Red Hot SEC Exam Topics

IA Watch presented a webinar: Red Hot SEC Exams Topics in 2017, Plus Exam-Prep Steps from Peers Who’ve Survived Recent Exams.

The presenters were

Fred Shaw, Principal/Director of Compliance, Hamilton Lane
Adam Reback, CCO, J. Goldman & Co
Chuck Daly, Principal, Constellation Advisers
Michelle Martin, CCO, Longfellow Investment Management

These are my notes:

Even though there is great deal of change in Was, exams are expected to continue.

Based on the 2017 Exam Priorities, there seems to be an emphasis on retail investors and how advisers deal with this type of client. There will be heightened focus on seniors and the possibility of exploitation.

There is an emphasis on data for exams. Word is that the SEC is grabbing lots more than in the past to test firm practices.

One presenter is seeing an uptick on never-before-examined advisor exams. The presenter noted that different regional offices are doing these exams differently.

Money market funds are expected to be a priority based on the 2014 rules on liquidity and redemption risks.

There seems to be less emphasis on private funds. That does not mean that there will be none.

Exams are generally shorter than in the past. OCIE wants to reach more firms, given the resources, that means less time on exams. The panelist is seeing fewer on-site exams and more correspondence exams. The examiners are asking for fewer documents, in part because the request is better tailored to the advisor. Of course, there is a wide range of exam experiences.

In exam tips and experiences, one presenter noted that it was worth discussing document requests with the examiner if the request is voluminous. The examiners are unlikely to want a big data damp and are generally not expecting it.

Some of the requested items may not be for the examiners, but for others behind the scene for data and policy considerations.

Introductory presentations are very helpful.

Valuations need to be well documented. If you use the data, you need a copy of the report in the file.