SEC Targets RIA Exams Based on Leadership Changes, Advisor Disciplinary History, Other Risk Factors
The U.S. Securities and Exchange Commission (SEC) outlined in a risk alert how it selects advisory firms to examine, the areas it focuses on in the probes and how it chooses which documents to request. Factors that can grab the SEC’s attention include: a firm’s prior examination or conduct records, supervisory concerns such as disciplinary history of advisors, conflicts of interest, the length of time since its registration or last examination and changes in leadership. A firm’s vulnerability to financial and market stresses, prior disclosures, its access to investor assets and exposure to “service provider related compliance risks” could also bring scrutiny, according to the alert.
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