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The weekly news source for investment management legal and compliance professionals

Topic: Examinations and OCIE

OCIE Exam Priorities List is a Tool, Not a Compliance Blueprint

February 8, 2019
New chief compliance officers at small firms, as well as compliance professionals of all sizes of firms, should avoid the trap of regarding the SECís annual examination priority list as a template for their own compliance programs. The priority list, published by the agencyís Office of Compliance Inspections and Examinations (OCIE), is a valuable tool for compliance efforts, but those efforts need to address topics in addition to those highlighted in the list.

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Electronic Messaging: OCIE Wants Advisers to Adopt Better Controls

December 21, 2018
Use of social media, texts and other types of electronic messaging, as well as employment of mobile and personal devices, count as business communications as much as email or paper documents. Advisers must establish proper policies and procedures, train employees, provide supervisory review and establish control over such communications and the devices used.

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SEC Issues 2019 Examination Priorities

December 21, 2018
The SEC had a holiday present for advisers this year. It released its 2019 examination priorities on December 20 rather than in January or February of the new year, as it has done in the past. The priorities listed are not that much different from the 2018 priorities, although digital assets is given more prominent play.

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Percentage of Advisers Examined Jumps 11 Percent

November 30, 2018
The percentage of investment advisers examined in fiscal year 2018 by the SECís Office of Compliance Inspections and Examinations increased to 17 percent from the 15 percent examined the year before Ė representing an 11 percent increase in the number of advisers examined, according to the agency. In doing so, OCIE surpassed its FY 2018 goal of holding steady at the 15 percent figure.

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Examiners Will Target Certain Types of Mutual Funds, ETFs and Their Advisers

November 16, 2018
The SECís examination arm is getting the word out about perceived fund and adviser risk areas. Just eight days after issuing a risk alert in regard to advisers and the Cash Solicitation Rule, it has issued another risk alert on risk-based examinations focusing on mutual funds, exchange-traded funds and their advisers.

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OCIE Reveals Most Common Cash Solicitation Rule Deficiencies

November 9, 2018
SECís Office of Compliance Inspections and Examinations wants advisers to know the violations its examiners are finding when they visit advisory firms. In recent months, it has issued Risk Alerts highlighting the most common deficiencies cited involving best execution, fees and expenses, and more. Its latest Risk Alert focuses on adviser compliance issues related to Advisers Act Rule 206(4)-3, the Cash Solicitation Rule.

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Get the Most from the Exam Postmortem

October 26, 2018
SEC examiners may visit an adviser for anywhere from one to multiple days. Most advisers will see their visits end with a number of deficiencies found, a few lucky ones will escape with no deficiencies found at all, and a very few unlucky ones will learn that they have been referred to the SECís Division of Enforcement. Whatever the outcome of an examination, wise advisory firms will conduct an internal postmortem of the exam experience and lessons learned.

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OCIE Reveals Most Common Best Execution Deficiencies Found by Examiners

July 27, 2018
Wouldnít it be great to know what examiners expect to find Ė and, as a result, will be looking for Ė when they visit? In the area of best execution, at least, that is no longer a mystery. The SECís Office of Compliance Inspections and Examinations on July 11 released a risk alert containing "the most common deficiencies associated with advisersí best execution obligations identified by OCIE staff."

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Fees and Expenses: OCIE Wants Advisers to Focus on the Nuts and Bolts

April 20, 2018
Sometimes itís the basic things that get overlooked, like fees and expenses. When that happens in the asset management community, problems occur and examiners notice Ė which may be why the SECís Office of Compliance Inspections and Examinations this month issued a Risk Alert offering an "Overview of the Most Frequent Advisory Fee and Expense Compliance Issues Identified in Examinations of Investment Advisers." Chief compliance officers would be wise to pay attention.

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Exam Referrals to Enforcement: How Much Should Advisers Worry?

April 13, 2018
Itís every advisory firmís nightmare. SEC examiners visit, find some deficiencies and suggest some corrective actions, which the adviser makes. Some months later, the advisory firm learns that it is the subject of a Division of Enforcement investigation, based on a referral from the exam team.

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OCIE Expects to Maintain 15 Percent Adviser Exam Rate in 2018 and 2019

March 9, 2018
The SECís Office of Compliance Inspections and Examinations achieved a historic rise when examiners visited 15 percent of advisory firms in fiscal year 2017, up from 11 percent the year before. It expects this rate to hold steady through the next two fiscal years, according to its annual performance report.

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2018 SEC Examination Priorities: Cryptocurrency Joins Cybersecurity, Retail and Disclosure

February 9, 2018
The SECís Office of Compliance Inspections and Examinations on February 7 finally issued what advisory firms, investment companies, broker-dealers, attorneys, consultants and others in the asset management community have been waiting for since mid-January: its 2018 list of examination priorities. This yearís list was marked by two additions: a more polished presentation and the inclusion of cryptocurrency as a priority.

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PF Manager Settles Charges Involving Conflicts, Disclosure and Exam Findings

January 5, 2018
A private fund manager that the SEC accused of not acting in a timely fashion on multiple examination findings was taken to federal court by the agency, which charged him with, among other things, engaging in conflicted transactions and misleading investors. The manager, Louis Mohlman, Jr. and his two advisory firms reached a settlement with the SEC the same day.

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OIG Turns Spotlight on SEC Exam Program, Data Center Management Problems

December 8, 2017
Every six months, the SECís Office of the Inspector General issues a report to Congress in which it updates its progress in investigating aspects of the Commissionís activities. In its latest report, released December 1, the watchdog arm of the SEC takes aim at, among other things, the Office of Compliance Inspections and Examinationsí investment adviser exam controls, and the agencyís management of its data centers

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OCIE Turns the Spotlight on Municipal Adviser Compliance Failures

November 10, 2017
The SECís Office of Compliance Inspections and Examinations on November 7 issued a Risk Alert based on its observations from examinations of municipal advisers. The observations make clear that OCIE finds compliance lacking in at least three key areas: registration, recordkeeping and supervision.

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OIG to SEC: Improve Information Security, Regulatory Oversight, Contract Management

October 13, 2017
When it rains, it pours. A little more than two weeks after the SEC began dealing with the public fallout from the cyber breach of one of its key electronic systems, its Office of the Inspector General issued its annual statement on the agencyís management and performance challenges. While the statement identified some progress the SEC made in addressing these challenges, it found significant areas for improvement.

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OCIE Finds Increased Cybersecurity But Wants More

August 11, 2017
The SECís Office of Compliance Inspections and Evaluations on August 7 made public its observations from its most recent round of cybersecurity exams Ė and what it found is encouraging only to a point. The message delivered by OCIE in its National Exam Program risk alert was this: Advisory firms, broker-dealers and investment companies have made strides in providing cybersecurity, but there is still a long way to go.

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SEC Conducting Unannounced Examinations

August 11, 2017
At least one of the SECís regional offices is conducting unannounced examinations on investment advisers Ė and other SEC offices may notice and follow suit.

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Capital Formation, Enforcement, Exams Rank High as Clayton Urges Budget Approval

July 14, 2017
SEC chairman Jay Clayton has begun the process of putting his mark on the SEC, its activities, and the perceptions of those it regulates. In addition to his "principles" speech in New York City on July 12, he recently appeared before Congress to justify the agencyís $1.6 billion budget request for fiscal year 2018.

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Electronic Messaging May Be Subject of New Sweep Examination

July 7, 2017
Advisory firms should consider preparing for what may be a new SEC sweep exam: electronic messaging. While it is not yet certain that such sweep exams have begun or are scheduled to begin, advisers would be wise to review their policies and procedures, as well as how they use and document such forms of communication as instant messaging, text/SMS messaging, emails sent and received on non-company systems, and personal or private messaging.

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