Thinking Like an SEC Examiner in 2009

In reaction to the Madoff Ponzi scheme, the Securities and Exchange Commission has started a new examination practice in which the agency is verifying the existence of client assets managed by the adviser it is examining. It appears that the SEC will be taking a number of proactive steps to address issues arising from the Madoff fraud and that SEC examinations will continue to change to better enable the SEC to detect fraud.

Examiners are probing in new areas, interviewing additional people, asking different questions and have expanded the list of requested documents. Legal and industry experts will detail the examination process from the unexpected first notice to the final follow-up, and explain how strong internal controls in place every day can help the firm be prepared on short notice for these new examinations. Understand what the SEC is looking for and how to manage the examination once the SEC is onsite. Additional topics to be covered include the firm’s rights during the examination process, common problems the SEC encounters during examinations, and effective strategies for dealing with deficiencies found during an examination.


After completing this course, you should be able to:

1) Understand how the current market and regulatory environments will affect SEC examinations of investment advisers.

2) Learn how to handle the new SEC examination focus on confirming client account balances in managed accounts.

3) Demonstrate an understanding of the federal and state examination processes from first notice to final follow-up to avoid unnecessary interruption of the firm’s business.

4) Become familiar with the SEC Document Request List to increase the firm’s preparedness, minimize retrieval time during an examination, and maximize a favorable examination outcome.

5) Identify SEC current priorities to help the firm focus on areas likely to be examined in depth.

6) Understand the link between internal controls and SEC examinations.

7) Learn how to limit regulatory risk on both a personal and firm level.

8) Receive tips that help support a successful exam outcome.