Additional staff guidance on this issue appears appropriate. The Division of Enforcement should issue guidance to its staff, clarifying in what circumstances disgorgement in insider trading cases should be distributed to investors. During the audit, the Division of Enforcement issued the guidance, described in the recommendation. To evaluate the management controls over identifying injured investors, we reviewed five disgorgement plans. Enforcement staff involved in these cases told us that they were readily able to identify the injured investors from the violator's books and records.
Supervisory review is important to ensure accuracy.
The Division of Enforcement should issue guidance to its staff on the supervisory review of disgorgement plans resulting from administrative proceedings, including any documentation requirements. During the audit, the Division of Enforcement issued the guidance, described in the recommendation.