SEC's Former CIO Sought Preemptive Safeguards - InformationWeek

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IT Leadership // CIO Insights & Innovation
Commentary
12/18/2008
10:08 PM
Bob Evans
Bob Evans
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SEC's Former CIO Sought Preemptive Safeguards

Exactly four years ago tomorrow, the former CIO of the now-embattled agency told InformationWeek that one of his top priorities was to enable the SEC "to look over the hills and around the corners to spot problems before they become problems." That objective looks eerily prescient this week as we realize the scope of Bernie Madoff's Ponzi scheme.

Exactly four years ago tomorrow, the former CIO of the now-embattled agency told InformationWeek that one of his top priorities was to enable the SEC "to look over the hills and around the corners to spot problems before they become problems." That objective looks eerily prescient this week as we realize the scope of Bernie Madoff's Ponzi scheme.Corey Booth joined the SEC early in 2004 and served through July of this year before leaving for a position as a principal in the financial-industry practice at Boston Consulting Group. While BCG declined my request to speak with Booth by saying, "We are going to respectfully decline in participating in the interview," some background material on Booth and the SEC offers some insight into the daunting challenge the agency faces in keeping up with a securities industry that has recently undergone extraordinary changes in business models, operating scope, regulation, global scale, financial instruments, consumer involvement, and technology. Hired by the SEC at age 34, Booth told InformationWeek four years ago that a top priority of then-chairman William Donaldson was to make the SEC more capable and aggressive in "protecting investors and maintaining fair and efficient markets by overseeing SEC-registered companies' financial practices," the article said. In light of the unprecedented scope of Madoff's scheme and the resultant loss of up to $50 billion of investors' money, it's striking to see the list of initiatives Booth was undertaking in 2004 as he attempted to bring the agency and many of its backward systems and processes into the 21st century:

"My assumption before I came to the SEC was that there were big computers down in the basement crunching numbers and looking for problems," Booth says. That wasn't the case. So Booth and his team are bringing in technology that will let the commission scour financial data from third-party providers, as well as the filings it currently collects, and even new, undisclosed financial data it may start collecting from SEC registrants. In the new year, Booth and his team will begin implementing risk-assessment and analytics tools; in particular, the SEC will start using data warehousing and tools for online analytic processing to crunch numbers. "As chairman Donaldson says, we want to be able to look over the hills and around the corners to spot problems before they become problems," Booth says.
In announcing Booth's departure from the SEC in July and his new position with Boston Consulting Group, current SEC chairman Christopher Cox was effusive in his praise of Booth in a statement that outlined, among other things, some new tools and capabilities that will likely get a rigorous workout in the Madoff investigation: Booth "has led the implementation of our interactive data initiative for mutual fund and company disclosures, and he has improved the SEC's own financial reporting and internal operations as we work to protect investors," Cox's statement said. The statement also noted that Booth and his IT team implemented "a program to help transform the system used by the Enforcement Division to maintain evidence from primarily paper-based formats to wholly digital formats, enabling SEC attorneys to view and search all evidence online and seamlessly integrate it with litigation management tools." Also, the statement cited the installation of "new internal systems, including new tools for enforcement case management, disgorgements and penalties tracking, and the management of compliance inspections." Here's hoping all of those tools prove very valuable to new SEC CIO Charles Boucher -- he's going to need all the help he can get.

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