Investment Adviser Makes the Most of a Mock SEC Exam

 

OPPORTUNITY

Diligent compliance testing by the compliance team of a privately held, $70B investment adviser revealed a weaknesses in the firm's ability to respond to an SEC examination.

The Chief Compliance Officer and executive management were concerned that the employees of the newly-registered adviser had limited knowledge of what to expect or how to behave during an SEC examination. They requested an independent review of the compliance program to identify gaps and issues in their program's design based on regulatory risks and expectations.

PROCESS

ReGroup conducted an independent review of the investment adviser in a manner designed to replicate an SEC examination, including document requests, interviews of key employees in all departments, and process walk-throughs. The firm was required to meet deadlines similar to those required by the SEC inspection staff, so the experience had the immediacy of a real exam situation.

We  evaluated the substantive design of the compliance program against regulatory requirements, and the strength of compliance administration against leading practice, as well as the firm's risk assessment and internal reporting of compliance matters, and the quality of the firm's ability to respond. ReGroup also assessed each interviewee’s regulatory interview based on the individual’s ability to explain job responsibilities, knowledge of compliance responsibilities, presentation and overall demeanor, and general appropriateness and tone of the response.

RESULTS

  • A roadmap of specific recommendations to further improve substantive elements of the compliance program; 
  • A written set of instructions on how to prepare and respond to an SEC exam;
  • Increased executive management’s confidence in the firm’s ability to respond to an SEC exam; and 
  • Elevated credibility and visibility for the compliance team’s purpose and goals across the firm.
Having worked with Ann Oglanian in the past, I expected nothing less than the highest level of professionalism and work quality we received. ReGroup made the mock SEC audit real for us. It was a great learning experience and the feedback we received was incredibly valuable because ReGroup was sensitive to our firm’s unique situation and perceived risks.
— Doug P., Chief Compliance Officer
Risk, ComplianceRebecca Leon