SEC Exam Staff: "Surprise, We're Back"

In August, Kevin Kelcourse, the associate director for examinations at the SEC's Boston Regional Office, confirmed that his office has been making "surprise" examination visits to registered advisers in the region. This departs from the typical way in which SEC staff initiate exams – by sending firms a document request list and specifying a time, usually a few weeks later, for an onsite inspection. For many years, surprise examinations have usually occurred only if the staff believed that malfeasance had occurred or was ongoing at a firm.

Recently, however, reports of surprise visits have revealed that while onsite, the SEC has requested to speak with chief compliance officers and, in some instances, made document requests. Kelcourse, whose remarks were delivered to an industry news outlet, stated that by catching firms off guard, the SEC hoped to gain a better perspective on how firms operate when they think nobody is watching.