SEC Exam Success with the Ex-Examiners

 Final Steps:

The Conclusion of your SEC Exam

MyComplianceOffice presents our co-hosts from NorthPoint Compliance as they explain final steps of the SEC Examination process and what compliance officers should expect once the SEC leaves their office. 

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.


Full video transcript available below:

After the interviews and once the SEC leaves, I'd like to go over some of the final steps of the SEC examination. At the conclusion of the onsite exam, the SEC may provide you with an exit interview. If they don't, we encourage you to request one. The purpose of this exit interview is for the SEC to go over their findings and concerns that they've thus far. If you do get an exit interview, it's a great time for you to do two things. First you can clarify any instances where the SEC may believe there be a violation or a deficiency, but where one actually doesn't exist and maybe was just perhaps of a miscommunication that occurred during the examination.

Second, if there are any violations or deficiencies that are brought to your attention, you can work to fix on those problems right away rather than fix them when you get the deficiency letter from the SEC. Remember too that the examination does not conclude with the onsite portion of the exam, but don't be surprised if the SEC contacts you for additional documents. Conversely, don't be surprised if you don't hear from the SEC for a number of weeks after they'd left your office. It's very possible that the examiner is still reviewing documents they received during the examination, or they could also be concurrently working on one or more other examinations including the examination of your firm.

Just note too that once the examination has concluded as determined by the SEC that they have no further questions or any more document request, the SEC has an internal policy of providing you with a response within the following 180 days. There are a number of outcomes that could occur, the most typical being that you'll receive a deficiency letter, and that you'd have to response to that deficiency letter within 30 days and discuss the corrective action that you're going to take.

The least typical outcome is that you would receive a no further action letter. That means that there were no violations or weaknesses that the SEC found, or that they feel compelled to put in the deficiency letter that require corrective action. Again, I can tell you that this is very unlikely. I worked for the SEC for six years and I never wrote a no further action letter, and I don't recall any of my colleagues writing any. It could happen but it's very unusual.

 Finally, another outcome, an unfortunate outcome would be if the SEC were to refer to the branches of enforcement. In which case the examination is not closed but it is still ongoing. If this were to occur you will likely be notified of this. Remember that you might actually still receive a deficiency letter stating less serious finding, but to inform that the examination is still ongoing.


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