**GAO-08-33**                      Published: Nov 15, 2007. Publicly Released: Dec 17, 2007.                  

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## Highlights

Self-regulatory organizations (SRO) are exchanges and associations that operate and govern the markets, and that are subject to oversight by the Securities and Exchange Commission (SEC). Among other things, SROs monitor the markets, investigate and discipline members involved in improper trading, and make referrals to SEC regarding suspicious trades by nonmembers. For industry self-regulation to function effectively, SEC must ensure that SROs are fulfilling their regulatory responsibilities. This report (1) discusses the structure of SEC's inspection program for SROs, (2) evaluates certain aspects of SEC's inspection program, and (3) describes the SRO referral process and evaluates SEC's information system for receiving SRO referrals. To address these objectives, GAO reviewed SEC inspection workpapers, analyzed SEC data on SRO referrals and related investigations, and interviewed SEC and SRO officials.

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## Topics

Auditing and Financial Management

AuditsBanking regulationFederal regulationsFinancial analysisFinancial managementInspectionInternal auditsInternal controlsProgram evaluationRegulatory agenciesRisk assessmentSecurities regulationSecurity regulationsStocks (securities)Trade regulation