United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2000-09-19 monographic deposited born digital 80 p. GA 1.13:GGD-00-198 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-198 P0b002ee1803790b7 f:gg00198 DGPO 2010-08-12 2011-03-24 GAOREPORTS-GGD-00-198 machine generated eng fdlp REPORT GAOREPORTS-GGD-00-198 GGD-00-198 Insurance regulation Embezzlement Insurance companies Interagency relations Investments Fraud Internal controls Corporate mergers NAIC Insurance Regulatory Information System NAIC Regulatory Retrieval System NAIC Special Activities Database Letter Report GGD Pursuant to a congressional request, GAO evaluated insurance regulatory oversight and information-sharing in the matter of a highly publicized insurance investment scam exposed in May 1999, focusing on: (1) the alleged scam; (2) the oversight and information-sharing by insurance regulators; and (3) cross-financial-sector coordination issues, including those emanating from the scam relevant to financial regulators' efforts to implement the Gramm-Leach-Bliley (GLB) Act.<p/>GAO noted that: (1) throughout the 1990s, Martin Frankel, with assistance from others, allegedly obtained secret control of entities in both the insurance and securities industries; (2) he is alleged to have anonymously acquired and controlled insurance companies in several states and, despite being barred from the securities industry, to have exercised secret control over a small securities firm; (3) using the name of this securities firm, Mr. Frankel allegedly took custody of insurance company assets and provided false documents on investment activity to disguise his actual purpose; (4) GAO observed some regulatory weaknesses in multiple states over several years during each of the key phases of insurance regulatory oversight--change of ownership approvals, routine financial analyses, and periodic on-site examinations; (5) specifically GAO observed inadequate measures for assessing the appropriateness of buyers of insurance companies, analyzing securities investments, evaluating the appropriateness of asset custodians, verifying the insurers' assets, and sharing information within and outside the insurance industry; (6) GAO also found some weaknesses in support services provided by the National Association of Insurance Commissioners (NAIC), a voluntary association of state insurance regulators; (7) some of these weaknesses were similar to those GAO identified in its previous reports, including weaknesses in interstate coordination, oversight of entities under holding companies, and gaps in controls to prevent migration of unscrupulous securities brokers to other sectors of the financial services industry; (8) NAIC and the Tennessee Comptroller of the Treasury have also conducted parallel reviews of the scam and disclosed similar weaknesses along with recommendations for corrective actions; (9) the GLB Act financial modernization legislation highlights the importance of consultation and information-sharing among federal regulators and state regulators when banks and insurance companies are affiliated; (10) the fraudulent activities allegedly perpetrated by Mr. Frankel further demonstrate the need for heightened coordination of oversight activities among regulators in cases where affiliated entities exist; and (11) although the legislation is recent, regulators have recognized the need to improve their coordination and have taken or plan to take a number of actions. https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-198/html/GAOREPORTS-GGD-00-198.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-198/pdf/GAOREPORTS-GGD-00-198.pdf GAO/GGD-00-198 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-198 Letter Report GAO/GGD-00-198; Insurance Regulation: Scandal Highlights Need for; Insurance regulation Embezzlement Insurance companies Interagency relations Investments Fraud Internal controls Corporate mergers NAIC Insurance Regulatory Information System NAIC Regulatory Retrieval System NAIC Special Activities Database Public Law 105-251 Public Law 106-102