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
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 www.trxpert.com.
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