The SEC recently announced its 2014 plan to target registered investment advisers who have never undergone a formal compliance examination. SEC Inspections Chief Andrew Bowden recently stated in a meeting of the Regulatory Compliance Association that the SEC plans to prioritize the review of the approximately 4,400 registered investment advisors who have never faced an SEC exam. Mr. Bowden noted it specifically intended to focus on the about half of those advisers that have been registered for more than three years and are domiciled in the U.S.
While some advisers and adviser trade associations have welcomed the SEC’s initiative to step up exams, citing the increased standardization and fairness across the industry that would come as a result of the exams, others have expressed doubt that the SEC will have the proper management and resources to fulfill these ambitious goals.
Registered investment advisers that (i) have been registered for more than three years, (ii) are domiciled in the U.S. and (iii) have never faced an SEC exam should be aware that the SEC may be targeting this group for exams in the upcoming year.