The SEC inspections of RIAs have been showing that certain RIAs have poor controls in place.
The SEC has been seeing in these inspections that the RIAs have been utilizing poor internal controls in their businesses. Many of these reports derive from the recent new advisers to hedge and private equity funds. These RIAs were required to be registered by the Dodd-Frank Act.
Importantly, RIAs must review their controls to ensure proper management. There really is no excuse for having poor controls in place.