U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

i 

Audit of the Representation of Minorities and 

Women in the SEC’s Workforce 

November 20, 2014

 Report No. 528
OFFICE OF 

INSPECTOR GENERAL

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

M E M O R A N D U M

November 20, 2014

TO: Mary Jo White, Chair

Pamela Gibbs, Director, Office of Minority and Women Inclusion

Alta Rodriguez, Director, Office of Equal Employment Opportunity

FROM: Carl W. Hoecker, Inspector General, Office of Inspector General

SUBJECT: Audit of the Representation of Minorities and Women in the SEC’s Workforce, 

Report No. 528

Attached is the Office of Inspector General’s (OIG) final report detailing the results of our audit 

of the representation of minorities and women in the U.S. Securities and Exchange 

Commission’s (SEC) workforce. The report contains five recommendations for corrective 

action that, if fully implemented, should help the SEC in its efforts to identify and eliminate 

potential barriers to equal opportunity, measure the effectiveness of its diversity efforts, and 

fully comply with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act (P.L. 111-203).

On November 4, 2014, we provided you with a draft of our report for review and comment. In 

your November 17, 2014, response, you concurred with our recommendations. We have 

included your response as Appendix VI in the final report.

Within the next 45 days, please provide the OIG with a written corrective action plan that 

addresses the recommendations. The corrective action plan should include information such 

as the responsible official/point of contact, timeframe for completing required actions, and 

milestones identifying how your offices will address the recommendations.

We appreciate the courtesies and cooperation extended to us during the audit. If you have 

questions, please contact me or Rebecca L. Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects.

Attachment

cc: Erica Y. Williams, Deputy Chief of Staff, Office of the Chair

Luis A. Aguilar, Commissioner

Paul Gumagay, Counsel, Office of Commissioner Aguilar

Daniel M. Gallagher, Commissioner
Benjamin Brown, Counsel, Office of Commissioner Gallagher

Michael S. Piwowar, Commissioner

Jamie Klima, Counsel, Office of Commissioner Piwowar

Kara M. Stein, Commissioner

Robert Peak, Advisor to the Commissioner, Office of Commissioner Stein

Anne K. Small, General Counsel, Office of the General Counsel

Timothy Henseler, Director, Office of Legislative and Intergovernmental Affairs

John J. Nester, Director, Office of Public Affairs

Jeffery Heslop, Chief Operating Officer, Office of the Chief Operating Officer

Lacey Dingman, Chief Human Capital Officer, Office of Human Resources

Darlene L. Pryor, Management and Program Analyst, Office of the Chief Operating

Officer
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

i

Why We Did This Audit

Embracing diversity increases the 

U.S. Securities and Exchange 

Commission’s (SEC) ability to attract 

the best and brightest in the 

securities industry, thereby 

empowering the agency to achieve 

professional excellence and remain 

steadfast in its commitment to protect 

the investing public. Members of the 

U. S. House of Representatives 

Committee on Financial Services 

affirmed the importance of diversity in 

a March 2014 letter to the SEC Office 

of Inspector General (OIG). 

Committee members requested that 

the OIG review the SEC’s internal 

operations to determine whether any 

personnel practices have created a 

discriminatory workplace or otherwise 

systematically disadvantaged 

minorities. The OIG was also asked 

to assess the operations of the SEC’s

Office of Minority and Women 

Inclusion (OMWI).

What We Recommended

In order to identify and eliminate 

potential barriers to equal 

opportunity, we made five 

recommendations for corrective 

action. The recommendations 

address OEEO policies and 

procedures; review and submission 

of required data to the U.S. Equal 

Employment Opportunity 

Commission; performance of barrier 

analyses; and OMWI policies,

procedures, and workforce diversity 

standards. Management concurred 

with the recommendations, which will 

be closed upon completion and 

verification of corrective action.

 

What We Found

We assessed diversity at the SEC and compared the agency’s 

workforce between fiscal year (FY) 2011 and FY 2013 to U.S. 

civilian labor force, Federal, and securities industry workforce data. 

We found that the SEC has made efforts to promote diversity. For 

example, its annual reports for the years reviewed state that the 

SEC will maintain an environment that attracts, engages, and 

retains a technically proficient and diverse workforce. In addition, 

the SEC’s Office of Equal Employment Opportunity (OEEO) did not 

identify any proven employment discrimination for cases closed 

between FY 2011 and FY 2013. However, some minority groups

and women: (1) were underrepresented in the SEC workforce; 

(2) received relatively fewer and smaller cash awards and bonuses; 

(3) experienced statistically significant lower performance 

management and recognition scores; and (4) filed equal 

employment opportunity complaints at rates higher than their 

percentage of the workforce. 

 Source: OIG summary of Federal Personnel Payroll System data.

These conditions may have occurred or may not have been 

remedied, in part, because OEEO did not take required initial steps 

to identify areas where barriers may operate to exclude certain 

groups. Therefore, the SEC did not examine, eliminate, or modify, 

where appropriate, policies, practices, or procedures that create 

barriers to equal opportunity. As a result, the SEC lacks assurance 

that it has uncovered, examined, and removed barriers to equal 

participation at all levels of its workforce. 

We also found that OMWI lacks a systematic and comprehensive 

method of evaluating the effectiveness of its programs and diversity 

efforts. Specifically, the office has not fully established internal 

policies and procedures or required workforce diversity standards 

needed to monitor, evaluate, and, as necessary, improve its 

operations and fully comply with Section 342 of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act. 

47%

53%

68%

32%

Average Distribution of the SEC Workforce 

(FY 2011 - FY 2013)

Minority

White

Men

Women

Executive Summary Audit of the Representation of Minorities and 

Women in the SEC’s Workforce

Report No. 528

November 20, 2014

For additional information, contact the Office of Inspector General at 

(202) 551-6061 or http://www.sec.gov/about/offices/inspector_general.shtml.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 ii November 20, 2014

TABLE OF CONTENTS

Executive Summary .....................................................................................................i

Background and Objectives.......................................................................................1

Background .......................................................................................................1

Objectives...........................................................................................................5

Results ........................................................................................................................7

Finding 1: Additional Efforts are Needed to Identify and Eliminate Potential 

Barriers to Equal Opportunity...............................................................................7

Recommendations, Management’s Response, and Evaluation of Management’s 

Response ..........................................................................................................23

Finding 2: OMWI Needs Additional Policies, Procedures, and Standards to 

 Measure the Effectiveness of its Diversity Efforts and Fully Comply with 

the Dodd-Frank Act............................................................................................25

Recommendation, Management’s Response, and Evaluation of Management’s 

Response ..........................................................................................................28

Tables and Charts

Chart 1: Average Distribution of the SEC Workforce by Race and

Ethnicity (FY 2013) ..............................................................................................3

Table 1: Workforce Distribution by Race and Ethnicity ................................................9

Table 2: Workforce Distribution by Race and Ethnicity and Supervisory Status .........10

Chart 2: Workforce Distribution by Gender and Supervisory Status...........................11

Table 3: New Hires by Race and Ethnicity.................................................................12

Table 4: Promotions by Race and Ethnicity ...............................................................13

Table 5: Cash Awards by Race and Ethnicity (FY 2011 – FY 2013) ..........................15

Table 6: Senior Officer Bonuses by Race and Ethnicity (FY 2011 – FY 2013)...........16

Chart 3: Average PMR Score by Race and Ethnicity for All SEC Employees.............18

Chart 4: Average PMR Score by Race and Ethnicity for Non-Supervisor Employees ..19

Chart 5: Average PMR Score by Race and Ethnicity and Gender..............................20

Chart 6: Workforce Distribution by Race and Ethnicity...............................................34

Chart 7: Workforce Distribution by Gender ................................................................35

Table 7: OMWI’s Implementation of Selected Dodd-Frank Act Requirements ...........36

Table 8: SEC’s PMR Rating Systems of Record for FY 2011 through FY 2013.........39

Appendices 

Appendix I: Scope and Methodology .........................................................................30

Appendix II: Workforce Distribution Data for FY 2011 through FY 2013.....................34

Appendix III: Additional Diversity Efforts at the SEC ..................................................36

Appendix IV: PMR Rating Systems for FY 2011 through FY 2013.............................39

Appendix V: DAS Data and Methodology ..................................................................41

Appendix VI: Management Comments ......................................................................43

Appendix VII: OIG Response to Management Comments .........................................45
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 iii November 20, 2014

ABBREVIATIONS

CLF Civilian Labor Force

CFR Code of Federal Regulation

DAS Data and Analytic Solutions, Inc.

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act

EEO Equal Employment Opportunity

EEOC Equal Employment Opportunity Commission

FPPS Federal Personnel Payroll System

FY Fiscal Year

GAO Government Accountability Office

MD-715 Management Directive 715

NAICS North American Industry Classification System

OEEO Office of Equal Employment Opportunity

OHR Office of Human Resources

OIG Office of Inspector General

OMWI Office of Minority and Women Inclusion 

PMR Performance Management and Recognition

SEC U.S. Securities and Exchange Commission

SEC-OP SEC Operating Procedures

SECR SEC Administrative Regulation 

SECU SEC University

SES Senior Executive Service
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 1 NOVEMBER 20, 2014

Background and Objectives

Background 

Federal laws and guidance provide a comprehensive set of requirements relating to 

workforce diversity.1 For example, Title VII of the Civil Rights Act of 1964 prohibits 

employment discrimination based on race, color, religion, sex, and national origin, and 

established the U.S. Equal Employment Opportunity Commission (EEOC) to prevent 

unlawful employment practices. Under EEOC regulations, Federal agencies are 

required to promote equal opportunity, identify and eliminate discriminatory practices, 

and provide counseling to aggrieved persons.2 Further, EEOC’s Management 

Directive 715 (MD-715) requires agencies to conduct a self-assessment at least 

annually to monitor equal employment opportunity (EEO) progress and identify areas 

where barriers may operate to exclude certain groups. In addition, Executive Order 

13583, dated August 18, 2011, directs executive departments and agencies to 

“develop and implement a more comprehensive, integrated, and strategic focus on 

diversity and inclusion as a key component of their human resources strategies” and to 

“promote diversity and remove barriers to equal employment opportunity....”3

As an employer, the U.S. Securities and Exchange Commission (SEC) seeks to hire 

and retain a skilled and diverse workforce, and to ensure that all decisions affecting 

employees and applicants are fair and ethical.4 According to the agency’s annual 

reports for fiscal year (FY) 2011 through FY 2013,

5 the SEC maintains “a work 

environment that attracts, engages, and retains a technically proficient and diverse 

workforce....” In order to effectively protect the interests of the investing public, the 

SEC’s workforce must include a wide range of backgrounds, skills, and experiences. 

Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(Dodd-Frank Act) established an Office of Minority and Women Inclusion (OMWI) in 

 1 U.S. Office of Personnel Management, Office of Diversity and Inclusion, “Government-Wide Diversity 

and Inclusion Strategic Plan 2011” defines “workforce diversity” as a “collection of individual attributes 

that together help agencies pursue organizational objectives efficiently and effectively. These include, but 

are not limited to, characteristics such as national origin, language, race, color, disability, ethnicity, 

gender, age, religion, sexual orientation, gender identity, socioeconomic status, veteran status, and family 

structures. The concept also encompasses differences among people concerning where they are from 

and where they have lived and their differences of thought and life experiences.” 

2 29 Code of Federal Regulations (CFR) Part 1614, U.S. Equal Employment Opportunity Commission 

Regulations, Federal Sector Equal Employment Opportunity, Subpart A—Agency Program to Promote 

Equal Employment Opportunity.

3 Executive Order 13583—Establishing a Coordinated Government-wide Initiative to Promote Diversity 

and Inclusion in the Federal Workforce, August 18, 2011.

4 U.S. Securities and Exchange Commission Strategic Plan, FYs 2014 – 2018, p. 4.

5 As described in Appendix I, our audit scope covered the period between FY 2011 and FY 2013. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 2 NOVEMBER 20, 2014

financial regulatory agencies, including the SEC, to ensure agencies, among other 

things, take affirmative steps to seek diversity in the workforce.

6

 

On March 24, 2014, members of the United States House of Representatives 

Committee on Financial Services requested that the SEC’s Office of Inspector General 

(OIG) review the SEC’s internal operations to “determine whether any personnel 

practices have created a discriminatory workplace or otherwise systematically 

disadvantaged minorities from obtaining senior management positions.” In their letter 

to the OIG, the members asserted that, despite the Dodd-Frank Act’s statutory 

mandate about diversity, a 2013 report by the U.S. Government Accountability Office 

(GAO) concluded that management-level representation of minorities and women

among Federal financial agencies did not change substantially between 2007 and

2011.7 Letters requesting similar reviews were sent to the Inspectors General of five 

other financial regulatory agencies. The OIGs, including the SEC OIG, determined that 

each would review the representation of minorities and women in its agency’s 

workforce and report on the results. 

SEC Workforce Distribution. As of September 30, 2013, the SEC’s workforce 

included 4,138 employees, of which about two-thirds were located at the SEC’s 

headquarters in Washington, D.C. and one-third were at the SEC’s 11 regional offices. 

In FY 2013, about 72 percent of the agency’s workforce consisted of attorneys, 

accountants, economists, and compliance examiners. The remaining 28 percent of the 

employees occupied other professional and administrative positions. 

As shown in Chart 1, the SEC’s workforce includes employees of various racial and 

ethnic categories,

8 including White, Black or African American, Hispanic or Latino, 

Asian, and Other.9 Also, between FY 2011 and FY 2013, the SEC workforce averaged 

53 percent men and 47 percent women.10

 6 Public Law 111-203 § 342, July 11, 2010. Unless otherwise stated, references in this report to the 

Dodd-Frank Act are to Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 

Office of Minority and Women Inclusion.

7 U.S. Government Accountability Office, Diversity Management: Trends and Practices in the Financial 

Services Industry and Agencies after the Recent Financial Crisis (GAO-13-238, April 2013).

8 We used the racial and ethnic categories established by the U.S. Office of Personnel Management 

Standard Form 181, “Ethnicity and Race Identification,” and relied on information SEC employees 

reported on the form, where available. Employees who identified their race and ethnicity as a category 

other than White are classified in this report as minorities. 

9 In Chart 1 and throughout this report, “Other” includes the following racial and ethnic categories: Two or 

More Races, American Indian or Alaska Native, and Native Hawaiian or other Pacific Islander. The 

“Other” category was used to consolidate, where necessary, racial and ethnic categories that had 

populations too small to analyze. 

10 Appendix II presents additional SEC workforce distribution data for race, ethnicity, and gender

between FY 2011 and FY 2013.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 3 NOVEMBER 20, 2014

2,809, 

68%

695, 

17%

180, 

4% 429, 

10%

25, 

1%

WHITE

BLACK OR AFRICAN

AMERICAN

HISPANIC OR LATINO

ASIAN

OTHER

For the purposes of our audit, we 

separated the SEC workforce into 

three groups: (1) Senior

Officers,

11 (2) supervisors,12 and 

(3) non-supervisors.

13 At the end 

of FY 2013, the SEC had 

134 Senior Officers,

667 supervisors, and 3,331 nonsupervisors.

14

 Organizational Roles and 

Responsibilities

Three SEC offices – OMWI, the 

Office of Equal Employment 

Opportunity (OEEO), and the 

Office of Human Resources 

(OHR) – have specific and 

interrelated responsibilities to ensure equal employment opportunity and diversity in the 

agency’s workforce. 

OMWI. The Dodd-Frank Act required the SEC to establish OMWI by January 2011. 

The SEC determined that it required Congressional approval to reprogram the 

appropriated funds necessary to create the office. Following House and Senate 

appropriations committees’ approval, the SEC formally established OMWI in July 2011. 

In January 2012, OMWI’s first permanent Director joined the SEC. Since its creation, 

OMWI has grown from two full-time employees and an acting Director to eight 

permanent employees, three contract employees, and a permanent Director. 

According to the Dodd-Frank Act, OMWI’s Director is responsible for, among other 

things, developing standards for:

• “equal employment opportunity and the racial, ethnic, and gender diversity of the 

workforce and senior management of the agency;

• increased participation of minority-owned and women-owned businesses in the 

programs and contracts of the agency...; and

 11 The SEC’s primary pay scale is the SK pay scale, which ranges from SK-1 to SK-17. Senior Officers 

comprise the SEC’s senior management.

12 Supervisors represent all employees who occupy supervisory (i.e., SK-15 and SK-17) positions. 

13 Non-supervisors represent all employees who are not Senior Officers or do not occupy supervisory 

positions.

14 Our analysis did not include non-SK pay scales used by the SEC. In FY 2013, 6 SEC employees

occupied positions that were not on the SK pay scale, which accounts for the difference in the total 

number of Senior Officers, supervisors, and non-supervisors (4,132) and the total number of all SEC 

employees (4,138) at the end of the year.

Chart 1: Average Distribution of the SEC 

Workforce by Race and Ethnicity (FY 2013)

Source: OIG-generated based on FY 2013 MD-715 data (Table A1).
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 4 NOVEMBER 20, 2014

• assessing the diversity policies and practices of entities regulated by the 

agency.” 

OMWI is required to submit to Congress an annual report on actions taken and 

challenges the agency may face in hiring qualified minority and women employees and 

contracting with qualified minority-owned and women-owned businesses. The report 

must also address the successes and challenges faced by the agency in operating 

minority and women outreach programs.

OEEO. The SEC’s OEEO is responsible for the agency’s EEO programs. OEEO 

administers the EEO administrative complaint process. OEEO counselors meet with 

aggrieved employees, provide information about the complaint process, and strive to 

work out mutually satisfactory resolutions of issues. OEEO also supports the SEC’s 

diversity and inclusion programs by sponsoring, with OHR, employee groups that

provide educational and cultural programs. Such programs include celebrations of 

ethnic, racial, and gender history; seminars; employee mentoring and development;

and community service projects.

MD-715 requires OEEO to conduct on at least an annual basis a self-assessment

“looking at the racial, national origin, and gender profiles of relevant occupational 

categories in an agency’s workforce.” The assessment includes evaluating data 

including but not limited to total workforce distribution by race, national origin, and sex; 

participation rates in supervisory and management positions by race, national origin,

and sex; and the rates of selections for promotions, training opportunities, and 

performance incentives by race, national origin, and sex. According to MD-715, “this 

‘snapshot’ can serve as a diagnostic tool to help agencies determine possible areas 

where barriers may exist and may require closer attention.” The results of the selfassessment are reported to the EEOC as a set of prescribed tables and data. OEEO 

must use the self-assessment to conduct analyses that identify barriers to inclusion

(referred to as barrier analyses) allowing the agency to take immediate steps to 

eliminate those barriers. 

OHR. The SEC’s OHR develops and oversees the agency’s staff-related programs 

including hiring, retention, promotion, and separation; compensation and benefits; 

performance management and awards; and overall employee relations. OHR is also 

responsible for staff training and development through SEC University (SECU), an inhouse function that provides internal courses, assists employees in enrolling for 

classes outside the SEC, and consults with office and division management to identify 

and deliver needs-based training. SECU provides training on diversity topics. For 

example, it hosts a required class for SEC supervisors titled “Unconscious Bias and 

Performance Management Training for SEC Supervisors,” which aids participants in 

understanding the nature of bias and how it influences key decisions that affect the 

SEC.

Collectively, OMWI, OEEO, and OHR strive to improve and enhance the SEC’s 

workforce diversity. Appendix III provides additional information on such efforts. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 5 NOVEMBER 20, 2014

SEC Policies, Procedures, and Administrative Regulations 

The SEC has established policies, procedures, and administrative regulations (SECR)

that promote diversity and inclusion and prohibit discrimination. For example, on 

March 24, 2014, the SEC Chair issued the Equal Employment Opportunity Policy, 

which establishes as a goal a workplace that is respectful, inclusive, and allows 

contribution to the best of one’s ability.15 The policy also reminds managers and 

supervisors of their responsibility to participate in inquiries into allegations of 

discrimination, harassment, or retaliation. In addition, A Personnel System Based on 

Merit Principles, posted on the SEC Insider (the SEC’s internal website) states that 

SEC employees should adhere to Merit System Principles such as: (1) recruiting so 

the workforce represents all segments of society, and (2) selecting and promoting

solely on relative ability, knowledge, and skills. Further, EEO at the SEC: Overview, 

also on the SEC Insider, states that discrimination on the basis of sex, color, race, or

national origin is prohibited, and provides an overview of the EEO complaint process. 

The SEC has also issued various diversity-related administrative regulations. For 

example, SECR 6-6, Delegated Examining Policy (September 19, 2011), places 

responsibility on SEC OHR staff to conduct “...special outreach and affirmative 

recruitment to secure an adequate pool of highly qualified candidates that includes 

minorities, women and disabled persons.” In addition, the SEC issued SECR 6-23, 

Merit Promotion Plan for Bargaining Unit Employees (March 2, 2012), and SECR 6-24, 

Merit Promotion Policy for Non-Bargaining Unit Positions (May 17, 2012), to ensure the 

implementation of a fair and systematic approach to identify, recruit, examine, and 

select employees.

16 Further, SECR 6-33, Revision 1, Excepted Service Hiring 

Authority (May 10, 2013), provides a streamlined approach for hiring accountants, 

economists, securities compliance examiners, and information technology specialists, 

and states that actions taken shall be made without regard to race, color, national 

origin, or sex. Finally, SEC Operating Procedures (SEC-OP) provide implementation 

guidance for the information in SECRs, and include SEC-OP 6-45, Pathways Programs

(January 13, 2014), which provides guidance for developmental programs tailored to 

promote employment opportunities for students and recent graduates. 

Appendix I contains other relevant SEC policies, procedures, and administrative 

regulations.

Objectives 

Our objective was to assess the SEC’s personnel operations and other efforts to 

increase the agency’s representation of minorities and women, create a workplace free 

of systemic discrimination of minorities and women, and provide equal opportunity for 

 15 In FY 2011 and FY 2012, respectively, Chairman Schapiro and Chairman Walter also issued messages 

expressing the SEC’s commitment to equal employment opportunity, diversity, and inclusion.

16 The National Treasury Employees Union represents staff at the SEC. Bargaining unit employees 

include nonprofessional and professional employees employed by the SEC, excluding all management 

officials, supervisors, and employees described in 5 U.S.C. 7112(b)(2), (3), (4), (6), and (7).
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 6 NOVEMBER 20, 2014

minorities and women to obtain senior management positions. We also sought to 

identify factors that may impact the SEC’s ability to increase the representation of 

minorities and women at the SEC, in general, and in senior management positions, in 

particular. 

We met with officials from OMWI, OEEO, and OHR, and analyzed SEC data from FY

2011 through FY 2013. Such data included hiring and promotion data, performance 

management and recognition (PMR) scores, cash awards, time-off awards, Senior 

Officer bonuses, and EEO complaint data.17 We contracted with Data and Analytic 

Solutions, Inc. (DAS) to analyze the SEC’s PMR scores for FY 2011 through FY 2013 

and determine if there were statistically significant differences based on race, ethnicity, 

and gender. We also compared the SEC’s workforce data to the most current civilian 

labor force (CLF) data prepared by the Department of Labor Bureau of Labor 

Statistics,

18 Federal workforce data,19 and securities industry workforce data.20

Appendix I includes additional information on our scope and methodology; review of 

internal controls; prior coverage; and applicable Federal laws and guidance and SEC

policies, procedures, and administrative regulations.

 17 Complaints include EEO complaints filed by employees, former employees, applicants for employment, 

and contractors. 

18 The U.S. Bureau of Labor Statistics provides projections of the CLF including labor force participation 

rates, and the civilian non-institutional population by gender, race, and ethnic groups. The CLF includes 

individuals 16 years of age or older, employed or unemployed, U.S. and non-U.S. citizens. MD-715 

directs agencies, when conducting annual self-assessments, to compare their internal participation rates 

with corresponding participation rates in the relevant CLF. As of the date of this report, 2010 CLF data 

was the most recent available for racial and ethnic categories, and 2013 CLF data was the most recent 

available for gender.

19 U.S. Office of Personnel Management, “FedScope: Federal Human Resources Data.”

20 U.S. Equal Employment Opportunity Commission, “2013 Job Patterns for Minorities and Women in 

Private Industry.”
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REPORT NO. 528 7 NOVEMBER 20, 2014

Results

Finding 1: Additional Efforts are Needed to Identify and 

Eliminate Potential Barriers to Equal Opportunity

According to the SEC’s Annual Performance Reports for FY 2011 through FY 2013, 

one of the agency’s strategic objectives is to maintain an environment that attracts, 

engages, and retains a technically proficient and diverse workforce. To assess the 

diversity of the SEC workforce, we considered the representation of minorities and 

women at the SEC in comparison to the CLF, the Federal workforce, and the securities 

industry. Although the SEC has made efforts to promote diversity, we determined that 

some minority groups and women were underrepresented at the SEC between FY 

2011 and FY 2013.

21 We also found that, during the same time, minorities and women 

received fewer awards and bonuses (based on their relative percentages of the 

workforce). Moreover, the average sizes of the awards received by minorities and 

women were smaller. Also, statistically significant differences were found in the PMR 

scores for some minority groups and women. Lastly, the percentage of EEO 

complaints filed by Black or African American employees and women was greater than

their respective representational percentages in the SEC workforce.

These conditions may have occurred or may not have been remedied, in part, because 

OEEO did not take required initial steps to identify areas where barriers may operate to 

exclude certain groups. Specifically, for FY 2011 through FY 2013, OEEO’s MD-715 

self-assessment was incomplete because the office was unable to collect and evaluate 

all required information and data. 

As a result, OEEO did not complete barrier analyses needed for the agency to 

examine, eliminate, or modify, where appropriate, policies, practices, or procedures 

that create barriers to equal opportunity. Therefore, the SEC lacks assurance that it 

has uncovered, examined, and removed barriers to equal participation at all levels of 

its workforce. Further, although OEEO did not identify any proven employment 

discrimination for EEO cases closed between FY 2011 and FY 2013, the agency lacks 

assurance that it is in compliance with 29 CFR Part 1614, which establishes the 

regulatory framework supporting the U.S. Government’s policy to provide equal 

employment opportunity for all persons, and to prohibit discrimination in employment 

because of race, color, sex, or national origin.22

 21 According to 5 CFR, § 720.202, underrepresentation is a situation in which the number of women or 

members of a minority group within a category of civil service employment constitutes a lower percentage 

of the total number of employees within the employment category than the percentage of women or the 

minority group constitutes within the CLF. 

22 U.S. Equal Employment Opportunity Commission, “Federal Sector Equal Employment Opportunity.” 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 8 NOVEMBER 20, 2014

Minorities and Women Were Generally Underrepresented and 

Received Fewer and Smaller Awards, Had Lower PMR Scores, and 

Filed EEO Complaints at Higher Rates

We determined that additional efforts are needed to identify and eliminate potential 

barriers to equal opportunity at the SEC. Specifically, we found that:

• some minority groups were underrepresented, including at the supervisor and 

Senior Officer levels;

• women were underrepresented, including at the supervisor and Senior Officer 

levels;

• some categories of newly hired minorities and newly hired women were

underrepresented; 

• some minority groups promoted were underrepresented and women promoted to 

supervisor and Senior Officer levels were underrepresented;

• minorities and women received fewer awards and bonuses (based on their 

relative percentages of the workforce), and the average size of their awards was 

smaller; 

• statistically significant differences existed in PMR scores for some minority 

groups and for women when race and ethnicity was considered; and

• the percentage of complaints filed by Black or African American employees and 

women was greater than their respective representational percentages in the 

SEC workforce.

The following sections examine each of these topics in turn.

Some Minority Groups Were Underrepresented Including at the Supervisor and 

Senior Officer Levels. We found that the overall representation of minorities at the 

SEC stayed fairly constant during the period reviewed. For all races and ethnicities, 

only the representation of Asian employees changed by more than 1 percent between 

FY 2011 and FY 2013. Although the overall SEC workforce had a higher 

representation of Black or African American employees and Asian employees than the 

CLF, SEC employees who identified themselves as Hispanic or Latino23, Two or More 

Races, American Indian and Alaska Native, and Native Hawaiian or Other Pacific 

Islander were underrepresented (See Table 1). 

 23 According to the U.S. Office of Personnel Management, “Federal Equal Opportunity Recruitment 

Program for Fiscal Year 2012” report, similar to the rest of the Federal government, the SEC also faced

challenges with regards to Hispanic or Latino full employment.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 9 NOVEMBER 20, 2014

Table 1: Workforce Distribution by Race and Ethnicity

(as a percentage of the total)

Race and Ethnicity

CLF

2010

SEC 

FY 2011 

SEC 

FY 2012

SEC 

FY 2013

White 72.36% 68.61% 68.39% 67.88%

Black or African American 12.02% 16.74% 16.56% 16.80%

Hispanic or Latino 9.96% 4.78% 4.59% 4.35%

Asian 3.90% 9.35% 9.84% 10.37%

Two or More Races 0.54% 0.08% 0.16% 0.14%

American Indian or Alaska

Native 1.08% 0.34% 0.36% 0.34%

Native Hawaiian or Other 

Pacific Islander 0.14% 0.10% 0.11% 0.12%

Total 100.00% 100.00% 100.01%^ 100.00%

Source: OIG-generated based on 2010 CLF data and MD-715 data (Table A1) for FY 2011 through FY 2013.

Totals with an “^” indicate that the percentages did not total to 100.00% due to rounding.

Furthermore, Table 2 shows race and ethnicity data for the CLF, the Federal workforce 

at the Senior Executive Service (SES) level, the securities industry separated by 

supervisor level, and the average of the SEC workforce separated by supervisor 

level.

24 As shown in the table, the SEC workforce had a greater percentage of Asian 

and Native Hawaiian or Other Pacific Islander employees at the supervisor level than 

the CLF; however, all other minority races and ethnicities were underrepresented at 

both the supervisor and Senior Officer levels.

In addition, although the SEC workforce had lower percentages of Black or African 

American and Hispanic or Latino employees at the Senior Officer level when compared 

to the SES, it did have a greater percentage of employees of these two racial and 

ethnic categories when compared to the securities industry.

 24 Comparisons to other workforce measures such as the Federal workforce and the securities industry 

are presented to provide context.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 10 NOVEMBER 20, 2014

Table 2: Workforce Distribution by Race and Ethnicity and Supervisory Status

(as a percentage of the total)

Race and 

Ethnicity

CLF

2010

Average 

Percentage 

of SEC 

Supervisors

FYs 2011 - 2013

Securities 

Industry 

Supervisors 

2013

Average 

Percentage 

of SEC 

Senior 

Officers

FYs 2011 -

2013

SES

Federal

Workforce

FY 2012

Securities 

Industry 

Executives

2013

White 72.36% 79.33% 79.40% 87.44% 80.6% 89.59%

Black or African 

American 12.02% 8.66% 4.11% 4.34% 10.5% 1.48%

Hispanic or 

Latino 9.96% 3.92% 4.11% 3.88% 4.1% 2.48%

Asian 3.90% 7.50% 11.44% 3.42% N/A 5.86%

Two or More 

Races 0.54% 0.05% 0.66% 0.23% 0.6% 0.41%

American Indian 

or Alaska Native 1.08% 0.34% 0.11% 0.68% 1.4% 0.10%

Native Hawaiian 

or Other Pacific 

Islander

0.14% 0.19% 0.17% 0.00% N/A 0.09%

Total 100.00% 99.99%^ 100.00% 99.99%^ 97.2%* 100.00%

Source: OIG-generated based on 2010 CLF data; Federal Personnel Payroll System (FPPS) data for FY 2011 through 

FY 2013 received on July 25, 2014; EEOC EEO-1 data for the North American Industry Classification System (NAICS)

code 523; and data from the U.S. Office of Personnel Management “Federal Equal Opportunity Recruitment Program 

for FY 2012 Report to Congress." Totals with an “^” indicate that the percentages did not total to 100.00% due to 

rounding. “N/A” indicates that data was not available. “*” indicates the sum did not total to 100.00% due to 

unavailability of all data. 

Women Were Underrepresented Including at the Supervisor and Senior Officer 

Levels. According to the Bureau of Labor Statistics, women made up 46.80 percent of 

the CLF in 2013. At the SEC, the overall representation of women in the workforce 

decreased slightly for each year reviewed, from 47.8 percent in FY 2011, to 

46.9 percent in FY 2012, and to 46.4 percent in FY 2013. Thus, in FY 2013, women 

were underrepresented. In addition, between FY 2011 and FY 2013, women on 

average made up 37.12 percent of the SEC’s supervisory workforce and 31.96 percent 

of the SEC’s Senior Officers. Both of these percentages were lower than the CLF 

percentage of 46.80 percent. These results are a potential indicator that women were

not promoted to or hired for supervisor and Senior Officer levels at the same rate as 

their male counterparts. As shown in Chart 2, we also determined that the percentages 

of both female supervisors and Senior Officers at the SEC were higher than the 

percentage of female supervisors and executives in the securities industry.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 11 NOVEMBER 20, 2014

Chart 2: Workforce Distribution by Gender and Supervisory Status

(as a percentage of the total)

Source: OIG-generated based on 2013 CLF data, FPPS data for FY 2011 through FY 2013 

received on July 25, 2014, and 2013 EEOC EEO-1 data for NAICS code 523.

Some Categories of Newly Hired Minorities and Newly Hired Women Were 

Underrepresented. During the period reviewed, the SEC hired25 1,053 new 

employees which, after accounting for separations, increased the SEC’s workforce by 

over 300 positions (or about 8 percent).26 Of these 1,053 newly hired employees, as 

shown in Table 3, the percentage of Black or African American, Asian, and Native 

Hawaiian or Other Pacific Islander employees was greater than their respective 

representational CLF percentages. However, all other races and ethnicities were 

underrepresented when compared to the CLF. For example, of the 1,053 newly hired 

employees:

• 38 (or 3.61 percent) were Hispanic or Latino, which was less than the 

corresponding CLF percentage of 9.96 percent; 

• 4 (or 0.38 percent) were of Two or More Races, which was less than the 

corresponding CLF percentage of 0.54 percent; and 

• 4 (or 0.38 percent) were American Indian or Alaska Native, which was less than 

the corresponding CLF percentage of 1.08 percent. 

 25 The SEC is required by 5 U.S. Code § 2301 to hire qualified individuals based solely on their relative 

ability, knowledge, and skills. In FY 2011 the SEC hired 214 employees, in FY 2012 the SEC hired 

372 employees, and in FY 2013 the SEC hired 467 employees. All new hires represent employees from 

outside the SEC who began employment with the SEC. 

26 According to the SEC’s MD-715 reports, the agency’s workforce totaled 3,829, 3,942, and 

4,138 employees at the end of FY 2011, FY 2012, and FY 2013, respectively, which represents an 

8 percent increase over those 3 years.

46.80%

37.12% 35.56% 31.96%

18.19%

53.20%

62.88% 64.44% 68.04%

81.81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CLF

2013

SEC

Supervisors

FYs 2011 -

2013

Securities

Industry

Supervisors

2013

SEC Senior

Officers FYs

2011 -2013

Securities

Industry

Executives

2013

Percentage of Employees

Male

Female
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 12 NOVEMBER 20, 2014

Also, 412 of the 1,053 new hires (or 39.1 percent) were women. Therefore, newly 

hired women at the SEC were underrepresented when compared to the percentage of 

women in the CLF, which was 46.80 percent.

Table 3: New Hires by Race and Ethnicity

(as a percentage of the total)

Race and Ethnicity

CLF

2010

SEC’s Average New 

Hires

FYs 2011-2013

White 72.36% 68.76%

Black or African American 12.02% 13.68%

Hispanic or Latino 9.96% 3.61%

Asian 3.90% 12.92%

Two or More Races 0.54% 0.38%

American Indian or Alaska Native 1.08% 0.38%

Native Hawaiian or Other Pacific Islander 0.14% 0.28%

Total 100.00% 100.01%^

Source: OIG-generated based on 2010 CLF and FPPS data for FY 2011 through FY 2013 retrieved 

on July 3, 2014. Totals with an “^” indicate that the percentages did not total to 100.00% due to 

rounding.

Of the 1,053 new hires, 55 were hired at the SK-15 or SK-17 supervisory levels,

including 20 minorities. The breakdown of these 20 minorities and their percentage of

the 55 new hires into the SK-15 or SK-17 supervisory levels were as follows:

• 12 (or 22 percent) were Black or African American; 

• 5 (or 9 percent) were Asian; 

• 1 (or 2 percent) was Hispanic or Latino; 

• 1 (or 2 percent) was of Two or More Races; and 

• 1 (or 2 percent) was Native Hawaiian or Other Pacific Islander. 

No American Indian or Alaska Natives were hired at the SK-15 or SK-17 supervisory 

levels during the period reviewed.

Based on these percentages, the Hispanic or Latino and American Indian or Alaska 

Native racial and ethnic categories were underrepresented for new hires at the 

supervisor level when compared to the CLF. Conversely, individuals of other racial and 

ethnic categories were hired at rates greater than their respective representational CLF 

percentages.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 13 NOVEMBER 20, 2014

Additionally, 29 of the SEC’s 1,053 new hires were hired as Senior Officers, including

6 (or 21 percent) minorities. Of these 6 minorities, 1 (or 3 percent) was Black or 

African American, 2 (or 7 percent) were Hispanic or Latino, and 3 (or 10 percent) were 

Asian. Based on these percentages, all minority races and ethnicities were 

underrepresented for new hires at the Senior Officer level except Asian.

Finally, of the 55 supervisors hired by the SEC during the 3 years reviewed, 19 (or 

35 percent) were women. Of the 29 Senior Officers hired, 8 (or 28 percent) were 

women. Thus, for the period reviewed, newly hired women were underrepresented 

when compared to the CLF at both the supervisor and Senior Officer levels. 

Some Minority Groups Promoted Were Underrepresented and Women Promoted 

to Supervisor and Senior Officer Levels Were Underrepresented. Between FY

2011 and FY 2013, the SEC promoted 1,600 employees.27 Sixty-nine (or 4.31 percent) 

were Hispanic or Latino, 6 (or 0.38 percent) were American Indian or Alaska Native, 

and 2 (or 0.13 percent) were of Two or More Races (See Table 4). Thus, for 

promotions, these races and ethnicities were underrepresented when compared to the 

CLF. Conversely, the percentage of promotions of Black or African American, Asian, 

and Native Hawaiian or Other Pacific Islander employees exceeded their respective 

representational CLF percentages. In addition, during the period reviewed, 51 percent 

of the 1,600 promotions were granted to women, which also exceeded their respective 

representational CLF percentage.

Table 4: Promotions by Race and Ethnicity

(as a percentage of the total)

Race and Ethnicity CLF

2010

Overall SEC 

Workforce

FYs 2011 - 2013

SEC’s Average 

Promotions

FYs 2011 - 2013

White 72.36% 68.45% 65.06%

Black or African American 12.02% 16.66% 20.44%

Hispanic or Latino 9.96% 4.58% 4.31%

Asian 3.90% 9.75% 9.38%

Two or More Races 0.54% 0.11% 0.13%

American Indian or Alaska Native 1.08% 0.34% 0.38%

Native Hawaiian or Other Pacific Islander 0.14% 0.11% 0.31%

Total 100.00% 100.00% 100.01%^

Source: OIG-generated based on 2010 CLF data and FPPS data for FY 2011 through FY 2013 retrieved on July 3, 

2014. Totals with an “^” indicate that the percentages did not total to 100.00% due to rounding.

In addition, 314 of the 1,600 promotions between FY 2011 and FY 2013 were

promotions to supervisor positions. Of these 314 promotions, 30 (or 10 percent) were 

 27 Promotions include SEC employees who moved at least one grade higher than their previous grade.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 14 NOVEMBER 20, 2014

granted to Black or African American employees, 12 (or 4 percent) were granted to 

Hispanic or Latino employees, none were granted to employees of Two or More Races, 

and 2 (or 1 percent) were granted to American Indian or Alaska Native employees. 

Further, of these 314 promotions, 132 (or 42 percent) were granted to women. 

Therefore, for promotions to the supervisor level, these races and ethnicities, as well 

as women, were underrepresented when compared to the CLF. Conversely, Asian and 

Native Hawaiian or Other Pacific Islander employees were promoted to supervisor

positions at rates exceeding their respective representational CLF percentages.

Next, there were 108 promotions to Senior Officer positions between FY 2011 and FY

2013. Of these 108 promotions, 16 were granted to minorities. Specifically, 8 (or 

7 percent) were granted to Black or African American employees, 2 (or 2 percent) were 

granted to Hispanic or Latino employees, and 6 (or 6 percent) were granted to Asian

employees. No other minority races or ethnicities were promoted to the Senior Officer 

level during the period reviewed. Therefore, for promotions to the Senior Officer level, 

Asian was the only racial and ethnic category that was not underrepresented when 

compared to the CLF. 

Finally, of the 108 promotions to the Senior Officer level, 32 (or 30 percent) were 

granted to women. Thus, for promotions to the Senior Officer level, women were also 

underrepresented when compared to the CLF. 

Minorities and Women Received Fewer Awards and Bonuses, and the Average 

Award Size Was Smaller. To determine whether disparities existed in the SEC’s 

distribution of awards and bonuses, we analyzed the rates at which employees 

received cash awards, time-off awards, and Senior Officer bonuses. Cash awards and 

time-off awards are not linked to employee performance ratings. Rather, they are 

given in recognition of special acts or as on the spot awards. Senior Officer bonuses, 

however, are tied to performance. 

Cash Awards for Minorities. As shown in Table 5, the SEC awarded a total of 

4,454 cash awards between FY 2011 and FY 2013, which resulted in 37.40 percent28

of the SEC’s total workforce receiving a cash award. However, Black or African 

American, Asian, and Other employees received fewer cash awards than the overall 

workforce average (37.40 percent) and White employees, relative to their 

representational percentages of the workforce. Specifically, White employees received 

3,164 cash awards, which resulted in 39.25 percent of the SEC’s White employees 

receiving a cash award. In comparison, 31.98 percent, 36.26 percent, and 

30.89 percent of Black or African American, Asian, and Other employees, respectively, 

received cash awards. Only Hispanic or Latino employees received cash awards at a 

rate higher than both the average of the entire workforce and Whites (41.70 percent of 

the SEC’s Hispanic or Latino employees received cash awards).

 28 We calculated the percentage (37.40 percent) of the SEC’s total workforce that received a cash award 

by dividing the total number of cash awards granted between FY 2011 and FY 2013 (4,454) by the total 

SEC workforce during the same period (11,909). It is possible that one employee received more than 

one cash award.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 15 NOVEMBER 20, 2014

In addition, on average White employees received larger cash awards than both the 

overall workforce and all racial and ethnic categories. Specifically, the average cash 

award received by White employees was $1,609, while the average cash award 

distributed to the SEC workforce was $1,529. The average cash award received by 

Asian and Other employees was slightly higher than the average received by the entire 

workforce, but their awards were still less than the average White employee’s. In 

addition, Black or African American and Hispanic or Latino employees received cash 

awards that were less than both the workforce average and the average of their White 

counterparts. On average, Black or African American employees received cash 

awards of $1,195, and Hispanic or Latino employees received awards of $1,287, which

was 22 percent and 16 percent, respectively, less than the average cash award of the 

SEC workforce. 

Table 5: Cash Awards by Race and Ethnicity (FY 2011 - FY 2013)

Race and Ethnicity

Total Number of Cash 

Awards / Weighted Average

Percentage of Population

Average Cash Award 

Amount

White 3,164 $1,609 39.25%

Black or African American

627 $1,195 31.98%

Hispanic or Latino

227 $1,287 41.70%

Asian

415 $1,549 36.26%

Other

21 $1,574 30.89%

Totals 4,454 $1,529 37.40%

Source: OIG-generated based on MD-715 data (Table A1) and FPPS data for FY 2011 through FY 2013

received on July 25, 2014.

Senior Officer Bonuses for Minorities. As shown in Table 6, the SEC awarded a total of 

225 Senior Officer bonuses between FY 2011 and FY 2013, which resulted in an

average of 51 percent29 of the SEC’s Senior Officers receiving a bonus. In FY 2013,

the make-up of the SEC’s Senior Officers by race and ethnicity was: 133 White, 

7 Black or African American, 5 Hispanic or Latino, 6 Asian, and 1 Other. 

The average amount of each Senior Officer bonus distributed between FY 2011 and

FY 2013 was $9,274, and only White and Hispanic or Latino employees received a 

higher average bonus than the overall average. In comparison, the remaining Senior 

Officers of other racial and ethnic categories received lower average bonuses.

 29 We calculated the percentage (51 percent) of the SEC’s Senior Officers that received a bonus by 

dividing the total number of Senior Officer bonuses granted between FY 2011 and FY 2013 (225) by the 

total number of Senior Officers during the same period (438). It is possible that one Senior Officer 

received more than one bonus.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 16 NOVEMBER 20, 2014

Similar to cash awards, the average Senior Officer bonus was lower for Black or 

African American employees when compared to the average of all Senior Officers that 

received a bonus. Specifically, Black or African American Senior Officers received an 

average bonus of $7,375 (or 20 percent less than the average bonus of $9,274). 

Additionally, Asian Senior Officers received an average bonus of $8,474 (or 9 percent 

less than the average bonus of $9,274).

Table 6: Senior Officer Bonuses by Race and Ethnicity (FY 2011 - FY 2013)

Race and Ethnicity Total Number of Bonuses Awarded Average Bonus Amount

White 195 $9,379

Black or African American 12 $7,375

Hispanic or Latino 9 $10,859

Asian 8 $8,474

Other 1 $3,803

Totals 225 $9,274

Source: OIG-generated based on FPPS data for FY 2011 through FY 2013 received on July 25, 2014.

Cash Awards, Time-Off Awards, and Senior Officer Bonuses for Women. Our analysis 

also showed that, between FY 2011 and FY 2013, when compared to men, women 

received fewer cash awards (2,388 awards versus 2,066 awards), more time-off 

awards (1,475 awards versus 1,650 awards), and fewer Senior Officer bonuses 

(153 bonuses versus 72 bonuses). 

The SEC’s Chief Human Capital Officer stated that often employees can elect the type 

of award they want to receive (cash versus time-off) and many women frequently 

request time-off. However, when women did receive cash awards at the nonsupervisor level, the average cash award paid to them between FY 2011 and FY 2013 

was smaller than the average cash award paid to men ($1,428 versus $1,307). Also, 

the average Senior Officer bonus paid to women during the same time was lower than 

the average Senior Officer bonus paid to men ($9,688 versus $8,396).

Statistically Significant Differences Existed in PMR Scores For Some Minority

Groups and Women When Race and Ethnicity Was Considered. PMR scores are 

the numeric results of employee performance appraisals and range from 1 to 5 as 

follows: 

• 1 - Unacceptable 

• 2 - Needs Improvement 

• 3 - Meets Expectations 

• 4 - Exceeds Expectations

• 5 - Greatly Exceeds Expectations
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 17 NOVEMBER 20, 2014

As described in Appendix IV, between FY 2011 and FY 2013, the SEC had different 

rating systems of record for various employees based on supervisory level and 

bargaining unit status. In October 2006, the Federal Services Impasse Panel set forth 

several provisions related to the SEC’s performance management system. In response, 

the SEC developed and implemented the Evidence Based Performance Management 

System Pilot Program that was in place during the period reviewed. An SEC 

employee’s official rating of record was either “Acceptable,” “Unacceptable,” or a PMR 

score of 1 through 5 based on the employee’s supervisory level and bargaining unit 

status.

30

Although certain SEC employees received an official rating of record of “Acceptable” or 

“Unacceptable,” we obtained all available underlying numerical PMR scores used to 

determine the official rating of record for SEC employees between FY 2011 and FY

2013. Employees with only “Acceptable” or “Unacceptable” ratings may still use their 

underlying numerical PMR score when applying to job announcements or promotions, 

and therefore we considered this information relevant for our analysis. However, 

numerical PMR scores for Senior Officers in FY 2011 and for bargaining unit employees 

in FY 2013 were unavailable. 

We contracted with DAS to analyze the SEC’s PMR scores for FY 2011 through FY 

2013 and determine if there were statistically significant differences based on race, 

ethnicity, and gender. Statistical significance means that, based on a 90 percent 

confidence level, differences observed between the average PMR scores for the groups 

of interest, no matter how small in relative magnitude, were real and not due to chance. 

As shown in the following analysis, there were statistically significant differences in PMR 

scores based on race, ethnicity, and gender. However, these findings only indicate that 

there were statistically significant differences in average PMR scores that existed

across a number of different characteristics. The findings do not indicate that 

discrimination was necessarily the cause. Further research is needed to determine the 

cause of statistically significant differences in PMR scores and, as necessary, how to 

remedy the cause so that individuals are afforded the same opportunities for 

advancement within the SEC.31

The following racial and ethnic categories were analyzed and combined into one group: 

Two or More Races, American Indian or Alaska Native, and Native Hawaiian or other 

Pacific Islander. Even so, this category proved too sparse for analysis and was 

 30 According to an August 2014 Memorandum of Understanding between the SEC and the National 

Treasury Employees Union, both parties agreed to work collaboratively towards developing a new fourlevel system for performance management and merit pay that makes relevant and meaningful distinctions 

between each performance level.

31 As stated in MD-715, “. . . statistics are only a starting point and alone rarely serve to provide a 

complete picture of the existence of workplace barriers. Agencies must look at statistics in the context of 

the totality of the circumstances. A statistical snapshot may be useful as an initial diagnostic tool, but 

conclusions concerning the existence of workplace barriers cannot be drawn from gross numerical 

assessments. Rather, the identification of workplace barriers will require a thorough examination of all of 

the circumstances.” 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 18 NOVEMBER 20, 2014

subsequently excluded. Appendix V further describes DAS’s methodology and 

analysis.

Findings by Race and Ethnicity. White employees received an average PMR score of 

3.81, compared to 3.50 for Black or African American employees, and 3.72 for Hispanic 

or Latino employees. The differences in PMR scores for Black or African American 

employees and Hispanic or Latino employees were statistically significant.32 The 

difference between the average PMR score for White and Asian employees was not 

statistically significant (See Chart 3). 

During the period reviewed, the average SEC PMR score was 3.75. The difference in 

the average PMR score for Black or African American employees (3.50) was statistically 

significant when compared to the average SEC PMR score of 3.75, and the difference 

in the average PMR score for White employees (3.81) was statistically significant when 

compared to the average SEC PMR score of 3.75. There were no statistically 

significant differences between employees of other races and ethnicities (i.e., Hispanic 

and Latino and Asian employees) and the average SEC PMR score.

Chart 3: Average PMR Score by Race and Ethnicity for All 

SEC Employees

Source: DAS analysis of SEC workforce data from FY 2011 through FY 2013.

DAS also examined the differences in PMR scores of the SEC’s non-supervisor

employees, supervisor employees, and Senior Officers. Statistically significant 

differences in the average PMR score for Black or African American and Hispanic or 

Latino non-supervisor employees compared to White non-supervisor employees are 

presented below in Chart 4. Differences among minorities in supervisor positions were 

not statistically significant, and therefore are not presented.

 32 For each of the charts that follow, a determination of significance was made using a 90 percent 

confidence interval. Significance is denoted with *. 

3.81

3.50*

3.72*

3.76

3.3

3.4

3.5

3.6

3.7

3.8

3.9

White Black or African

American

Hispanic or Latino Asian
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 19 NOVEMBER 20, 2014

Chart 4: Average PMR Score by Race and Ethnicity for

Non-Supervisor Employees

Source: DAS analysis of SEC workforce data from FY 2011 through FY 2013.

Findings by Gender. DAS also analyzed the relationship between gender and PMR 

score to determine whether statistically significant differences existed. Based on the 

analysis conducted by DAS, there were no statistically significant differences between 

the average PMR scores for men and women at the SEC between FY 2011 and FY 

2013.

However, DAS further analyzed the intersection of race and ethnicity and gender and 

found statistically significant differences. As shown in Chart 5, compared to White 

males, Black or African American males and females received lower PMR scores as 

did Hispanic or Latino females and Asian males, and these differences were 

statistically significant. There were no significant differences for White females or 

Asian females or Hispanic or Latino males as compared to White males.

3.73

3.44*

3.65*

3.68

3.2

3.3

3.4

3.5

3.6

3.7

3.8

White Black or African

American

Hispanic or Latino Asian
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 20 NOVEMBER 20, 2014

Chart 5: Average PMR Score by Race and Ethnicity and Gender

Source: DAS analysis of SEC workforce data from FY 2011 through FY 2013.

DAS also analyzed the relationship between gender and position type (Senior Officer, 

supervisor, and non-supervisor employees). The results of the analyses conducted 

were not statistically significant and neither were the analyses examining the 

intersection of race and gender and position type. 

The Percentage of Complaints Filed by Black or African American Employees and 

Women Was Greater than Their Respective Representational Percentages in the 

SEC Workforce. We determined that a higher percentage of EEO complaints were 

filed by Black or African American employees and women than their respective 

representational percentages in the SEC workforce. Minority category information was 

available for 77 of the 93 total complaints33 filed during the 3 fiscal years reviewed. Of 

these 77 complaints, 26 (or 34 percent) were filed by Black or African American 

employees. The average percentage of Black or African American employees at the 

SEC between FY 2011 and FY 2013 was 17 percent, a difference of 17 percent. 

Similarly, of the 93 total complaints filed, 55 (or 59 percent) were filed by women. The 

average percentage of women employed at the SEC between FY 2011 and FY 2013 

was 47 percent, a difference of 12 percent.

The Director of OEEO responded to these differences by stating that OEEO is currently 

overseeing a barrier analysis, which began in April 2014 and will be completed by the 

end of the calendar year. It is expected that this analysis will help determine if there 

 33 The 93 total complaints included 47 formal complaints and 46 informal complaints as well as any 

instances where an individual filed more than one complaint.

3.8

3.82

3.49* 3.51*

3.81

3.63*

3.73*

3.78

3.3

3.4

3.5

3.6

3.7

3.8

3.9

White

Males

White

Females

Black Males Black

Females

Hispanic

Males

Hispanic

Females

Asian Males Asian

Females
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 21 NOVEMBER 20, 2014

are particular barriers to employment and provide recommendations for corrective 

action. 

The SEC Did Not Fully Implement MD-715 Requirements

MD-715: EEO Reporting Requirements for Federal Agencies34 requires agencies to

conduct on at least an annual basis a self-assessment of the racial, national origin, and 

gender profile of relevant occupational categories in the agencies’ workforce. The 

results of the self-assessment are reported to the EEOC as a set of prescribed tables 

and data. The self-assessment may be useful as an initial diagnostic tool to identify

possible areas that may require closer attention. For example, when an agency’s selfassessment indicates that minorities or women may have been denied equal access to 

employment opportunities, MD-715 requires agencies to identify, eliminate, or modify, 

where appropriate, any policy, practice, or procedure that creates a barrier to equal 

opportunity. This is done by conducting a barrier analysis which allows agencies to 

uncover, examine, and remove barriers to equal participation at all levels of the 

workforce.

35

An effective barrier analysis pinpoints the particular phase or facet of a process that is 

causing a workforce discrepancy. For example, as identified in this report, between FY

2011 and FY 2013, women on average made up 37.12 percent of the SEC’s 

supervisory workforce and 31.96 percent of the SEC’s Senior Officers, both 

percentages lower than the CLF percentage of 46.80 percent. This information may 

present an indicator that women were not promoted to or hired for supervisor and 

Senior Officer positions at the same rate as their male counterparts, and therefore 

could present a potential barrier for analysis. 

For FY 2011 through FY 2013, OEEO’s MD-715 self-assessments were incomplete 

because the office was unable to collect and evaluate all required information and data. 

Specifically, all of the required workforce data tables that could not be completed 

without applicant flow data were either not submitted by OEEO or the submissions 

were incomplete. In addition, OEEO did not submit the workforce data table allowing 

examination of the distribution of opportunities to participate in Career Development 

programs. 

As a result, OEEO did not complete barrier analyses needed for the agency to 

examine, eliminate, or modify, where appropriate, policies, practices, or procedures 

that create barriers to equal opportunity. In addition, during the period reviewed, 

OEEO did not have formal policies or procedures for submitting workforce data or 

conducting barrier analyses. Rather, OEEO relied on existing EEOC guidance. 

OEEO officials stated that, during the period reviewed, they were unable to obtain and 

submit to the EEOC certain MD-715 tables because, in part, applicant flow data from 

 34 U.S. Equal Employment Opportunity Commission, “MD-715: EEO Reporting Requirements for Federal 

Agencies.” 

35 U.S. Equal Employment Opportunity Commission, “Instructions to Federal Agencies for EEO MD-715.” 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 22 NOVEMBER 20, 2014

the U.S. Office of Personnel Management was unavailable.36 Also, in FY 2011, OEEO 

contracted with a vendor to provide a comprehensive 5-year barrier analysis. 

However, OEEO determined that reports drafted by the vendor were unacceptable and 

terminated the contract. Therefore, barrier analyses were not completed during the 

period reviewed.

In May 2013 and April 2014, officials from the EEOC met with OEEO personnel and 

raised concerns about the SEC’s lack of full implementation of MD-715 requirements. 

In addition, OEEO’s FY 2013 and FY 2014 internal control self-assessments included 

the office’s inability to meet external reporting requirements as an area of high risk. 

The SEC’s OEEO Director stated that, historically, the office has not had the necessary 

staffing resources with the appropriate knowledge and skill sets to conduct in-depth 

barrier analyses. OEEO is overseeing a new vendor that is conducting a barrier 

analysis expected to be completed by the end of 2014. In the future, and with 

additional resources and required expertise, OEEO’s goal is to conduct detailed barrier 

analyses itself.

The SEC Lacks Assurance That It Has Removed Barriers to Equal 

Participation and Is In Compliance with Diversity Regulations

Because OEEO did not take required initial steps to identify areas where barriers may 

operate to exclude certain groups, the SEC did not examine, eliminate, or modify, 

where appropriate, policies, practices, or procedures that create barriers to equal 

opportunity. As a result, the SEC lacks assurance that it has uncovered, examined, 

and removed barriers to equal participation at all levels of its workforce. Further, 

although OEEO did not identify any proven employment discrimination for EEO cases 

closed between FY 2011 and FY 2013, the agency lacks assurance that it is in 

compliance with 29 CFR Part 1614, which establishes the regulatory framework 

supporting the U.S. Government’s policy to provide equal employment opportunity for 

all persons, and to prohibit discrimination in employment because of race, color, sex, or 

national origin. 

According to OMWI’s “Frequently Asked Questions for SEC Hiring Managers,” in order 

to effectively protect the interests of the investing public, the SEC’s workforce must 

include a wide range of backgrounds, skills, and experiences. It is equally important 

that the SEC attract and retain a diverse workforce to work collaboratively to execute 

its mission. Fully embracing diversity increases the SEC’s ability to attract the best and 

brightest in the securities industry, thereby empowering the agency to achieve 

professional excellence and remain steadfast in its commitment to protect the investing 

public. Our audit found that additional efforts are needed to identify and eliminate 

potential barriers to equal opportunity at the SEC.

 36 MD-715 defines “applicant flow data” as information reflecting characteristics of the pool of individuals 

applying for an employment opportunity. 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 23 NOVEMBER 20, 2014

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

In order to identify and eliminate potential barriers to equal opportunity, we recommend 

that:

Recommendation 1: The Office of Equal Employment Opportunity create policies and 

procedures documenting how the office (a) collects, evaluates, and submits all 

information and workforce data tables, and (b) conducts barrier analyses that allow the 

SEC to uncover, examine, and remove barriers to equal participation at all levels of the 

workforce, as required by Management Directive 715.

Management’s Response. The Office of Equal Employment Opportunity

concurred with the recommendation and is in the process of reviewing, 

assessing, and documenting its policies and procedures for collecting, 

evaluating, and submitting all information and workforce data tables, as required 

by Management Directive 715. The Office also is in the process of reviewing, 

assessing, and documenting its policies and procedures for conducting barrier 

analyses that allow the SEC to uncover, examine, and remove barriers to equal 

participation at all levels of the workforce, as required by Management Directive 

715. The Office of Equal Employment Opportunity is committed to the timely, 

effective, and responsible handling of both of these matters.

OIG’s Evaluation of Management’s Response. Management’s proposed 

actions are responsive; therefore, the recommendation is resolved and will be 

closed upon verification of the action taken.

Recommendation 2: The Office of Equal Employment Opportunity complete and 

submit to the U.S. Equal Employment Opportunity Commission all data and tables 

required by Management Directive 715, beginning with the fiscal year 2014 submission.

Management’s Response. The Office of Equal Employment Opportunity 

concurred with the recommendation and is committed to the timely completion 

and submission of all data and tables required by Management Directive 715, 

consistent with the availability of the data to the Office.

OIG’s Evaluation of Management’s Response. Management’s proposed 

actions are responsive; therefore, the recommendation is resolved and will be 

closed upon verification of the action taken.

Recommendation 3: The Office of Equal Employment Opportunity complete the 

ongoing barrier analysis, aimed at determining if there are particular barriers to equal 

employment opportunity at the U.S. Securities and Exchange Commission, as soon as 

practicable, and complete future barrier analyses as appropriate.

Management’s Response. The Office of Equal Employment Opportunity 

concurred with the recommendation and is committed to the completion of the 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 24 NOVEMBER 20, 2014

ongoing barrier analysis, aimed at determining if there are particular barriers to 

equal employment opportunity regarding promotions at the SEC, as soon as 

practicable. The Office also is committed to the completion of future barrier 

analyses, as appropriate, consistent with the availability of data and additional

resources and expertise required.

OIG’s Evaluation of Management’s Response. Management’s proposed

actions are responsive; therefore, the recommendation is resolved and will be 

closed upon verification of the action taken.

Recommendation 4: The Office of the Chair ensure that the SEC responds to the 

findings of the ongoing barrier analysis by eliminating or modifying, where appropriate, 

any practice or procedure that creates a barrier to equality of opportunity, as required by 

Management Directive 715.

Management’s Response. The Office of the Chair concurred with the 

recommendation and will ensure that the SEC works to eliminate or modify, 

where appropriate, any practice or procedure that creates a barrier to equal 

opportunity, as required by Management Directive 715.

OIG’s Evaluation of Management’s Response. Management’s proposed 

actions are responsive; therefore, the recommendation is resolved and will be 

closed upon verification of the action taken.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 25 NOVEMBER 20, 2014

Finding 2: OMWI Needs Additional Policies, Procedures, and 

Standards to Measure the Effectiveness of its Diversity 

Efforts and Fully Comply with the Dodd-Frank Act

The Dodd-Frank Act requires OMWI to be responsible for “all matters of the agency 

relating to diversity in management, employment, and business activities”37 and to 

submit annual reports to Congress regarding OMWI’s efforts.

38 The Dodd-Frank Act 

also requires OMWI’s Director to develop standards for “equal employment opportunity 

and the racial, ethnic, and gender diversity of the workforce and senior management of 

the agency”39 (workforce diversity standards) and to take specific actions to seek 

diversity in the agency’s workforce. In addition, GAO provides guidance on establishing 

and maintaining an effective internal control system, including policies and procedures. 

We determined that the SEC’s OMWI submitted annual reports to Congress in FY 2011 

through FY 2013 and made many efforts40 to enhance diversity in the SEC’s workforce, 

to include: 

• participating in diversity job fairs sponsored by minority-serving groups; 

• posting job opportunities in minority- and women-serving publications; and

• partnering with various women and minority focused organizations. 

Additionally, OMWI established the following performance standard included in the 

Performance Work Plans for all SEC SK-15 and SK-17 supervisors:

Champions and promotes a diverse and inclusive work environment in which all 

employees have an opportunity to be productive by managing, developing, and treating 

staff equitably regardless of individual differences. Contributes to a culture of respecting 

and appreciating diversity and the benefits of a diverse workforce through participating in 

diversity awareness activities.

However, the office lacks a systematic and comprehensive method of delivering its 

program and evaluating its effectiveness. Specifically, the office has not established

internal policies and procedures or required workforce diversity standards. This 

occurred because the OMWI Director determined that other requirements of Section 

342 of the Dodd-Frank Act were a higher priority. As a result, OMWI lacks the controls 

necessary to monitor, evaluate, and, as necessary, improve its operations and fully 

comply with the Dodd-Frank Act. 

 37 Public Law 111-203 § 342(a)(1)(a), July 21, 2010.

38 Public Law 111-203 § 342(e), July 21, 2010.

39 Public Law 111-203 § 342(b)(2)(a), July 21, 2010.

40 Appendix III describes OMWI’s efforts to comply with the Dodd-Frank Act.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 26 NOVEMBER 20, 2014

OMWI Needs Additional Internal Policies and Procedures and

Workforce Diversity Standards 

Although the SEC’s OMWI was created over 3 years ago and internal control, 

performance measurement, and evaluation methods would help OMWI monitor, 

evaluate, and improve its operations, the office has not fully established internal policies 

and procedures to guide its work. Also, as of October 2014, OMWI had not developed 

workforce diversity standards as required by the Dodd-Frank Act. 

Federal Internal Control Requirements. The Federal Managers’ Financial Integrity 

Act41 requires the Comptroller General to issue standards for internal control in the 

Federal government. The GAO “Standards for Internal Control in the Federal 

Government” provide the overall framework for establishing and maintaining an effective 

internal control system.42 According to the document, control activities, such as 

policies, procedures, techniques, and mechanisms that enforce management’s 

directives, are “an integral part of an entity’s planning, implementing, reviewing, and 

accountability for stewardship of government resources and achieving effective results.” 

Additionally, GAO states that one example of a control activity is the establishment and 

review of performance measures and indicators. Specifically, “activities need to be 

established to monitor performance measures and indicators. These controls could call 

for comparisons and assessments relating different sets of data to one another so that 

analyses of the relationships can be made and appropriate actions taken.”

Although not a Federal internal control requirement, GAO’s “Performance Measurement 

and Evaluation”43 provides definitions of performance measurement and different types 

of evaluations. The document states that “performance measurement is the ongoing 

monitoring and reporting of program accomplishments, particularly progress toward preestablished goals. It is typically conducted by program or agency management. 

Performance measures may address the type or level of program activities conducted 

(process), the direct products and services delivered by a program (outputs), or the 

results of those products and services (outcomes).” In addition “outcome evaluation”

assesses “the extent to which a program achieves its outcome-oriented objectives. It 

focuses on outputs and outcomes (including unintended effects) to judge program 

effectiveness but may also assess program process to understand how outcomes are 

produced.”

OMWI’s Efforts to Establish Internal Control. According to the Director of OMWI, the 

office uses established mechanisms to guide its work. Specifically, the Director stated

that the office uses a number of existing agency-wide administrative policies and 

 41 Public Law 97-255, September 8, 1982.

42 U.S. Government Accountability Office, “Standards for Internal Control in the Federal Government” 

(GAO/AIMD-00-21.3.1, November 1999). In September 2014, GAO revised the “Standards for Internal 

Control in the Federal Government” (GAO-14-704G, September 2014). However, the revised standards 

are not effective until FY 2016, although agency management may adopt them earlier. 

43 U.S. Government Accountability Office, “Performance Measurement and Evaluation” (GAO-11-646SP, 

May 2011).
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 27 NOVEMBER 20, 2014

protocols such as guidance from the Office of the Chief Operating Officer for its budget 

process. The OMWI Director also said that SECR 6-33 and SECR 6-45 provide some 

standards regarding OMWI’s diversity efforts. Specifically, SEC-OP 6-33, Section 7,

states that the OHR Director shall “partner with the Office of Minority and Women 

Inclusion (OMWI) . . . to ensure outreach to minority and women organizations.” 

SECR 6-45, Section 7.5, states that the OMWI Director shall “assist the OHR and 

agency selecting officials by taking affirmative steps to enhance diversity at all levels 

within the SEC” in accordance with the Dodd-Frank Act; “partner with the OHR to 

ensure diversity and equal opportunity at the SEC;” and, “assess the outcomes of the 

Pathways Programs on an ongoing basis and evaluate the impact on the hiring of 

qualified minority and women candidates.” 

Finally, the Director pointed out that OMWI has developed an internal strategic plan for 

FY 2014 through FY 2017, which includes strategic goals, tasks, and metrics to 

measure the progress of each strategic goal. One goal included in the strategic plan is 

to “develop and deploy standards for assessing the diversity policies and practices of 

SEC entities.”

However, for its diversity efforts and programmatic activities, the OMWI Director stated 

the office did not have internal policies and procedures and instead has relied on 

Section 342 of the Dodd-Frank Act, as well as the experience, knowledge, and

leadership of OMWI’s Director and staff. We found that OMWI tracked and disclosed in 

its annual reports certain outputs of its diversity efforts, such as the number and type of 

outreach events SEC employees attended; the number of high school students that 

participated in the SEC’s Student Shadowing Program; and its efforts to share SEC 

employment information with minority students, faculty, and administrators. 

Furthermore, in OMWI’s FY 2013 annual report, the office presented workforce metrics 

for the representation of the employment of minorities and women in: (1) the SEC’s 

workforce; (2) “mission critical” occupations of attorneys, accountants, compliance 

examiners, and economists; (3) supervisory and management positions; (4) Senior 

Officer positions; (5) new hires; (6) separations; and (7) promotions. However, 

information evaluating the effectiveness of OMWI’s diversity efforts and activities, 

including information about the outcomes of OMWI’s diversity efforts, is not reported or 

directly linked to the changes in the SEC’s workforce metrics for the representation of 

the employment of minorities and women.

Development of Policies, Procedures, and Workforce Diversity 

Standards Has Not Been a Priority 

When we asked why OMWI had not developed policies, procedures, or workforce 

diversity standards, the OMWI Director emphasized that the office was created in 2011 

and the first permanent Director did not join the SEC until January 2012. Since that 

time, the OMWI Director determined that other requirements of Section 342 of the 

Dodd-Frank Act were a higher priority. Such requirements included those for 

(1) developing an interagency policy statement establishing joint standards for 

assessing the diversity policies and practices of entities regulated by the financial 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 28 NOVEMBER 20, 2014

regulatory agencies required under Dodd-Frank 342(b)(2)(C),

44 (2) working on a “good 

faith contract standard” required under Dodd-Frank 342(c)(2), and (3) gathering 

information and understanding SEC policies, processes, and potential best practices. 

OMWI Lacks Controls to Monitor, Evaluate, and Improve its 

Operations 

Because OMWI does not have a systematic and comprehensive method of evaluating 

the effectiveness of its programs and diversity efforts, the office lacks the controls 

necessary to monitor, evaluate, and, as necessary, improve its operations and fully 

comply with the Dodd-Frank Act. OMWI’s Director told us that she hopes to begin 

developing policies, procedures, and workforce diversity standards, and measuring the 

effectiveness of OMWI’s programs in the coming year. 

Recommendation, Management’s Response, and Evaluation of 

Management’s Response

To measure the effectiveness of its diversity efforts and to fully comply with Section 342 

of the Dodd-Frank Act, we recommend that:

Recommendation 5: The Office of Minority and Women Inclusion use the U.S. 

Government Accountability Office’s “Standards for Internal Control in the Federal 

Government” and “Performance Measurement and Evaluation” to develop (a) internal 

policies and procedures to guide its diversity efforts and programmatic activities, and 

(b) workforce diversity standards required by the Dodd-Frank Act, including methods to 

monitor and evaluate its activities. 

Management’s Response. The Office of Minority and Women Inclusion

concurred with the recommendation and has begun developing internal policies 

and procedures to guide its diversity efforts and programmatic activities. A 

comprehensive outline for its internal policies and procedures has been 

developed in collaboration with the Office of the Chief Operating Officer. The 

Office of Minority and Women Inclusion is in the process of adding content and 

anticipates the completion of its Program Manual in early 2015 using the U.S. 

Government Accountability Office's "Standards for Internal Control in the Federal 

Government" and "Performance Measurement and Evaluation" as guides.

The Office of Minority and Women Inclusion also concurred with the 

recommendation that it develop workforce diversity standards as required by 

Section 342(b)(2)(A) of the Dodd Frank Act. The Office is committed to ensuring 

that the workforce diversity standards include methods to monitor and evaluate 

its activities, as outlined in the recommendation.

 44 “Proposed Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity 

Policies and Practices of Entities Regulated by the Agencies and Request for Comment.”
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 29 NOVEMBER 20, 2014

OIG’s Evaluation of Management’s Response. Management’s proposed 

actions are responsive; therefore, the recommendation is resolved and will be 

closed upon verification of the action taken.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 30 NOVEMBER 20, 2014

Appendix I: Scope and Methodology

We conducted this performance audit from June 2014 through November 2014 in

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. 

Scope and Methodology. The audit covered FY 2011 through FY 2013 (the period 

between October 1, 2010, and September 30, 2013). To address our audit objectives, 

we reviewed (1) Federal laws and guidance and SEC policies, procedures, and 

administrative regulations; (2) internal controls of OMWI, OEEO, and OHR related to 

diversity; (3) efforts of OMWI, OEEO, and OHR to achieve diversity in the SEC 

workforce, to detect and prevent discrimination in the workplace, and to increase the 

representation of minorities and women at the SEC; (4) diversity-related data for the 

period reviewed; and (5) PMR scores analyzed by a firm with statistical expertise 

contracted by the SEC OIG. We also interviewed officials from OMWI, OEEO, and 

OHR to gain an understanding of the SEC’s processes related to diversity; reviewed a 

selection of closed or settled EEO complaints to determine if they were handled in 

accordance with EEO and SEC policy; and reviewed OEEO’s annual reports to 

determine compliance with MD-715.

The Federal laws and guidance, as well as the SEC policies, procedures, and

administrative regulations we reviewed included: 

Federal Laws and Guidance:

• Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 

111-203 (July 21, 2010). 

• Civil Rights Act of 1964, Public Law 88-352, Title VII, 42 U.S. Code, Equal 

Employment Opportunities (July 2, 1964). 

• Equal Employment Opportunity Commission, Equal Employment Opportunity, 

Management Directive 715 (MD-715), (October 1, 2003). 

• U.S. Equal Opportunity Commission Regulations, Part 1614—Federal Sector 

Equal Employment Opportunity, Subpart A—Agency Program to Promote 

Equal Opportunity (last modified June 1, 2010). 

• Executive Order 13583—Establishing a Coordinated Government-wide 

Initiative to Promote Diversity and Inclusion in the Federal Workforce

(August 18, 2011). 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 31 NOVEMBER 20, 2014

• Government-Wide Diversity and Inclusion Strategic Plan 2011, issued by the 

U.S. Office of Personnel Management, Office of Diversity and Inclusion. 

• Overview of Federal Sector EEO Complaint Process, U.S. Equal Employment 

Opportunity Commission. 

• Federal Equal Opportunity Recruitment Program for FY 2012 Report to the 

Congress, issued by the U.S. Office of Personnel Management (January 

2014). 

• Performance Measurement and Evaluation, GAO-11-646SP, Government 

Accountability Office (May 2011). 

• Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1, Government Accountability Office (November 1999) and revision 

Standards for Internal Control in the Federal Government, GAO-14-704G, 

Government Accountability Office (September 2014). 

SEC Policies, Procedures, and Administrative Regulations:

• Equal Employment Opportunity Policy and Preventing EEO-Based 

Harassment Policy (PEHP) (March 24, 2014). 

• A Personnel System Based on Merit Principles, SEC Insider [the SEC’s 

internal site]. 

• EEO at the SEC: Overview, SEC Insider (Revised February 2014). 

• Office of Equal Employment Opportunity – Standard Operating Procedures

for Complaints Processing and Related Processes (Revised March 13, 2014). 

• SEC Administrative Regulation, SECR 6-6, Delegated Examining Policy

(September 19, 2011). 

• SEC Administrative Regulation, SECR 6-23, Merit Promotion Plan for 

Bargaining Unit Employees (March 2, 2012). 

• SEC Administrative Regulation, SECR 6-24, Merit Promotion Policy for Nonbargaining Unit Positions (May 17, 2012) and related Merit Staffing Plan 

Standard Operating Procedures for Non-Bargaining Unit Positions. 

• SEC Administrative Regulation, SECR 6-33, Revision 1, Excepted Service 

Hiring Authority (May 10, 2013) and related SEC Operating Procedures, SEC 

OP 6-33, Excepted Service Hiring Authority (May 3, 2013). 

• SEC Administrative Regulation, SECR 6-45, Pathways Programs

(January 13, 2014) and related SEC Operating Procedures, SEC-OP 6-45

(January 13, 2014). 
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REPORT NO. 528 32 NOVEMBER 20, 2014

Internal Controls. We reviewed and evaluated the internal controls associated with the 

SEC’s activities related to diversity. For our review of internal control, we considered 

the following:

Control Environment – We identified OMWI, OEEO, and OHR as the three offices 

directly related to promoting diversity at the SEC. Further, we identified the Directors of 

these offices as the internal control officials and determined that these persons are 

responsible for ensuring that their offices’ responsibilities related to diversity are 

operating in accordance with Federal laws and guidance and SEC policies, procedures, 

and administrative regulations.

Risk Assessment – We determined that OMWI, OEEO, and OHR completed annual 

internal control self-assessments, and we reviewed the self-assessments for items 

related to diversity. We also reviewed control objectives identified to mitigate the stated 

risks. 

Monitoring – We discussed with the Directors of OMWI, OEEO, and OHR their 

programs for monitoring their offices’ diversity-related efforts. In addition, we assessed 

their monitoring effectiveness and awareness of issues affecting their offices through 

interviews and by reviewing documents prepared by their offices.

Control Activities – We reviewed Federal laws and guidance and SEC policies, 

procedures, and administrative regulations related to diversity and identified where 

compliance needed improvement. We also reviewed the control activities that OMWI, 

OEEO, and OHR identified in their annual internal control self-assessments and 

reported as mitigating controls to diversity-related risks. As discussed in this report, we 

identified two compliance-related issues: OEEO’s incomplete MD-715 tables and 

required execution of barrier analyses, and OMWI’s lack of policies, procedures, and 

required workforce diversity standards. 

Information and Communication – We determined that the SEC disseminated diversityrelated information to SEC staff through the SEC Insider internal site and SECU 

training. We reviewed relevant communications by OMWI, OEEO, and OHR and 

ascertained from SECU the SEC’s education program related to diversity. In addition, 

we reviewed the annual reports issued by OMWI and OEEO for the audit scope period. 

Computer-processed Data. We relied on computer-processed data to analyze the 

demographic information of the SEC workforce. This computer-processed data 

consisted of FPPS data used by the SEC to process and document human resourcesrelated actions such as new hires and promotions. We used GAO Report 09-680G, 

“Assessing the Reliability of Computer-Processed Data” as a guide to design the steps 

used to assess the data’s reliability. Specifically, we interviewed SEC personnel 

involved with FPPS, performed electronic testing of FPPS data, and traced a sample of 

FPPS data to source documentation. Based on these steps, we determined the FPPS 

data were sufficiently reliable for the purposes of the audit.
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REPORT NO. 528 33 NOVEMBER 20, 2014

Sampling. To assess the reliability of computer-processed data, we traced a sample of 

30 employee records from FPPS to related source documentation. We judgmentally 

selected the sampled items and did not project based on our sample results. Our 

primary objective was to determine whether FPPS data existed for sampled items, and 

whether that data was accurate.

Prior Coverage. During the last 5 years, the SEC OIG and GAO issued two reports of 

particular relevance to this audit. Unrestricted reports can be accessed over the 

Internet at http://www.sec.gov/about/offices/oig/inspector_general_audits_reports.shtml

(SEC OIG) and http://www.gao.gov (GAO).

SEC OIG:

• “Establishment of the Office of Minority and Women Inclusion” (June 15, 2011). 

GAO:

• “Diversity Management: Trends and Practices in the Financial Services Industry 

and Agencies after the Recent Financial Crisis” (GAO-13-238, April 2013).
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 34 NOVEMBER 20, 2014

Appendix II: Workforce Distribution Data for 

FY 2011 through FY 2013

The charts below describe the SEC’s workforce distribution between FY 2011 and FY

2013 and compare the representation of minorities and women at the SEC with the 

CLF, the Federal government, and the securities industry. As shown in Chart 6, the 

SEC had more minorities in its workforce during the period reviewed than the CLF and 

the securities industry, but had fewer minorities in its workforce than the Federal 

government.

Chart 6: Workforce Distribution by Race and Ethnicity

Source: OIG-generated based on 2010 CLF data, MD-715 data (table A1), U.S. Office of Personnel Management 

“FedScope Federal Human Resources Data,” and EEOC EEO-1 data for NAICS code 523. Totals within this chart 

may not total to 100.00% due to rounding.

72.36%

65.50%

74.06% 68.61% 68.39% 67.88%

12.02%

17.52%

6.35% 16.74% 16.56% 16.80%

9.96%

5.64% 5.71%

4.78% 4.59% 4.35%

3.90%

5.54% 12.53% 9.35% 9.84% 10.37%

1.76% 5.77% 1.34% 0.52% 0.63% 0.60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CLF

2010

Federal

Government

2013

Securities

Industry

2013

SEC

FY 2011

SEC

FY 2012

SEC

FY 2013

Percentage of Employees

Other

Asian

Hispanic

Black

White
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 35 NOVEMBER 20, 2014

As shown in Chart 7, the SEC had more women in its workforce during the period 

reviewed than the securities industry, the Federal government, and (for FY 2011 and 

FY 2012), the CLF.

Chart 7: Workforce Distribution by Gender

Source: OIG-generated based on 2013 CLF data, MD-715 data (table A1), U.S. Office of Personnel Management 

“FedScope Federal Human Resources Data,” and EEOC EEO-1 data for NAICS code 523. 

46.80% 43.50% 40.03%

48.08% 47.21% 46.47%

53.20% 56.50% 59.97%

51.92% 52.79% 53.53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CLF

2013

Federal

Government

2013

Securities

Industry

2013

SEC

FY 2011

SEC

FY 2012

SEC

FY 2013

Percentage of Employees

Men

Women
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. 528 36 NOVEMBER 20, 2014

Appendix III: Additional Diversity Efforts at the SEC

As previously discussed, the SEC seeks to promote a results-oriented work 

environment that attracts, engages, and retains a technically proficient and diverse 

workforce. The SEC’s Equal Employment Opportunity Policy establishes as a goal a 

workforce that is respectful, inclusive, and allows contribution to the best of one’s ability. 

Additionally, the Dodd-Frank Act established an OMWI in financial regulatory agencies, 

including the SEC, to ensure agencies, among other things, take affirmative steps to 

seek diversity in the workforce. In order to meet these goals and requirements, SEC’s 

OMWI, OEEO, and OHR strive to improve and enhance the SEC’s workforce diversity

as described below. 

OMWI Efforts. OMWI engages in various outreach efforts to support diversity at the 

SEC. For example, OMWI has participated in a variety of outreach activities and

formed strategic partnerships with professional associations and organizations that 

disseminate SEC-related information, including job announcements, to their members. 

OMWI also sponsors “Diversity Champions” and “Regional Outreach Coordinators” to 

assist its diversity efforts at the SEC’s headquarters and regional offices.

Table 7 further describes OMWI’s efforts to satisfy the requirements of the Dodd-Frank 

Act during the period reviewed.

Table 7: OMWI’s Implementation of Selected Dodd-Frank Act Requirements 

Section Requirement OMWI Implementation Efforts

342(e) Submit annual reports to Congress regarding 

the actions taken by the SEC and OMWI, 

including:

(1) a statement of the total amounts paid by the 

agency to contractors since the previous report;

(2) the percentage of the amounts described in 

paragraph (1) that were paid to women-owned 

and minority-owned contractors;

(3) the successes achieved and challenges 

faced by the agency in operating minority and 

women outreach programs;

(4) the challenges the agency may face in hiring 

qualified minority and women employees and 

contracting with qualified minority-owned and 

women-owned businesses; and

(5) any other information, findings, conclusions, 

and recommendations for legislative or agency 

action, as the Director determines appropriate.

OMWI has prepared and submitted annual 

reports between FY 2011 and FY 2013,

meeting all requirements in the Dodd-Frank

Act, Section 342(e) (1-5).

342(f)(1) Recruiting at historically black colleges and 

universities, Hispanic-serving institutions, 

women’s colleges, and colleges that typically 

serve majority minority populations. 

OMWI reported on efforts to recruit from 

historically black colleges and universities and 

other minority-serving institutions. 
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Section Requirement OMWI Implementation Efforts

342(f)(2) Sponsoring and recruiting at job fairs in urban 

communities. 

OMWI participated in diversity job fairs 

sponsored by minority-serving groups. 

Examples include the Federal Bar Association 

– Washington, D.C./Baltimore Public Service 

Career Fair, the National Society of Hispanic 

Professionals Diversity Job Fair, and the 

Vault/Minority Corporate Counsel Association 

Annual Legal Diversity Career Fair. 

342(f)(3) Placing employment advertisements in 

newspapers and magazines oriented toward 

minorities and women. 

OMWI reported on efforts to place 

advertisements in minority- and women-serving 

publications. For example, the office posted 

job opportunities in publications of the National 

Association of Black Accountants, the 

Association of Latino Professionals in Finance 

and Accounting, and the Hispanic National Bar 

Association.

342(f)(4) Partnering with organizations focused on 

developing opportunities for minorities and 

women to place talented young minorities and 

women in industry internships, summer 

employment, and full-time positions. 

OMWI partnered with various minority- and 

women-focused organizations, including the 

Association of Latino Professionals in Finance 

and Accounting, the National Association of 

Asian MBAs, and the Women’s Bar 

Association.

342(f)(5) Partnering with inner-city high schools, girls’ 

high schools, and high schools with majority 

minority populations to establish or enhance 

financial literacy programs and provide 

mentoring.

OMWI and the SEC sponsor an annual student 

shadowing program called Professionals 

Reaching Out to Promote Excellence and

Learning for Students. This program matches 

interested high school juniors and seniors with 

SEC professionals for a day of mentoring and 

financial education. Participating high schools 

met the Section 342(f)(5) criteria. OMWI 

reported that approximately 250 students from 

18 high schools participated in the FY 2014 

program.

342(f)(6) Any other mass media communications that the 

OMWI determines necessary. 

OMWI placed advertisements providing 

general information about the SEC in 

publications such as Black Enterprise and

Diverse Careers.

Source: OIG-generated summary of Section 342 of the Dodd-Frank Act and information provided by OMWI.

OEEO Efforts. OEEO supports SEC’s diversity and inclusion programs by sponsoring, 

with OHR, employee groups. The groups provide educational and cultural programs 

for SEC employees, such as annual celebrations of history, seminars, employee 

mentoring and development, and community service projects. The SEC’s OEEOsponsored groups are as follows:

• African American Council 

• American Indian Heritage Committee

• Asian Pacific American Committee 

• Caribbean American Heritage Committee
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• Disability Issues Advisory Committee

• Hispanic and Latino Opportunity, Leadership, and Advocacy Committee

• Lesbian, Gay, Bisexual, and Transgender Committee

• Veterans Committee

• Women’s Committee

OHR Efforts. OHR, through its training and development unit, SECU, works with 

OMWI and OEEO to offer a range of diversity-related trainings. Such trainings include:

• No Fear Act training for all employees;

• diversity training required for all SEC managers and supervisors;

• employee and management workshops on diversity and inclusion;

• EEO training for hiring managers and committees; and

• unconscious bias and performance management training for managers and 

supervisors.

In addition, through its eLearning capability, the SEC offers diversity-related on-line 

courses including:

• Understanding Workplace Diversity;

• Managing Diversity; and

• Diversity on the Job: Diversity and You.
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Appendix IV: PMR Rating Systems for 

FY 2011 through FY 2013

Between FY 2011 and FY 2013, the SEC had different rating systems of record for 

employees based on their supervisory level and bargaining unit status. As shown in 

Table 8, during this period, an SEC employee’s official rating of record was either 

“Acceptable,” “Unacceptable,” or a PMR score from 1 through 5.

Table 8: SEC’s PMR Rating Systems of Record for FY 2011 through FY 2013 

FY Employee Type Rating 

System

OIG Comments

2011 Bargaining Unit Acceptable / 

Unacceptable

The five point rating system was used to calculate whether an 

employee’s performance was acceptable or unacceptable. A PMR 

score of 1 was “Unacceptable” and all other PMR scores were 

“Acceptable.” However, employees were not provided a numerical 

rating; rather their official rating of record was only “Acceptable” or 

“Unacceptable.”

Non-Bargaining 

Unit (NonSupervisory)

Acceptable / 

Unacceptable

The five point rating system was used to calculate whether an 

employee’s performance was acceptable or unacceptable. A PMR 

Score of 1 was “Unacceptable” and all other PMR scores were 

“Acceptable.” However, employees were not provided a numerical 

rating; rather their official rating of record was only “Acceptable” or 

“Unacceptable.”

Non-Bargaining 

Unit (Supervisory)

5 point Non-bargaining unit supervisors received ratings on a numerical 5 

point rating system. However, this score was then converted to a 

rating of record of either “Acceptable” or “Unacceptable.” A PMR 

score of 1 was “Unacceptable” and all other PMR scores were 

“Acceptable.” 

Senior Officers Acceptable / 

Unacceptable

Senior Officers received a numerical rating that was translated to a 

rating of record of either “Acceptable” or “Unacceptable.” OHR did 

not manage the rating process for Senior Officers, and does not 

have these numerical ratings. Therefore, the OIG was unable to 

obtain any numerical data for this population.

2012 Bargaining Unit Acceptable / 

Unacceptable

The five point rating system was used to calculate whether an 

employee’s performance was acceptable or unacceptable. A PMR 

score of 1 was “Unacceptable” and all other PMR scores were 

“Acceptable.” However, employees were not given a numerical 

rating; rather their official rating of record was only “Acceptable” or 

“Unacceptable.”

Non-Bargaining 

Unit (NonSupervisory)

5 point Employees were given a PMR score from 1 through 5.

Non-Bargaining 

Unit (Supervisory)

5 point Employees were given a PMR score from 1 through 5.

Senior Officers 5 point Employees were given a PMR score from 1 through 5.
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Source: OIG-generated based on data obtained from OHR.

FY Employee Type Rating 

System

OIG Comments

2013 Bargaining Unit Acceptable / 

Unacceptable

Employees were not given a numerical rating and were only rated 

“Acceptable” or “Unacceptable.” The OIG was unable to obtain any 

numerical data for this population since OHR did not maintain this 

information.

Non-Bargaining 

Unit (NonSupervisory)

5 point Employees were given a PMR score from 1 through 5.

Non-Bargaining 

Unit (Supervisory)

5 point Employees were given a PMR score from 1 through 5.

Senior Officers 5 point Employees were given a PMR score from 1 through 5.
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Appendix V: DAS Data and Methodology

We contracted with DAS to analyze the SEC’s PMR scores for FY 2011 through FY

2013 and determine if there were statistically significant differences based on race, 

ethnicity, and gender. As discussed in Finding 1, statistically significant differences 

existed in PMR scores for minorities and for women when race and ethnicity was 

considered. Additional analysis showed that there were no significant differences in 

average PMR scores across occupations (accountants, economists, general attorneys, 

and securities compliance examiners) by racial/ethnic groups. However, the analysis 

examining the relationship between race and gender on occupation found that 

significant findings were observed. Results for economists were not significant; 

however, there were statistically significant differences across the remaining 

occupations of interest (accountants, general attorneys, and securities compliance 

examiners).

Statistical significance in this case means that the differences observed between the 

average PMR scores for the groups of interest, no matter how small in relative 

magnitude, are real and not due to chance. In this study, DAS used a 90 percent 

confidence interval to determine statistical significance. This means that there is a 

10 percent chance that the characteristics of the sample these analyses are based on 

do not accurately reflect or represent the real distribution of scores, if we were to have 

had complete data over several years.

About the Data – For FY 2011 through FY 2013, data was not portioned by year and 

trend analyses were not conducted due to insufficient sample sizes for selected years. 

A composite data set comprised of cases with complete information for the variable of 

interest—the average PMR score for each of the 3 years—was created. The final data 

set contained approximately 8,000 cases covering FY 2011 through FY 2013. Actual 

sample sizes for each individual analysis may vary.

Selected Methods and Rationale – In order to better understand if PMR scores indicate 

if minorities and women and other groups of interest were systematically 

disadvantaged, several different analyses were conducted. First, an exploratory 

descriptive analysis was conducted. This analysis was necessary to help gain an 

understanding of what the sample distribution looked like and the appropriate 

significance tests to conduct. During these analyses, DAS examined the proportion of 

sample groups that fell into each occupational group, into the supervisory versus nonsupervisory categories, as well as into each division, bargaining unit, occupational 

category, and duty location. In addition, similar analyses were conducted for the 

demographic variables (race, age, and gender) which examined the proportion of 

individuals in each racial/ethnic group, age group, or gender group which fell into each 

division, occupational category, tier, and duty location. The resultant contingency tables 

(crosstabs) were then examined to help DAS gain a richer understanding of the data 

and to identify data which was to be excluded because it was too sparse for statistical 

analysis. Typically, categories with fewer than 30 observations were excluded.
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These exploratory analyses were then coupled with a combination of several tests for 

statistical significance. A classificatory discriminant analysis45 was used to classify 

observations into groups on the basis of the quantitative variable (i.e., PMR score). 

Logistic regression was preferable to parametric discriminant analysis in cases for 

which the variables might not have multivariate normal distributions within classes. 

Significant differences were noted from the Wald χ2 statistic.

 45 A classificatory discriminant analysis is an analysis where the characteristics used to predict an 

outcome are categorical (e.g., gender, race, office), rather than continuous numeric characteristics such 

as years of tenure or salary. 
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Appendix VI: Management Comments 
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Appendix VII: OIG Response to 

Management Comments 

We are pleased that SEC management concurred with all five recommendations for 

corrective action. Management’s proposed actions are responsive to the 

recommendations; therefore, the recommendations are resolved and will be closed 

upon completion and verification of appropriate corrective action. Full implementation of 

our recommendations should help the agency in its efforts to identify and eliminate 

potential barriers to equal opportunity, measure the effectiveness of its diversity efforts,

and fully comply with Section 342 of the Dodd-Frank Act.
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Major Contributors to the Report

Kelli Brown-Barnes, Audit Manager

Colin Heffernan, Lead Auditor

Kamran Beikmohamadi, Auditor

Steve Kaffen, Auditor

To Report Fraud, Waste, or Abuse, Please Contact:

Web: www.reportlineweb.com/sec_oig

E-mail: oig@sec.gov

Telephone: (877) 442-0854 

Fax: (202) 772-9265

Address: U.S. Securities and Exchange Commission

Office of Inspector General

100 F Street, N.E.

Washington, DC 20549-2736

Comments and Suggestions 

If you wish to comment on the quality or usefulness of this report or suggest ideas for 

future audits, please contact Rebecca Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects at sharekr@sec.gov or call (202) 551-6061. 

Comments, suggestions, and requests can also be mailed to the attention of the 

Deputy Inspector General for Audits, Evaluations, and Special Projects at the 

address listed above.