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Regulation and Compliance > Federal Regulation > SEC

Is a ‘Presence Exam’ in Your Future, RIA?

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SEC exam chief Andrew Bowden said at a January hedge fund conference in New York that the agency’s Office of Compliance Inspections and Examinations will use the “presence exams” that it used to audit newly registered private fund advisors on never-examined advisors in 2015.

“We will use the presence exam process to examine non-private fund advisors that have been registered for more than three years but not yet examined,” Bowden told through an SEC spokesperson after his comments at the Practising Law Institute’s hedge fund compliance conference on Jan. 7.

Included among the SEC’s current exam initiatives are: presence exams of newly registered private fund advisors, which started in late 2012 and are near completion; exams of never-been-examined investment advisors, which is “well underway,” according to Bowden; and exams of never-been-examined investment companies (or “fund complexes”), as set out in the SEC’s 2015 priorities list.

Presence exams are more limited in scope than a traditional exam.

Brian Hamburger, of the New Jersey-based Hamburger Law Firm and its affiliate MarketCounsel, which offers RIA compliance services, said that while he “applauds” the SEC for increasing its presence exams, the SEC is “really talking about reallocating from one type of advisor exam to another advisor exam,” which doesn’t equate to increasing the actual number of advisor exams. (For more on SEC initiatives regarding RIA exams, see page 47.)


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