At the Investment Company Institute Securities Law Developments Conference held in Washington, D.C., on December 9, 2009, Douglas Scheidt, Associate Director and Chief Counsel of the Division of Investment Management of the SEC, discussed changes that firms can expect in future examinations conducted by the SEC’s Office of Compliance Inspections and Examinations (OCIE) as well as changes to the SEC’s internal subpoenaissuing process.
According to Scheidt, following the appointment of a new OCIE Director and in light of poor OCIE reviews in two SEC Office of Inspector General reports covering periods prior to that appointment, OCIE is attempting to make its examinations more efficient. He noted that, in the future, firms can expect the following changes in OCIE examinations:
- SEC inspectors with more experience and a greater understanding of the industry;
- Fewer “top-down” inspections, with SEC inspectors no longer on-site for weeks;
- More tightly focused exams, with SEC inspectors looking primarily at specific conduct;
- Fewer “sweep examinations”;
- Fewer “cause examinations”; and
- Examinations focused on client asset verification.
Scheidt also indicated that, going forward, OCIE intends to notify examinees when their inspections are complete.
Additionally, Scheidt indicated that in the event Congress passes legislation “merging” broker-dealers and investment advisers, OCIE would likely merge future broker-dealer and investment adviser inspections as well.
Finally, Scheidt mentioned that OCIE was seeking Division input on the “Top 5” industry problems and would likely focus future examinations on those problems.
Regarding SEC subpoenas, Scheidt indicated that the SEC was making efforts to reduce the number of internal procedures required to issue subpoenas. The SEC is seeking to streamline the process, making it more efficient and less complex, with the goal of allowing the staff to issue more subpoenas, and to issue them faster.