When the Three Mile Island disaster struck five years after the Nuclear Regulatory Commission was established, the NRC's inspector general ordered a full investigation and later issued a scathing report on the commission's disorganization.

Likewise, when Mary Schiavo became the inspector general at the Department of Transportation, she launched a series of investigations after discovering "frightening gaps in FAA competence, thoroughness and judgment," Schiavo wrote in her book, "Flying Blind, Flying Safe."

But when SRO scandals came to light and raised fundamental questions about SEC oversight of the industry's key regulatory mechanisms, the SEC inspector general (IG) was silent.

The SEC's IG is only involved "in the internal operations of the SEC," says Walter Stachnik, the agency's IG. For example, Stachnik's office conducted recent investigations of SEC computer system security and allegations that an agency employee accessed a pornographic Web site.

Who oversees the SEC's crucial job of regulating the SROs? Stachnik says that's the duty of the SEC's Division of Market Regulation and its Office of Compliance, Inspections and Examinations, as well as the General Accounting Office, Congress' investigatory arm.

But IGs can go beyond routine audits and perform a broad organizational overview, says Schiavo, now a professor of aviation at Ohio State University. "An IG has the power to go wherever fraud, waste and abuse go."

Those broader inquiries can address whether an agency is performing its fundamental mission, which in the case of the SEC IG, is to "increase the likelihood that commission objectives are achieved."

NASD/Nasdaq: After press accounts and a Department of Justice inquiry in 1994 raised questions about Nasdaq practices, the SEC began an investigation it concluded in August 1996.

The SEC charged that large market makers conspired to fix Nasdaq quotes and that the NASD knew about it. Other regulatory failures were discovered as well, leading SEC Chairman Arthur Levitt Jr. to claim that "the NASD did not fulfill its most basic responsibilities." Levitt acknowledged that the SEC "should have acted sooner" in cleaning up the problems.

NYSE: Joining an investigation begun by the U.S. Attorney in New York, the SEC in June 1999 charged the exchange with inadequately regulating floor brokers, some of whom allegedly traded for their own accounts and ahead of customers--violations of both federal securities law and NYSE rules. The SEC found that the Big Board at times had suspended its routine surveillance of floor brokers and did not adequately investigate tips of wrongdoing.