GAO Report Reveals SEC’s Mistake
The Government Accountability Office (GAO) has determined that the Securities and Exchange Commission (SEC) made an error in its handling of “Staff Accounting Bulletin 121” (SAB 121) by failing to submit it to Congress as required for official rules. According to the GAO’s report titled “Securities and Exchange Commission—Applicability of the Congressional Review Act to Staff Accounting Bulletin No. 121,” released on October 31, the SEC overstepped its bounds when issuing SAB 121.
The GAO argues that the SEC did not comply with the Congressional Review Act (CRA) by failing to submit a report to Congress or the Comptroller General regarding the Bulletin. The report highlights that the 2022 guidance, which potentially impacts crypto investors’ ability to secure safe harbors for their assets, should have been treated as a formal rule.
Although the GAO’s finding does not directly alter the ongoing nonbinding status of the Bulletin as outlined by the SEC, it suggests that the Bulletin should have undergone congressional review.
