 

• OCDO designed a more streamlined approach to provisioning data into the EDW. The 

first set of data provisioning will focus on EDGAR and FINRA-related data. SEC 

currently is in the planning phase to document the requirements.

5. Workstream 2E: Implementing a Continuous Improvement Program (CIP)

In addition to the ongoing efforts of the CIP described in prior reports, in early FY13, the Office 

of Information Technology (OIT) began gathering requirements to establish a Business Process 

Improvement Center of Excellence (BPI CoE), and in February 2013, the SEC competitively 

awarded a contract to launch it. The placement of the BPI CoE within OIT ensures that all 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 15

automation or system-related business processes improvements are fully integrated in the 

existing SEC information technology (IT) governance structure. The natural collaboration 

between this new CoE and the CIP will further enhance the agency’s ability to address new 

improvement initiatives in a consistent manner. The BPI CoE will provide the SEC with:

• Business Process Improvement Support: Documenting existing and new processes, 

facilitating process improvement workshops and meetings, developing metrics, and 

utilizing appropriate process re-engineering techniques and methodologies. 

• Requirements Analyses /Organizational Studies/Program Evaluations: Conducting 

requirements analyses, organizational studies, program evaluations and

training/knowledge management analysis, and developing communications strategies to 

improve performance of mission and programmatic functions. 

• Development of Metrics: Developing and documenting metrics and SLA’s for 

transactional procedures.

• Training Support: Developing training documentation and curriculum on improved 

processes.

While the BPI CoE is new, preliminary planning has taken place and several business process 

improvement opportunities have been identified and prioritized for development.

6. Workstream 3A: Transforming the Office of Information Technology (OIT) and 

enhancing the SEC’s technology capabilities 

OIT continues to implement its technology strategy and advance its Technology Transformation 

Plan, building on progress over the past two years to bring innovative and efficient tools and 

processing to the SEC. 

Progress since the last report includes the following:

• OIT continues to standardize its enterprise-wide platforms to ensure data is appropriately 

linked and integrated across the agency. Architecture has been standardized around a set 

of key technologies. The introduction of rigorous architecture governance to ensure 

adherence to the standards that have been developed. 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

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• OIT awarded the SEC.gov Modernization contract in the first quarter of FY13. The 

initial release of the new SEC.gov content management system is scheduled to “go-live”

in the production environment late in the third quarter of FY13. This initial release will 

include an improved SEC.gov website search solution that utilizes GSA’s USA Search 

feature and an improved user experience with the existing EDGAR Search function.

• OIT is enhancing data management, cloud computing, and complex, predictive analytical 

capabilities to be used by the Divisions and Offices. Through the EDW contract, OIT is 

establishing a robust data management program to assist Divisions and Offices with data 

initiatives. OIT is also utilizing the cloud to store additional SEC.gov content, improve 

response times, and improve its ability to scale up to meet peak demand. The utilization 

of the cloud to store content has allowed the SEC to handle dramatic increases in monthly 

SEC.gov traffic. For example, SEC.gov traffic in February 2012 was 30 million, in 

February 2013, the number was 78 million. In addition, OIT implemented the Market 

Information and Data Analytics system (MIDAS), which has been used by multiple 

Divisions and Offices since January of 2013. MIDAS collects trade data to analyze 

market crashes, monitors market activities, provides input to the SEC to determine if 

further investigations are warranted, and will be used to inform rulemaking and policies.

• OIT is standardizing its IT controls by implementing the security controls outlined in 

National Institute of Standards and Technology (NIST) Special Publication (SP) 800-53, 

Revision 3, Recommended Security Controls for Federal Information Systems and 

Organizations.

• OIT continues to make positive progress in closing Office of Inspector General (OIG)

and GAO audit findings. During the FY12 financial statement audit, the GAO closed 22 

of the findings it issued in prior years. OIT continues to remediate deficiencies identified 

by OIG engagements, closing 29 items during FY12. Assuming adequate funding, 

remaining remediation efforts will be ongoing.

• OIT continues to build on the $12M in “Spend to Save” initiatives reported in FY12. 

These initiatives include: investing in capacity planning tools that will identify the 

computing capacity of the enterprise environment, perform data collection to construct 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 17

predictive growth models, and ensure right-sizing of the computing environment based 

on the strategic IT roadmap for future technologies; and identifying and implementing 

industry-proven technologies that offer increased computing performance, while reducing 

overall IT operational costs. For example, the SEC invested in Blade Server technology, 

which offered a reduced data center physical footprint, while significantly increasing 

computing capabilities.

7. Workstream 3C: Creating a Technology Center of Excellence (CoE)

The Technology CoE continues to make great progress in its support of SEC Divisions and 

Offices. 

Progress since the last report includes the following:

• The Center has improved the ability of the agency to share innovation across the SEC. 

For example, the Boston Regional Office’s success with a Commercial-off-the-Shelf 

(COTS) visual data analytics tool was a key input to the SEC’s decision to procure the 

powerful analytics tool for forensic analysis for other regions supporting ENF and the 

Office of Compliance Inspections and Examinations (OCIE). Other analytical software 

tools currently are being piloted on a limited basis. If the results are positive, the 

capability may be deployed more widely in support of complex exams, forensic analysis,

and risk based analysis. 

• The Center has deployed applications such as eDiscovery and improved courtroom trial 

presentation capabilities that have improved the efficiency and effectiveness of 

enforcement litigation activities.

• The Center is collaborating with several Divisions and Offices on a Market Data 

Analytics review of tools currently being utilized in various SEC Divisions and regions. 

The review also is identifying new tools in the marketplace that could decrease staff time 

spent conducting investigations and improve oversight capabilities through relational 

analyses across disparate data sources, both public and private.
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8. Workstream 3H: Hiring staff for priority positions

BCG recommended that the SEC hire additional staff with high priority skills, building both 

capacity and capabilities across the agency. 

Progress since the last report includes the following:

• OHR underwent an extensive review of its hiring practices and identified 12 key areas 

where improvements could be made to further improve upon the Agency’s ability to hire 

staff for priority positions. The review of the hiring practices concluded at the end of 

January 2013. Over the course of the next few months OHR will begin to implement 

improved processes.

• The OHR Director met with other Financial Institutions Reform, Recovery and 

Enforcement Act (FIRREA) agencies and the Partnership for Public Service in January 

2013 to create a platform for the financial regulatory agencies to discuss human capital 

priorities within the FIRREA community. These discussions will enable the FIRREA 

agencies to share human capital best practices and other HR data. Historically, the 

FIRREA agencies compete against each other in the same pool of talent. However, 

through increased discussion, collaboration, and sharing of HR data, the agencies can find

better ways to recruit talent with the specialized skills each agency needs. 

• Working with SEC senior leadership, OHR created a new SEC-wide on-boarding program. 

The program transitioned from a one-day format to a new two-day orientation that includes 

employee training and new managers/supervisors training. This new program ensures there 

is a consistent agency-wide approach to on-boarding new SEC staff.

9. Workstream 3G: Developing a capability to monitor and manage market risk 

The SEC has engaged in and completed multiple activities in its Divisions and Offices to address 

the BCG Report’s finding that the SEC should increase its “risk-IQ” by increasing personnel and 

technological resources dedicated to risk analyses within the Division of Risk, Strategy, and 

Financial Innovation (RSFI) and by embedding additional resources and capabilities within other 

Divisions and Offices. Progress over the last six months includes:
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Activities within the Division of Risk, Strategy, and Financial Innovation (RSFI)

The Office of Quantitative Research (OQR) within RSFI is responsible for the development of

custom analytics intended to inform monitoring programs across the SEC. It continues to build 

analytic models and tools dedicated to stronger risk analysis.

• OQR staff have begun to routinely leverage the XBRL tagged content from operating 

companies’ annual and quarterly financial statements to produce custom analyses that 

complement traditional commercial data sources. The quantity of XBRL data coming 

into the SEC via EDGAR has more than doubled, from 10 million discrete data items in 

calendar year 2011 to 20 million in calendar year 2012. This data supported multiple 

projects, including continuous screening of registration statements, annual analysis of 

post-retirement benefit obligations, research comparing segment disclosures across 

industries, companies doing business in China, and the Accounting Quality Model

(AQM) project which assists staff tasked with reviewing financial information in 

detecting anomalies. The team dedicated to XBRL efforts doubled its support in 2012 

from three staff to six. 

• As Business Owner of the TCR system, OQR produced regular reports on the 

submission, handling and disposition of TCRs (including Whistleblower TCRs). In 

addition, OQR provides data analysis and risk monitoring, and has contributed to 

program governance by highlighting anomalies and trends. 

Activities within Other Divisions and Offices

• The Division of Investment Management (IM) has established the Office of Risk and 

Examinations Group (REG). REG is responsible for, among other things, conducting 

rigorous quantitative and qualitative financial analysis of the investment management 

industry. One of REG’s primary projects is to develop the SEC’s capability to 

systematically monitor the risk-taking activities of Investor Advisor and Investor 

Companies (IAs/ICs). REG is working to identify strategically important IA/IC positions 

and create risk analytics on the positions to measure, monitor, and report the market risks 

of IA/ICs. The project is expected to be substantially completed in calendar year 

2013. REG is also working to develop an examination program to meet its mission. To 
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date, REG has onboarded three staff members, has one offer in process, and is actively 

recruiting for additional positions, with the goal of staffing the office with eight risk 

specialists and five examiners.

• The Risk Supervised Broker-Dealer Program expanded and refined the Market Report 

which summarizes key market risk areas. The Market Report analyzes equity markets, 

financial institutions’ stock prices and credit default swaps (CDS) spreads, sovereign 

CDS spreads, exchange rates, U.S. Treasury market yields, credit markets, and 

commodity markets. The Market Report is used by broker-dealer supervision staff, and 

distribution of the report has expanded in Trading and Markets (TM) to help other staff 

keep informed of the broad market.

10. Workstream 2B: Conducting a Regional Organizational Assessment (ROA)

In response to a BCG recommendation stating that the SEC should make fundamental decisions 

about its organizational design, internal operations and regional model, a ROA working group 

was established. The working group included an Enforcement Subcommittee, a National Exam 

Program Subcommittee and a Regional Operations Subcommittee. The workstream’s progress

since the last report includes the following:

Enforcement Subcommittee 

On October 2012, the Enforcement Subcommittee officially established an internal Advisory 

Committee which focused on evaluating and improving specific aspects of ENF operations: 

priorities, structure, technology and human capital. The Advisory Committee has created 11 

project teams across the four subcommittees to assess and recommend national program process 

improvement initiatives. The project teams have started meeting, and are working on establishing 

governance around the recommendations and projects that result from these early discussions.

National Exam Program (NEP) Subcommittee

The NEP Subcommittee was established to increase the effectiveness and efficiency of the Exam 

Program and to define a clear reporting structure for its national program. The Subcommittee 

chose three primary focus areas: resource allocation, risk assessment process, and clarification 

of roles and responsibilities between the Home Office and the regions. 
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NEP Focus Area 1 – Resource Allocation 

• During the first quarter of FY13, the NEP continued to allocate new hiring authority and 

vacancies to the programs and offices with the greatest need. Using a risk-based 

approach to identify those needs, the NEP has hired 62 new examiners and support 

personnel. NEP hired a Training Manager to work with SECU and NEP management to 

revamp the examiner training program, both in terms of technical content and delivery 

mechanisms. The NEP also hired a Communications Manager to develop and implement 

an effective internal communications strategy for the NEP, leveraging existing processes 

and new technologies to inform and educate staff across the country.

NEP Focus Area 2 – Risk Assessment Process 

• The NEP continues to enhance and improve its shared, national risk framework and its 

communication with Commission Divisions and Offices, as well as other regulators.

NEP Focus Area 3 – Clarification of Roles and Responsibilities 

• The NEP implemented several organizational and process changes to clarify roles and 

responsibilities for its major programs. The NEP Leadership Team continues to utilize 

the established governance process to review and clarify the roles of the Home Office and 

regions.

Regional Operations Subcommittee

As reported in the Third Report to Congress, The Regional Operations Subcommittee evaluated 

the SEC’s regional operating model to improve how the SEC manages and supports operational 

functions (i.e., human capital, financial management, information technology, facilities, and 

security) in its Regional Offices. Its assessment considered the optimal alignment of 

responsibilities among Regional Offices, the Enforcement and Exam national programs, and 

support functions, as well as the clarification of the roles and responsibilities of the Assistant 

Regional Director of Operations (ARDO) position. The subcommittee worked with the Office of 

the Chief Operating Officer (OCOO), ENF and OCIE senior leadership to clarify roles and 

responsibilities between Regional Offices, Home Office, and the OCOO. 
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The Subcommittee has begun evaluating current roles and responsibilities in all operational areas

to develop implementation plans for each regional office and headquarters operations function. 

Once finalized, these implementation plans will be executed under the leadership of the ENF and 

OCIE Managing Executives, in coordination with the OCOO.

Workstream Decision Process Completed Outside the ESC Governance Process

The following workstream decisions were completed outside of the ESC process. Many of these 

initiatives were already in progress at the time of the BCG study.

11. Workstream 2C: Seeking flexibility from Congress on Dodd-Frank-mandated Offices 

As stated in the Third Report to Congress, the SEC has established an Office of Minority and 

Women Inclusion, an Office of Credit Ratings, and the Office of Municipal Securities, with 

directors on-board in all three Offices. The process for hiring the Investor Advocate continues.

12. Workstream 3E: Accelerating the roll-out of the SEC’s Evidence-Based Performance 

Management (EBPM) system 

The EBPM was successfully implemented in 2012. All non-bargaining unit members have been 

placed into the system and will receive pay-for-performance in FY13. Bargaining unit members

have also been placed into the EBPM system, although they still receive a Rating of Record of 

Acceptable/Unacceptable. Transition to EBPM has already made a positive impact. Employees 

are receiving useful performance feedback that is clearly related to critical job elements and 

managers have become more aware of their responsibilities as leaders in addition to their roles as 

technical experts.

Over the last six months the following progress has been made to further institutionalize the 

EBPM and strengthen a performance management culture:

• An electronic version of the EBPM system is being piloted. The system will allow for 

greater speed, communication, and management of all aspects of EBPM.

• An internal audit of the EBPM system was conducted to determine managers’ 

compliance with EBPM procedures and the quality of manager and employee narratives. 
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Results from the audit will enable the SEC to determine where and how to adjust its 

policies, communications, and training to improve compliance and effectiveness.

• All Senior Officers (SOs) were transitioned to EBPM. Senior Officer training was 

conducted and the first annual performance cycle for using the system was completed. 

• Negotiation with the National Treasury Employees Union (NTEU) has begun regarding

potential changes to the compensation structure and the potential implementation of payfor-performance for bargaining unit employees. The proposed changes include merit pay 

raises and performance bonuses for employees who make extraordinary contributions to 

carrying out the mission of the SEC.

13. Workstream 5A: Conducting an outcome-oriented performance measures feasibility study 

In FY12, the SEC began updating existing performance metrics. Over last six months, this 

initiative has been building on momentum gained through development of outcome-oriented 

goals and indicators. 

Progress since the last report includes the following:

• The Chairman’s Quarterly Operating Report (CQOR) was created to establish a 

performance measure monitoring process for the agency. The agency’s Performance 

Improvement Officer meets quarterly with the Chairman’s Office to review the status of 

performance measures (e.g., timeliness of responsiveness to investor contact, leadership 

competency gaps, percentage of transaction dollars settled on time each year, number of 

non-US regulators trained, etc.), and recommends action plans, as necessary, to achieve 

them.

• The Office of Financial Management (OFM) continues to improve its internal controls 

related to requesting, documenting, reporting, and reviewing performance measures. 

OFM implemented a new procedure to formalize and document any requested changes to 

existing performance metrics. The process also enables OFM to review any such changes 

and ensure new or revised measures are outcome-oriented.
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• SEC will begin drafting a strategic plan aimed at advancing performance and 

management efficiencies. Once complete, the strategic plan will enable the SEC to 

continue development of performance goals and indicators that are outcome-oriented, and 

will inform decisions related to agency operations, resource allocations, major new 

acquisitions, and investments in IT and human capital. The SEC expects to publish the 

new strategic plan in February 2014.

• In parallel to the development of the strategic plan, the SEC is developing a bi-annual 

review process to ensure the strategic plan aligns with agency strategic objectives and 

performance goals, and addresses any changes in agency priorities or legislation.

14. Workstream 3H: Hire staff for priority skill positions – administrative skills

Since the Third Congressional Report, contractor resources were hired in late 2012 to finalize the 

initial assessment of the skills gaps of the agency’s administrative workforce and to develop a 

comprehensive strategy that addresses those gaps. Each recommendation will address culture 

and change management needs, propose timelines, and suggest an implementation sequence

appropriate to the recommendation. Upon completion, OHR will work with key leadership 

within the Divisions and Offices to implement the recommendations. 

15. Workstream 3G: Enhancing the SEC’s Operational Risk Management capabilities

The Operational Risk Management (ORM) Program Office’s mission is to enhance the agency’s 

ability to proactively identify, correct, and mitigate operational risk. Since its inception in the 

spring of 2011, the office has worked to cultivate an environment that minimizes operational 

risk, mitigates and effectively manages identified risks, and ensures corrective action plans are 

established and executed. 

Progress since the last report includes the following:

• In FY12, the SEC reported an Unqualified Statement of Assurance reflecting the overall 

effectiveness of internal controls. GAO concurred and reported overall effectiveness of 

internal controls in the FY12 independent audit report.
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• The SEC continued to build the internal ORM capability by hiring senior ORM 

leadership and staff to continue operationalizing the program’s vision. 

• The SEC established the ORM Oversight Committee to assist the agency in achieving its 

strategic and operational objectives by increasing operational risk awareness and 

fostering the continued development of a culture that supports enhanced operational risk 

identification and management. The Committee’s mission is to monitor the operational 

risk environment, including high priority risk areas, and to provide direction and 

guidance on risk management systems, processes, structures and procedures. 

• The SEC expanded the Management Assurance process to include 100 percent

participation from Divisions and Offices. This process helps to identify, assess, respond 

to, control, and monitor risks at the Division and Office levels. An improved agencywide framework and structure is under development.

• The SEC updated the Governance Risk and Compliance (GRC) tool first deployed in 

fiscal year 2011 (FY11) to enhance cataloging of information about risks, controls, 

deficiencies, and corrective action plans. In total, the GRC captured and catalogued more 

than 460 operational risks and 812 related controls during FY12. Additional 

improvements include the ability to better capture corrective action plans. These 

collective enhancements not only made the GRC a more user-friendly resource, but also 

improved the quality of risk and control data across the agency

• Future plans to further operationalize ORM include: (1) improving policies to effectively 

manage operational risk; (2) reviewing the risk appetite and tolerances established for 

Divisions and Offices; (3) recommending an overall risk appetite for the Commission; (4) 

continuing to identify, prioritize, and manage top agency operational risks identified; and 

(5) understanding the extent to which the operational risks align with the strategic 

initiatives, risk appetite and risk tolerance of the Commission.

Analysis, Design and/or Recommendations in Process

The following workstreams are at various stages of their analysis and/or recommendations. 
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16. Workstream 1A/B: Reprioritizing mission activities 

The SEC established a working group to address the BCG report’s recommendation that the SEC 

evaluate and reprioritize its mission critical activities agency-wide and realign resources 

accordingly. As stated in the Third Report to Congress, eight activities were identified where

reprioritization was likely to have the greatest impact, and which therefore warranted further 

study to determine the appropriate scope for potential changes. The working group is now 

meeting with the relevant Offices and Divisions to document impact assessments of these 

activities. 

17. Workstream 2D: Reviewing the Commission/staff interaction process and delegation of 

authority 

Due to limited resources and the need to address other SEC priorities, the working group 

postponed further efforts to implement the draft recommendations regarding periodic review of 

existing delegations and advance notice of significant exercises of delegated authority with 

Commissioners and staff. As priorities shift, the SEC may reevaluate the availability of

resources and refocus on this matter.

18. Workstream 3D: Restructure OHR (Workforce Planning)

The SEC continues to undertake workforce analysis and planning activities to better understand 

and respond to the gap between Division and Office workload and the workforce available to 

fulfill it. These improvements in workforce planning constitute a significant step forward for the 

agency.

Progress since the last report includes the following:

• In September 2012, OHR updated the workforce profile data that was initially developed 

and introduced as a workforce planning tool to the SEC. The workforce profile identified 

gaps in the workforce, served as an effective tool for recruitment actions, and helped to 

assess future workforce needs. Each Office received its own updated profile along with 

instructions on how to obtain the greatest value from it. OHR also required each Office

to submit a report providing its 2013 workforce plans.
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• The SEC has retained the services of an expert in workforce planning and has begun 

sourcing for a succession planning professional. In conjunction with the current staff and 

the workforce planning information that has been constructed, disseminated, and 

implemented, these experts will help to create an effective, centralized workforce 

planning function. Executives and managers across the SEC will now have access to data 

and planning information to staff their organizations more effectively.

19. Workstream 4ABC: Strengthen Oversight of Self-Regulatory Organizations (SROs); 

Centralize and Coordinate Self-Regulatory Organization Interactions

Two task forces formed under the auspices of an SRO working group comprised of OCIE and 

TM staff have completed evaluation of the current SRO regulatory structure and oversight. Task 

Force 1 reviewed and analyzed the disclosures that SROs make, both to the public and the SEC, 

regarding regulatory operations. To date, the Task Force has developed a list of potential new 

disclosures. Implementation would require rulemaking by the Commission. Task Force 2

reviewed and analyzed the feasibility of defining metrics and standards to assist the SROs in 

preparing for SEC oversight. To date, the Task Force determined that OCIE staff observations 

regarding existing better practices, such as enterprise risk management frameworks, and certain 

governance practices at the various exchanges, could be developed into discussion points for the 

exchanges and could serve as a prospective template for the exchanges to develop their own set 

of improved practices. 

Oversight of FINRA and other SROs

OCIE staff finalized a review of FINRA, focused on the substantive issues relating to national 

securities associations set forth in Dodd-Frank Section 964.

Progress since the last report includes the following:

• The final report is close to completion. The report will include a risk-based framework 

for identifying areas for examination at FINRA, and a process for conducting such 

examinations. Next steps include examining FINRA based on the results of that 

oversight. Several examinations based on this increased oversight are currently 

underway. 
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• OCIE has devoted a full time employee to monitor and develop risk assessments of 

FINRA and any new markets (e.g., securities-based swap execution facility) that would 

register under the Dodd-Frank Act with the Commission.

OCIE also has enhanced its real-time oversight of the exchanges by devoting a full time 

employee to non-FINRA SRO monitoring and risk assessment.

Increasing Communication and Outreach

The working group developed an SRO Communications Plan in response to concerns expressed 

to BCG by the SROs regarding communication with SEC staff. Progress since the last report 

includes:

• OCIE and TM staff will hold the 2013 SRO Outreach Conference in May 2013 (the 

original March date for the conference was rescheduled due to inclement weather). 

• SEC staff collaborated with the SROs regarding the agenda and format of the conference. 

The agenda will include a joint panel of TM, OCIE, and SRO staff that will be dedicated 

to discussing SRO rule filings. In connection with this panel discussion, SEC staff expect 

to provide written materials to the SROs with additional guidance to assist them in 

preparing certain types of rule change proposals, including new order types and fees. 

SEC staff also will solicit feedback from SROs regarding rule filing matters for which 

they seek further guidance. One of the key objectives at the conference will be a 

discussion of the possible better practices identified by Task Force 2. 

Rule Review Process Enhancement

TM staff continues to assess how to enhance the post-Dodd-Frank SRO rule change review 

process in a manner that allows it to progress efficiently, while assuring adequate review of each 

proposal with opportunities for input from relevant parties. 

Progress since the last report includes:

• TM analyzed and is planning enhancements to the electronic form filing system for SRO 

rule changes, including ways to capture and reflect in the system more information on 

filings. 
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• TM staff continued to prepare and circulate to Commissioners’ Offices and key senior 

staff a written dashboard of noteworthy SRO rule changes. The dashboard has been 

expanded to include additional information on SRO rules that are effective on a pilot 

basis to assist the Commission in tracking outstanding pilot programs. The report has 

assisted the staff in informing and engaging the Commission on important proposals early 

in the review process. 

Staff Skills and Tools

TM staff, in partnership with SEC University, continues to conduct a needs assessment to inform 

the development of a training program to enhance the skills of, and the tools available to, TM 

staff. The focus groups planned at the time of the Third Report to Congress have now been 

conducted. The results of those sessions have informed the preparation of a survey that will be 

circulated to TM staff to solicit targeted feedback on their training and skill development needs 

and concerns. After the training needs assessment has been completed and a training program 

has been developed, TM will consider the development of appropriate metrics to assess staff 

performance.

Two-Year Program Summary

Over the last two years, the SEC’s leadership and staff have used the BCG report and the 

creation of MAP to improve the agency’s mission and support operations. Led by staff from 

Divisions and Offices, 20 working groups followed a disciplined process to identify potential 

organizational changes and make a positive impact on the efficiency, structure, and capabilities 

of the SEC. 

Specifically, the SEC has realized benefits across the following four key themes outlined early in 

the MAP management agenda. 

• Optimize the agency’s organizational structure: Restructure Divisions and Offices to 

align with the SEC’s strategic direction, clarify purpose, reduce duplication of effort, and 

eliminate organizational confusion.
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• Improve controls & efficiency: Develop internal mechanisms to locate cost savings, 

enhance operational risk management, gather data, and clarify or streamline business 

processes within Division and Offices.

• Enhance the workforce: Identify and improve resources to meet the organization’s 

dynamic need for talent.

• Strengthen capabilities: Provide the organization with the tools to execute its core 

function of overseeing the markets and market participants.

The accomplishments in the workstreams have resulted in systemic organizational change that 

has increased the agency’s efficiency and effectiveness. In a climate of limited resources and 

competing priorities, the SEC quickly and efficiently responded to the BCG study and developed

a rigorous program to implement real change for the agency. The SEC was able to develop a 

comprehensive approach and translate complex recommendations into action plans. The 

governance structure allowed for transparency both within the agency and to Congress, so that

recommendations were appropriately communicated. While the SEC has made great strides in 

building these internal capabilities, the agency also recognizes that meaningful organizational 

improvement is a continuous process, and that prolonged effort over several years is required to 

successfully operationalize the improvements and realize the benefits of the work completed 

during the past two years. 

Two-Year Highlights

Optimize the Agency’s Organizational Structure 

The SEC restructured the OFM, OAS, and OHR to align the organizations, better define roles, 

accountabilities and decision rights, and provide improved services to the program Offices. Part 

of the restructuring process included transitioning to external service providers. This included

moving to a FSSP to gain a modernized financial management infrastructure, transitioning to the 

procurement and administration of all new leases to GSA to reduce operational risk, and 

outsourcing the SEC’s supply management function to provide better management control over 

administrative supply expense. 
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The SEC also created the OCDO to better gather, distribute, and utilize the SEC’s diverse 

information on markets and institutions and improve its overall enterprise data management 

capability. Overall, the support functions of the SEC under the COO are operating in a more 

cost efficient manner and with improved customer service as a result of the recommendations 

implemented by the MAP program. 

In addition to examining support operations, the SEC also took a critical look at its regional 

operations and regulatory activities, which led to improved collaboration between the regions

and headquarters. Following the 2010-2011 reorganizations of the Division of Enforcement and 

OCIE, the SEC created the ROA working group to evaluate the effectiveness of the 

organizational design, support operations, and regional model. The ROA working group 

consisted of four subcommittees that resulted in: (1) further enhancements to the Enforcement 

program by establishing an internal Advisory Committee focused on continuous improvements;

(2) increased efficiency and effectiveness of OCIE’s Exam Program based on an improved 

approach to resource allocation and clarification of roles and responsibilities between the Home 

Office and the regions; (3) a regional growth strategy focused on strategically placing staff for 

the SEC using the current regional office footprint; and (4) an improved model for providing

operational support in the regions. 

The agency also continues to evaluate and analyze its mission critical activities. Additionally, 

the SEC identified a set of eight activities that could be stopped, delegated, scaled back or 

expanded and is continuing to conduct impact assessments for each activity. Given the sensitive 

nature of this effort, the working group leading this workstream has been careful and deliberate 

with any decisions. The agency has continued to evaluate these activities in its preparation to 

provide recommendations to the Chairman. 

Improve Controls & Efficiency

The SEC created the CIP to provide a structure to identify, evaluate, and launch initiatives 

designed to enhance the agency’s efficiency. In FY12, the CIP tracked and catalogued a total of 

$18.2 million in realized savings or cost avoidance. Over the last two years, the CIP working 

group has focused on institutionalizing the CIP capability across the agency, working 

collaboratively with the Divisions and Offices. It is also coordinating with the OIT and its 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 32

substantial cost savings/avoidance “Spend to Save” initiative. In addition to cost savings, the 

SEC has launched a number of improvement initiatives (e.g., streamlining employee on-boarding 

processes) that have enabled the agency to create a culture of continuous improvement 

throughout the agency. Further, operationalizing the BPI CoE will promote a continuous 

improvement culture by providing expert resources, frameworks, and tools to address 

improvement initiatives in a consistent manner. 

To address deficiencies in internal controls, the SEC created the ORM Program Office that is 

working to enhance the agency’s ability to proactively identify, correct, and mitigate operational 

risk. Since its inception in the spring of 2011, the Office has worked to cultivate an environment 

that minimizes operational risk, mitigates and effectively manages identified risks, and ensures

corrective actions are established and executed. In FY12, the GAO determined that for the 

second consecutive year the SEC had no material weaknesses in internal controls regarding 

financial reporting. The SEC also developed outcome-oriented performance metrics to measure 

the agency’s progress toward achieving the agency’s mission. This resulted in the publication of 

improved performance measures and indicators for the Division of Enforcement and updated 

performance measures and indicators across the agency for internal management reporting and 

tracking.

Over the past two years, the SEC has strengthened its relationships with SROs through increased 

oversight and by establishing a centralized approach to SRO interactions. The SEC conducted a 

systematic evaluation of the current SRO regulatory structure and oversight that led to additional 

risk based examinations of SROs. OCIE staff also conducted a review of FINRA that was

focused on the substantive issues relating to national securities associations set forth in Section 

964 of the Dodd-Frank Act. To help facilitate collaboration and clarify rule filing guidance, the 

SEC conducted its first ever SRO Outreach Conference in January 2012 and is planning a second 

conference in May 2013.

Enhance the SEC’s Workforce

To address the SEC’s continuously evolving need for talent, OHR has focused on improving the 

recruiting and hiring functions, resulting in a 38 percent improvement in total vacancy 

announcements advertised over FY11 totals and a 100 percent improvement in the number of 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 33

processed applications. The SEC upgraded the talent within OHR, addressing strategic functions 

that OHR has not previously performed or had performed only on a limited basis, specifically,

data analytics, workforce planning, and compensation guidance. OHR also developed the 

agency’s first Human Capital Plan, a key strategic document outlining people-related priorities 

that link human resource activities to broader mission needs. The plan identifies five high-level 

goals and supports each goal with key initiatives. Most initiatives in the plan are scheduled to be

implemented by the end of FY13, though the agency’s efforts have been limited by the funding 

constraints associated with the Continuing Resolution and sequestration. Additionally, OHR 

launched the Human Capital Manager program in early 2012, hiring dedicated staff to service the 

Divisions and Offices by enhancing customer recruiting and hiring support. The SEC also 

improved its ability to hire staff with high priority skills, including hiring individuals in the 

Division of Corporation Finance, OCIE, and the Division of Enforcement with experience in 

structured finance, financial instrument valuation, quantitative algorithms, automated highfrequency trading, and municipal derivative products. 

To better manage the SEC’s current workforce, the SEC implemented an Employee Based

Performance Management (EBPM) system. This system improved the agency’s previous 

performance management process by moving from a pass/fail rating scale to a five-point rating 

scale to allow for a stronger differentiation among levels of performance. As of October 2012, 

the system became fully operational for non-bargaining unit staff. The implementation of 

EBPM, along with a new compensation system, will provide a critical foundation for 

implementing pay-for-performance in the future by recognizing and rewarding employees based 

on their performance. The SEC also created a Surge Response Plan to help the agency quickly 

scale its workforce up and down to respond to changing mandates or market conditions (e.g., a 

severe market disruption). 

Strengthen the SEC’s Capabilities 

To acquire tools needed to improve the agency’s ability to oversee the markets and market 

participants, the SEC developed an improved capacity to monitor and manage market risk and 

transformed its supporting IT structure. The Division of RSFI established the Office of 

Quantitative Research to develop custom analytics intended to inform monitoring programs 

across the SEC. RSFI also developed an analytical model that uses performance data to identify 
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 34

hedge fund advisers worthy of further review by either OCIE or Enforcement’s Asset 

Management Unit. OIT developed automated solutions to analyze information obtained from the 

Electronic Blue Sheets Platform (equity trade data from clearing brokers). The SEC also 

invested in modernizing its overall IT systems, which included a centralized system for tips and 

complaints, enforcement and examination management systems, and risk analysis tools. To 

further improve core operations and implement the agency’s new responsibilities, the SEC 

embarked on a multi-year Technology Transformation Plan called “Working Smarter” to: (1)

ensure the SEC’s business processes are streamlined, integrated, and implemented with the best 

technology; (2) reduce costs and increase efficiencies and effectiveness; (3) deliver better 

services to both employees and the public; and (4) provide greater accountability, transparency, 

and security. Some of the key results included the procurement and installation of an Enterprise 

Data Warehouse, modernization of SEC.gov, and enhancements of the EDGAR filer system to 

increase, enhance, and optimize the quality of data and information received by internal and 

external users.

Conclusion

The BCG report provided the SEC with an opportunity to assess and implement improvements to 

the agency’s core infrastructure through redesigning its organizations, enhancing risk 

management capabilities and internal controls, strengthening the agency’s workforce, updating

processes to improve customer service, improving the management of resources, and building 

valuable technology capabilities. SEC staff believes it has responded appropriately to these 

recommendations. 

The agency has transitioned into an organization that applies the principles of continuous 

improvement, collaboration, and coordination in executing its mission across all of its Divisions 

and Offices. While this is the last of the statutorily mandated reports, the SEC will continue to 

seek improvements by implementing and operationalizing the spirit of recommendations

stemming from the BCG study.
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 35

Appendix A: Acronym List 

AFR Annual Financial Report

AQM Accounting Quality Model

ARDO Assistant Regional Director of Operations

ATM All Things Management

BCG Boston Consulting Group

BPR Process Re-Engineering

CIP Continuous Improvement Program

COO Chief Operation Officer

COOP Continuity of Operations Planning

COTS Commercial-Off-The-Shelf

CQOR Chairman’s Quarterly Operating Report

D&P Disgorgements and Penalties

DOT Department of Transportation

EBPM Employee Based Performance Management

EBPM Evidence-Based Performance Management

EDW Enterprise Data Warehouse

ENF Division of Enforcement

ESC Executive Steering Committee

ESHA Excepted Service Hiring Authority

FINRA Financial Industry Regulatory Authority

FIRREA Financial Institutions Reform, Recovery and Enforcement Act

FOIA Freedom of Information Act 

FSSP Federal Shared Service Provider

GAO Government Accountability Office
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 36

GRC Governance Risk and Compliance

GSA General Services Administration

HCAC Human Capital Advisory Committee

HCM Human Capital Management

HR Human Resource

IA Investment Advisor

IC Investment Company

IM Investment Management

IT Information Technology

MAP Mission Advancement Program

MIDAS Market Information and Data Analytics System

MSRB Municipal Securities Rulemaking Board

NEP National Exam Program

NIST National Institute of Standards and Technology

NRSI Name Relationship Search Index

NTEU National Treasury Employees Union

OA Office of Acquisition

OAS Office of Administrative Services

OC Office of Collection

OCDO Office of the Chief Data Officer 

OCOO Office of the Chief Operating Officer

OD Office of Distribution

OFM Office of Financial Management

OHR Office of Human Resources

OIG Office of Inspector General
FOURTH REPORT ON THE IMPLEMENTATION OF SEC ORGANIZATIONAL REFORM RECOMMENDATIONS

PAGE 37

OIT Office of Information Technology

OQR Office of Quantitative Research

ORM Operational Risk Management

OSO Office of Support Operations

PCAOB Public Company Accounting Oversight Board

POC Point of Contact

REG Risk and Examinations Group

ROA Regional Organizational Assessment

RSFI Risk, Strategy, and Financial Innovation

SEC U.S. Securities and Exchange Commission

SECU SEC University

SIPC Securities Investor Protection Corporation

SP Special Publication

SRO Self Regulating Organizations

SRP Surge Response Plan

TCR Tips Complaints and Referrals System

TM Trading and Market