Summary: GAO testified on insider trading on the New York Stock Exchange (NYSE), specifically: (1) the surveillance systems and enforcement procedures that self-regulatory organizations and the Securities and Exchange Commission (SEC) use to detect, investigate, and deter insider trading; and (2) how the NYSE and SEC surveillance systems worked in reviewing the case against an individual trader. GAO found that: (1) NYSE investigates market manipulation, insider trading, and other market-related matters, as well as broker/dealer violations of securities laws and regulations; (2) SEC investigates the same types of violations as NYSE, as well as those related to disclosure and accounting problems; (3) to monitor and analyze more than 75,000 trades involving 150 million shares of stock daily at NYSE, SEC and the stock exchanges invested millions of dollars to develop and upgrade computer systems' capabilities; (4) SEC and the stock exchanges need to make further improvements to the computer systems; (5) insider trading and market manipulation pose unusual difficulties in terms of developing the evidence necessary for enforcing securities regulations; (6) the SEC computer systems do not produce irrefutable evidence showing who passed insider information and to whom; and (7) NYSE and SEC identified 47 cases, of which they are currently investigating 11 in which individuals may have been involved in insider trading.
