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SEC Exam Success with the Ex-Examiners

 

A Compliance Officer's Best Tools and Tips for the SEC Exam Process

MyComplianceOffice presents our co-hosts from NorthPoint Compliance as they discuss their best tools and tips for a Compliance Officer to remember during the SEC Examination process. 

Victoria Hogan, CFA, President of NorthPoint Compliance worked for over six years as a compliance examiner in the New York Regional Office of the U.S. Securities and Exchange Commission. Victoria also spent two years as a compliance officer at Fortress Investment Group. Victoria graduated magna cum laude from The College of New Jersey.

Colleen Montemaraon is a consultant at NorthPoint. Prior to joining NorthPoint, Colleen worked for more than six years as a compliance examiner in the New York Regional Office of the US Securities and and Exchange Commission.Colleen graduated magna cum laude from St. Thomas Aquinas College with a BS in Finance.

 You can download a full copy of the slides from this webinar.

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Full video transcript available below:

Since I'm sure, it is the audience’s goal to not have an enforcement action against your firm, and also to reduce any violations that might be found during an SEC exam, there are some things that you can do now, some  tools and tips that I'll give you to reduce your risk. Our first recommendation is that you obtain a full SEC document request list, and make sure that you can readily obtain the information in the request. This can be found through an internet search, or a through a consulting firm or your attorney. This is one of the first things that you can do, make sure that you would be ready for an examination.

Secondly, you can conduct your own mock audit internally, or you could hire a third party service provider to conduct one for you. If you practice responding to the full document request list as I had said before, you're already part of good portions away through any kind of internal mock audit you might want to conduct. In addition, you should conduct a mock SEC interview with the key employees, and keeping in mind the tips that I shared with you earlier about SEC interviews. In addition to this, you should also do your own pre-examination similar to the pre-examination process that Colleen had described earlier.

Third, you should review all past deficiency letters, not just the most recent deficiency letter, as well as your firm's responses to those letters. This is an area where you don't want to mess up. You want to make it absolutely certain that if it's still applicable that you took and continue to take the corrective action that you told the SEC that you would to take to fix any past violations and deficiencies. Finally, make sure that you're documenting any compliance violations or weaknesses at your firm. This will be asked of you during an SEC exam, and you want to make sure that you can provide this information even after you may have left the firm.

It's also very, very important to document how such violations and weaknesses were or will be fixed. When I tell this to advisers they often tell me, "Vicky, wouldn't we be leaving a kind of road map for the SEC if we were to document all of our violations?" My answer has always been the same. When I worked at the SEC and ask our registrant if there were any violations or deficiency at the firm and was told that "oh, you know, there is no violations or deficiencies here. That will lead me to think one of two things. One, either the compliance program was just not strong enough to detect violations or/and weaknesses. Secondly, that the firm was not being truthful in its response.

If you're asked to respond to the SEC, just put emphasis on the fact that you do have a strong compliance program, and also that you have an action plan to find violations and also to remedy any violations or deficiencies that might be found.

 

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