E-records help SEC survive

The Securities and Exchange Commission's Northeast Regional Office (NERO), which was destroyed as a result of the terrorist attack on the World Trade Center, was fortunate not to lose a single employee. And its work was able to resume quickly because of the electronic storage of many of the regulatory program's documents.

"Within two days of the attack, we had retrieved all documents stored electronically and had commenced a review of every single investigation and case currently under way in the office," SEC Chairman Harvey Pitt said in his Sept. 26 testimony before the House Financial Services Committee. "[We had] the twin aims of ensuring that we do not miss any imminent deadlines and of developing a plan for completing our investigations and cases in timely fashion.

"While our review has not been completed, we are optimistic that we will not lose any significant investigation or case as a result of the loss of our building," Pitt said. "No one whom we have sued or whose conduct we have been investigating should for a single moment doubt our resolve to continue our pursuit of justice in every such matter."

The SEC NERO was also responsible for the agency's oversight of securities firms located in the New York area, but those records were stored remotely and are safe, Pitt said.

"The commission's records related to examinations of all securities firms are maintained electronically in a central database and were unaffected by the tragedy," he said. "Electronic copies of examination reports and deficiency letters are maintained off-site for investment advisers, investment companies, broker-dealers and transfer agents. Records relating to open examinations will be reconstructed from records that exist at registrants' offices and from other sources."

Pitt said the SEC is planning to use examination staff from other offices in Boston, Philadelphia and Washington, D.C., to work with the New York Stock Exchange and the NASD Regulation Inc. "to ensure that examination cycles are fulfilled and that appropriate examination oversight is maintained.

"We are very mindful of the disruption to many firms' operations and records and are ensuring reasonable accommodation to requests for extensions of time for on-site examinations or to produce records and other information," he said.

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