In Focus

March 17, 2008

he SEC has announced a new program to have examiners carry out short, introductory interviews with newly registered investment advisers. That's good news for both investors (who deserve SEC protection sooner rather than later), and for investment advisers, as they navigate through the sometimes difficult regulatory and compliance requirements.

This national roll out of examinations follows a pilot program that the SEC carried out last year, according to Compliance Reporter. The specifics of the new program include: a one-half day on-site visit, interviews with principals of the firm, examination of the firm's business plans, inquiries about existing and prospective clients, examining the "compliance culture" at the firm, and interviewing the firm's compliance officer.

During the pilot program examinations last year, the SEC noted deficiencies that had to be corrected, and referred two matters to the SEC's enforcement division.

Last year, 1,200 investment advisers registered and, with similar numbers expected in the years ahead, the SEC does not plan to inspect each and every adviser but instead "a good sampling."

— James J. Eccleston
FinancialCounsel.com