U.S. Government SecuritiesMore Transaction Information and Investor Protection Measures Are Needed Gao ID: GGD-90-114 September 14, 1990
Pursuant to a legislative requirement, GAO evaluated the implementation and effectiveness of the Government Securities Act of 1986.
GAO found that: (1) the Securities and Exchange Commission (SEC) found that the National Association of Securities Dealers (NASD) was ensuring that specialist firms complied with Treasury requirements and regulations; (2) gaps in investor protection could result in investor losses due to abusive dealer practices and lack of SEC-required insurance coverage; (3) the rules imposed the most major costs on dealer operations by requiring dealers to have signed repurchase agreements with all hold-in-custody repurchase counterparties and to issue confirmation to customers of securities held in custody whenever a new transaction occurred or the identity of the securities changed; (4) dealers and brokers believe that the market has been safer for investors since the act's implementation although the act would not entirely prevent fraud; (5) there has been no adverse effect on the market for government-sponsored enterprise securities caused by the act's implementation or Treasury's rules; (6) screen brokers believe that the NASD annual assessment results in excessive examination charges; (7) the SEC database was not completely reliable for determining the number and identity of active broker participants in the government securities market; (8) several organizations examined their institutions less frequently than other organizations and were also slower to issue guidance to examiners; (9) under the act, government securities specialist dealers' customers have no federal protection for their funds; (10) it could not determine whether expanded access would safely be enforced by regulation; and (11) information access would benefit market efficiency, investor protection, and equity without damaging government debt management or monetary policy activities or interdealer brokers' blind trading systems.Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.Director: Team: Phone: