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Regulation and Compliance > Federal Regulation > SEC

SEC Getting More Aggressive With Advisor Exams, Ex-Directors Say

By Melanie Waddell

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The scope of exams conducted by the Securities and Exchange Commission has expanded “significantly” as the agency takes a more “aggressive” exam approach, former SEC exam directors said Tuesday.

“We’ve seen a significant expansion in scope for exams,” former SEC exam director Carlo di Florio, partner and global advisory leader at ACA Group, said Tuesday at the Investment Adviser Association’s annual compliance conference in Washington on a panel discussing exam trends.

“We’ve seen the [exam] scope period go as far back as three or four years” and seen “exams with over 90-plus document request items. Despite that, we’re still seeing the same response periods of 10 to 14 days.”

In some cases, di Florio continued, SEC scrutiny is also extending beyond the registration period. He questioned the agency’s authority to do this.

Pete Driscoll, former director of the SEC’s exam division, who’s now a partner at PricewaterhouseCoopers, added on the panel with di Florio that the more “aggressive” exam environment — both in terms of scope and the breadth of the requests — is reflective of SEC Chairman Gary Gensler’s agenda.

“I spent 20 years [at the SEC], and depending on what the political environment was, there would be that swing in the ability and the aggressiveness of the exam program, depending on who’s in the chair’s seat,” Driscoll said. “Right now, it’s pretty evident there’s an aggressive chair — that filters down, not directly to examiners … but I think that there’s less concern of the ideas and approaches they [the examiners] take. That’s resulted in larger periods of time and more documents.”

Onsite Exams

The SEC is returning to onsite exams, Driscoll said. “Not a lot of them, but they are starting to come back.”

Natasha Vij Greiner, the SEC’s deputy director and national associate director of the Investment Adviser/Investment Company Examination Program, said Tuesday at the IAA event that “we’re going to start conducting more onsite exams over the next couple months.”

Said Greiner: “Having the interaction with registrants is really critical, so going forward you’re going to see us request to come back onsite but also willing to coordinate — we know the world has changed a bit … we’re not past the remote work environment” so some of the exams will be offsite.

“It will ebb and flow and taking a hybrid approach is not a bad way to go moving forward,” Greiner said.

Melanie Waddell

@Think_MelanieW

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