Despite the pandemic, the Securities and Exchange Commission’s exam division conducted over 2,950 examinations in fiscal year 2020, including 15% of all SEC-registered investment advisors, according to Pete Driscoll, director of the Office of Compliance Inspections and Examinations.
OCIE “successfully began initiatives to review compliance with Regulation Best Interest and Form CRS and to assess registered advisers’ and investment companies’ preparedness for the transition away from LIBOR,” Driscoll said in a recent speech.
OCIE has continued to conduct exams “off-site through correspondence, and we are working with registrants to address the timing of our requests, availability of registrant personnel, and other matters to minimize disruption,” he explained.
The agency’s examiners, Driscoll continued, “engaged in outreach and other efforts with many investment advisers and investment company complexes to assess the impacts of Covid-19 and to gather information, including challenges with operational resiliency and fund liquidity.”
Business Continuity Plans
Most firms “we met with had business continuity plans (BCPs) and had activated them,” he stated. A “small percentage of the hundreds of firms” OCIE met with virtually had “pandemic specific plans that were in existence before the Covid-19 pandemic.”
BCPs, Driscoll said, “generally were beneficial in addressing the impact of the pandemic.”
OCIE found that “critical areas for operations were typically covered in the BCPs,” he explained.
“We saw BCPs that provide for personnel to work in separate remote sites, succession plans that address the death or lengthy incapacitation of key personnel and contingency plans for when other essential personnel are unable to work for extended periods,” Driscoll added.