The SEC's push to conduct narrowly focused examinations of
newly registered investment advisers is ahead of schedule and
providing it with insights about compliance weaknesses, hedge fund
advisers, and private equity companies.
To date, the SEC has completed 210 presence exams while 42 are
currently open. Exam teams are focused on compliance
associated with marketing practices, portfolio management,
conflicts of interest, safety of client assets, and valuation.
Data from presence exams conducted to date reveals the most
commonly cited deficiency for hedge fund managers involves
marketing practices, including, but not limited to, misleading
statements or weak disclosures contained in marketing and
advertising materials, such as misleading performance statistics
and data on past recommendations. The exams also showed hedge
fund adviser deficiencies involved internal compliance, control
procedures and inadequate maintenance of books and records as well
as conflicts
