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News November 1, 2004 Issue

Minisweeps To Continue Apace in 2005

There will be as many minisweeps in 2005 as there were in 2004, predicted OCIE associate director Gene Gohlke at last week’s NSCP conference. In 2004, there was "a range of 20 to 25 minisweeps," he said.

Each minisweep can involve as few as five firms or as many as 100 firms, he said. "We try to ‘spread the wealth’ in these exams around little," he said, adding that "sometimes it’s inevitable" that the same firm will be targeted in multiple sweeps.

Gohlke also said that the SEC would continue performing more traditional exams, with firms selected "based on the passage of time" as well as the firm’s risk profile. Firms with a relatively weak compliance program will be visited every two or three years, he said, whereas firms with a lower risk will be visited every four, five, or six years. Asked whether the SEC would let firms know what their internal rating is, Gohlke replied: "No, we don’t." The good news: if a firm is viewed as having strong controls, "the firm could very well be low risk even if it is engaging in risky activities," he said.