The Securities and Exchange Commission's Regulation of Public Utility Holding Companies:

An Evaluation of Commission Comments on a Critical Report

FGMSD-78-7: Published: Jan 4, 1978. Publicly Released: Jan 4, 1978.

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A June 1977 report "The Force of the Public Utility Holding Company Act Has Been Greatly Reduced by Changes in the Securities and Exchange Commission's (SEC) Enforcement Policies" raised questions concerning SEC surveillance of 14 regulated public utility holding companies. The report noted that SEC was not conducting the type of field investigations necessary to ensure that the companies were complying with constraints imposed by the act and questioned the SEC policy of exempting companies from the full force of the act. The report was issued without SEC comments.

The Commission stated that it had carefully and vigorously supervised the activities of registered holding companies, but it acknowledged that most of its efforts were devoted to financial matters and questioned the need for field investigations. The SEC may be correct in believing that the information reported to it is complete and reliable and that intercompany transactions conform to regulatory restrictions. GAO believes, however, that it is not possible to be reasonably certain that regulated holding companies are complying with the act's restrictions without the information provided by the independent, first-hand assessments of a field investigation. The SEC has relied primarily on the act's geographical qualifications in exempting companies as intrastate in character. In its comments, the SEC acknowledged that its level of regulation had declined, but it held that this represented an accomodation to the act's objections.

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    Priority Open Recommendations:

    Department of the Treasury
    GAO-20-549PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.

Apr 27, 2020

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