The review by the Government Accountability Office, Congress' investigative arm, also found that the distribution of money to aggrieved investors that the SEC recovers in settlements with companies should be speeded up, individuals familiar with the report said Friday. They spoke on condition of anonymity because the report hasn't yet been made public.

The findings of the GAO review were reported in Friday's editions of The Wall Street Journal.

SEC spokesmen declined to comment.

The workings of the SEC's enforcement division came under congressional scrutiny last year after a former agency attorney alleged political interference by his superiors in an insider-trading investigation touching on a major hedge fund and a prominent Wall Street executive. Sen. Charles Grassley, R-Iowa, who then headed the Senate Finance Committee, requested the GAO review a year ago. In addition, Grassley and Sen. Arlen Specter, R-Pa. -- then chairman of the Senate Judiciary Committee -- ordered an investigation by the two panels' Republican staff of the SEC's handling of the insider-trading probe.

A report of the Senate investigation, made public last month, concluded that numerous missteps marred the SEC's probe involving the hedge fund, Pequot Capital Management Inc. It recommended that the SEC establish a comprehensive set of procedures for conducting enforcement investigations.

The SEC changed its procedures earlier this year, for example, to have senior officials of the enforcement division review and assign cases, The Journal noted.

Securities and Exchange Commission: http://www.sec.gov