SEC’s National Exam Program Overview

The SEC's Office of Compliance Inspections and Examinations ("OCIE") mission is to protect investors through its nationwide examination and inspection program. Examiners in Washington DC and in the SEC's 11 regional offices conduct examinations of the nation's registered entities. Besides investment advisers, OCIE also examines broker-dealers, transfer agents, investment companies, the national securities exchanges, clearing agencies, the nationally recognized statistical rating organizations, SROs (Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board), and the Public Company Accounting Oversight Board. That's a lot of ground to cover.

OCIE recently released its National Exam Program Overview (.pdf). The first 23 pages ramble on about the statutory and regulatory framework. The good stuff starts on page 24 with a description of the inspection and examination process.

  1. Overview
  2. Scope
  3. Scheduling Fieldwork
  4. Entrance Interviews
  5. Document Requests
  6. Questions
  7. Exit Interviews/Exit Conference Calls
  8. Results

The staff may identify compliance deficiencies or internal control weaknesses. If this is the case, the staff generally will provide the registrant with a deficiency letter identifying the problems, asking the registrant to take remedial steps, and requesting that the registrant provide a written response. Examinations often conclude with a deficiency letter.

It's a good roadmap to help prepare your firm for when the SEC inevitably comes knocking on your door.

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For additional commentary on developments in compliance and ethics, visit Compliance Building, a blog hosted by Doug Cornelius.

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