SEC Again Indicates Closer Monitoring of Financial Advisers
The Securities and Exchange Commission issued a press release on February 20th that reinforced its intention of stepping up its examination of registered investment advisers. In particular, the SEC's Office of Compliance Inspections and Examinations ("OCIE") plans to focus on investment advisers that have never been examined by its office in the past and that have been registered as investment advisers with the SEC for three or more years. Many of these investment advisers are private equity firms and hedge funds who registered and came under the SEC's jurisdiction as the result of Dodd-Frank.
The announcement is consistent with previous releases by the SEC that have indicated that examining the large number of recently registered advisers is a priority in 2014. The OCIE intends to examine a "significant percentage" of advisers that have not been examined since they registered.
The examinations are expected to address areas that the OCIE deems most important to protecting the interests of investors. Last month, in a report on its examination priorities for 2014, areas of focus identified by the OCIE included the safety of assets and custody issues, conflicts of interest, and marketing and performance presentation issues.