Dear Clients and Friends,
ACA has observed an uptick in SEC examinations of registered investment advisers operating from a principal place of business outside the United States.
The Commission is targeting such advisers across the globe as part of its risk-focused exam strategy. It announces these inspections via telephone and follows the call with a formal letter and initial information request list. Firms based as far away as Hong Kong and as close as Canada have received SEC inspection notices.
The initial information request lists typically ask advisers to provide some or all of the following materials:
The SEC inspections typically take place off-site and advisers are being asked to provide requested documentation electronically. Notably, the requests focus largely on activities linked to existing and prospective U.S. clients and investors. (Click here for an initial information request list from the SEC’s Office of Compliance Inspections and Examinations in Washington, D.C.)
Registered investment advisers operating from a principal place of business outside the U.S. must be ready to undergo an SEC correspondence exam. Firms that can respond to the initial information request list in a timely and accurate manner and that can effectively demonstrate maintenance of high-quality compliance programs are less likely to receive heightened scrutiny. Registered investment advisers can accomplish this by, among other things, maintaining up-to-date compliance policies and procedures tailored to their advisory activities, “plain-English” disclosure documents, and marketing materials free of misleading information.
ACA specializes in preparing domestic and foreign-based registered investment advisers for SEC inspections. In fact, ACA’s team of former SEC examiners and in-house compliance professionals conducts hundreds of mock SEC inspections each year. ACA’s compliance experts operate from offices throughout the U.S. and U.K. In addition, ACA is expecting to formally open its first office in Asia in early 2013.
For more information on ACA’s Mock SEC Inspection services, please email:
ACA Compliance Group