Non-Enforcement Matters
SEC Provides Insight in Choosing Who to Examine
Senior SEC officials recently outlined the agency's criteria
used when it selects registered investment advisers (RIAs) for
examination.
The SEC initiated its "risk-based" approach in 2010 to
determine which firms to examine and which parts of a firm's
business it will want to more closely scrutinize during the
examination. Factors that may dictate which firms to examine
include tips, complaints, and referrals from other governmental
agencies received by the SEC. In addition, the selections are often
made by the risk areas identified by the SEC through a review of
the firm's Form ADV, results of previous examinations of the
firm, information from third parties, business activities of
affiliates, amount of assets under management, private fund
advisory activities, disciplinary history, and the time that has
elapsed since the last examination was conducted.
