When Jane Jarcho is talking, advisors’ ears should prick up.
Not only has she headed the SEC’s advisor/investment company exam program since 2013, but she was also named in February as national director of the agency’s Office of Compliance Inspections and Examinations.
Jarcho oversees about 600 lawyers, accountants and examiners responsible for inspections of RIAs and investment companies.
While at the helm, advisor and investment company exams increased more than 27%, with OCIE initiating targeted exams in the areas of cybersecurity, never-before-examined investment advisors and investment companies, alternative mutual funds, fixed income funds and retirement accounts.
Peter Driscoll, head of the SEC’s new Office of Risk and Strategy, housed within OCIE, said at a recent meeting of the agency’s Investor Advisory Committee, that Jarcho has “made a lot of changes” in how OCIE performs exams.
Jarcho was the first SEC executive to sound the warning bell that the agency would be cracking down on advisors’ cybersecurity preparedness. The second round of cyber exams started last October, but will primarily take place in fiscal 2016.
At the recent investment advisor/investment company compliance outreach summit held at SEC headquarters in Washington, Jarcho alerted advisors that the agency plans to launch by year-end a “Share Class Initiative” to examine advisors’ commissions in connection with recommending share classes that charge investors 12b-1 fees, and the agency is knee-deep in assessing the “scope” of potential third-party advisor audits.
Also on the agency’s agenda is a proposal to require advisors receive a third-party audit. Jarcho stated recently that “a lot of thinking [about] getting the scope [of such audits] right is being put into this proposal; there’s a lot of discussion on what the scope should be.”
She added that while SEC Chairwoman Mary Jo White has stated that using third-party audits to boost the number of advisor exams is not her “first choice,” developing such a proposal is “a priority of White’s and a lot of effort is being placed on this” at the agency.