SEC Examined 11% of Advisers in 2016

The SEC met its stated fiscal year 2016 goal by examining 11 percent of the investment adviser pool. The SEC released the results as part of its annual Summary of Performance and Financial Information.

That number presents a one percent uptick from fiscal year 2015.

Out of the estimated pool of 12,200 investment advisers, that amounts to roughly 1,342 advisers that were covered. Under recently departed SEC Chair Mary Jo White, the SEC shifted personnel from broker exams and explored third-party exams as a way to boost its examination efforts. It’s not known whether that initiative will be pursued by incoming SEC leadership.

However, in January’s National Exam Program Exam Priorities 2017 release, the SEC said it would be expanding its “Never-Before Examined Adviser initiative” to include focused, risk-based examinations of newly registered advisers as well as selected advisers that have been registered for a longer period but have never been examined by OCIE.

Despite the seemingly low number of advisers looked at in 2016, many advisers receive some touch from SEC examiners. During Ascendant’s recent ComplianceCast, “SEC Exam Priorities: What’s Between the Lines & Behind the Scenes,” 74 percent of attendees said their firms have been examined by the Commission.

The SEC cast a wider net on investment companies, examining 17 percent of them in fiscal 2016, exceeding the internal 15 percent projection. Meanwhile, broker-dealers saw 50 percent coverage.

Inside the SEC Exam Program

The SEC’s Exam Program will be a major focus of Ascendant’s upcoming conference on April 3-5 in Naples, Florida, taking attendees through a typical exam journey, highlighting lessons we’ve learned in the field alongside compliance teams and regulators. We’ll go through all the essentials, from how to respond to the SEC’s information requests to handling the in-person interactions to the exit interview and responding to a findings letter. Here’s a look at our SEC Exam track. For more information on the conference, click here.

SEC Exam Track Sessions

  • Special Presentation: SEC Data Analysis of Investment Managers
  • SEC Exam Part 1: First Day Letter & Exam
  • SEC Exam Part 2: What Happens When Regulators Are in Your Office
  • SEC Exam Part 3: The Exit Interview and Responding to a Findings Letter
  • What You Still Want to Know About SEC Exams

Related Content

Latest Content

When Policies, Procedures and Testing Protocols Aren’t Enough…

The Compliance Program Rule continues to be a powerful tool for SEC enforcement, recently used by the SEC to address trading away in wrap accounts, misappropriation of retail client assets, and the misuse of an omnibus account. Advisory firms had written policies and procedures and testing protocols, but they were not good enough; are yours? … Continued

The Compliance Professionals Guide to Effective Trade Desk Monitoring

Global regulators continue to enhance their ability to monitor the activities of market participants through a combination of new rules, filing requirements, and upgrades to surveillance technologies. As a result, many market participants, including both buy-and sell-side firms, need to re-assess how they currently monitor the trading desk, and whether new policies and procedures are … Continued

How Do You Supervise for SEC Pay-to-Play Violations?

If you wanted more information about the contours of the SEC’s Pay-to-Play Rule, or how the SEC may enforce it, three recent Settlement Orders against large investment advisers for “over de minimis” political contributions provide some insight regarding one of the prohibitions: Contributions by Covered Associates to certain Government Officials over the specified Exception amount (capitalized words are terms in the … Continued

Do your Fund Documents Clearly Disclose Receipt of Accelerated Monitoring Fees?

Somewhat more reminiscent of the broken-windows enforcement era, two affiliated private equity advisers managing billions settled with the SEC on charges that they failed to make pre-commitment disclosures in fund governing documents related to accelerated fees received from portfolio companies. Interestingly, according to the Settlement Order, the advisers had made some disclosures in fund documents … Continued

With New Risk Alert, SEC Doubles Down on Best Execution

On July 11, 2018, the SEC issued a Risk Alert outlining commonly found compliance issues related to best execution by investment advisers. Advisers have an obligation to seek best execution of client transactions, taking into consideration quantitative factors such as execution quality and commission rate, as well as more qualitative factors such as the value … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.