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News November 22, 2004 Issue

Enforcement Attorneys on Exams to Learn, Says OCIE’s Richards

You may have heard that over the past year, SEC enforcement attorneys have accompanied examiners on routine exams. You may have even heard their presence described as turning "routine inspections" into "routine enforcement investigations," with the Division of Enforcement getting a first hand look at documents sans subpoena.

But according to OCIE director Lori Richards, the whole thing was merely an effort to better educate Division of Enforcement attorneys about the workings of the fund industry. When asked about the practice at last monthís NSCP conference, Richards said that there had been inaccurate press reports about the practice. She said it had "happened a handful of times" and described it as a training exercise designed to better educate the SECís enforcement attorneys. "There is a general recognition on the part of the Enforcement staff that they need to know a lot more about how the [investment management] industry works." By going out on exams, she said, enforcement staff learn how funds are structured and how they operate.

In any event, Richards indicated that the plug has been (or soon will be) pulled on that program. Richards said that "itís not something that we are going to make a permanent part of our program, in part because of the concerns that were raised by the industry about an enforcement personís presence."