SEC Commission Paul Atkins believes that the SEC should consider a bill proposed in Congress last year that would abolish the regulator’s Office of Compliance, Inspections and Examinations (OCIE).

Atkins spoke during Practising Law Institute’s Coping with Broker/Dealer Regulation and Enforcement Conference last week and praised the bill that Reps. Vito Fossella (R-NY) and Michael Castle (D-Del.) introduced in December.

After his speech, he urged that the SEC will have to consider changes to the OCIE.

“It’s time to take a look at how we are organized at the SEC and see if any of it [the bill] applies to us,” Atkins said in an interview with CCH Wall Street. “It’s incumbent on us to look into it.”

The main thrust of The Inspections and Examinations Reorganization Act is to change the way the regulator conducts investigations. The main component would fold the OCIE’s functions into the other divisions of the Commission, which is the system that had been in place prior to 1995.

Atkins said the bill’s introduction proved that there were concerns with some of the SEC’s investigative procedures.

“The bill is a call and a challenge to act,” Atkins said in his speech. “The SEC needs as smart and as efficient a regulatory process as possible.”

The bill also proposes specific changes to the SEC’s examination process including notifying registrants when an investigation or inspection has been closed, updating registrants every 120 days during an ongoing investigation, and appointing an ombudsman to guide registrants through processes within the agency, receive complaints, and encourage registrants to come forward with their questions on compliance issues.

Most of those changes will actually be taking place regardless of the bill’s passage. In May, SEC Chairman Christopher Cox told the U.S. House Committee on Financial Services that he would implement many of those changes. But he did not mention any structural changes to the Commission, or the elimination of the OCIE. (See story, click here.)

Atkins acknowledged that any additional changes regarding the bill will have to come from Cox. As of right now, there appears to be no immediate plans to look into the rest of the bill, but Atkins nonetheless thinks the SEC should.

“I’d like to encourage them [the SEC] to take this matter up and consider it,” Atkins said in the interview.

A number of former SEC officials including ex-Chairman Arthur Levitt and Stephen Cutler, the former director of the Division of Enforcement, have been critical of the bill. (See story, click here)

Firms have been frustrated with the OCIE because they have received conflicting requests for information or requests that did not go into specifics about what they were looking for. Those frustrations led the two Congressmen to introduce the bill. Atkins blasted the SEC those same unclear information requests.

“For the government to ask for such vagueness and that they want it documented is unbelievable,” he told the crowd.

The bill is currently pending in Committee. Rep. Fossella has stated that he wants to conduct hearings on the matter as a way to expose some of the problems firms contend with when being investigated by the SEC.

The sweep process was not the only SEC action that raised Atkins’ ire. He was also concerned about the ramifications of Regulation NMS, which he said would wind up doing more harm than good.

He said when the rule passed, the SEC never took into account how much it would cost firms to implement. He was also critical of the regulator’s planned rolling implementation that will start next month. He wondered if the schedule would hold up or be delayed, again.

But when all was said and done, he figured it would be the industry itself that will inform the SEC on the efficiency of the entire process.

“I’m imploring your firms to provide us with input as we slog through the NMS quagmire,” he said.

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