Surviving an SEC Audit

By Sheryl Rowling, CEO, Total Rebalance Expert on Tuesday, November 19th, 2013

This Wednesday, November 20th, at 2 pm Eastern, I will be presenting a webinar “Surviving an SEC Audit: Tales from a Very Recent Experience.” In this webinar, I will discuss:

  • SEC audit basics

  • what to do before the visit

  • preparing for the SEC exam

  • the initial interview and process

  • what the SEC wants to see while in your office

  • the exit interview and follow-up

  • lessons learned

In this article, I’ll give you a few tips that will be covered in more detail during the webinar.
Don’t Panic! Most SEC exams are routine. Although you won’t be given a lengthy lead time, you will get warning.  Chances are that you were chosen because it was just “your turn.” Or you might have been chosen because you are a new firm, have had significant changes in your business, have high AUM, are part of an affiliated group or use complex investment strategies or products.  The SEC is concerned with improving compliance, preventing fraud and informing policy. The goal is not to shut you down.
Establish a Culture of Compliance. Your firm must take compliance seriously at all times – not just when an examination is scheduled. The best way to prepare for an eventual audit is to enact effective systems and procedures:

  • Establish an effective compliance system

  • Observe record-keeping requirements

  • Perform annual reviews

  • Emphasize to employees that compliance results from putting clients’ interests first.

Review Items Prior to Auditor’s Arrival. Be sure to review “the basics” prior to the auditor’s visit. Check your company’s website, LinkedIn and other publicly available information to ensure that there are no misrepresentations or testimonials.  Carefully review your Form ADV (Parts 1 and 2) for consistency and clarity. Make sure that your logs and records are up-to-date on complaints, trade errors and receipt (and mailing out) of clients’ checks to third parties. It is important to have records with documentation of appropriate responses and actions.  Finally, review prior examination reports.  You want to be sure that any issues addressed previously have been corrected and addressed.
There’s much more to cover!  Please join me by registering at:
For information on Total Rebalance Expert, please visit
You may also be interested in:
Are You Compliance Ready? 12 Takeaways for Preparing for the SEC's 2013 Exam Priorities (Whitepaper)
"Just in Time" is too Late for Efficient Compliance (Blog post by Mark Wickersham, Director of Product Management, ByAllAccounts)
How to Pass a Regulatory Exam (Whitepaper)

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