CCO Resource Hub: Examinations Requests

Chief Compliance Officer Committee

EXAMS Requests

The SEC’s Division of Examinations, which refers to itself as the EXAMS Division, was previously known as the SEC's Office of Compliance Inspections and Examinations (OCIE). EXAMS engages with SEC registrants both through conducting inspections to determine their compliance with the Federal securities laws and by pushing out relevant information to them. [In December 2020, 25 years after it was created, OCIE was renamed as “The Division of Examinations.” All references in this Resource Center to “OCIE” were added to it prior to this name change.] This portion of the Resource Center provides CCOs access to this information as described below.

The Division of Examinations/OCIE Document Requests

Members of the CCO Committee have long shared with ICI copies of the document requests they receive in connection with SEC’s inspection including those that are routine, targeted, or specialized reviews. The Institute redacts identifying information from these documents and posts them on the Resource Center.  As noted previously, we expect all members who access these documents to maintain their confidentiality by not sharing them outside your firm, including not sharing them with your outside counsel or consultants.

Risk Alerts

Years ago, at the recommendation of the ICI, EXAMS/OCIE began publishing Risk Alerts as a vehicle to communicate with registrants. Typically, these Risk Alerts serve two purposes.  First, they are used to alert registrants to upcoming targeted examinations, including the purpose of such review and the type of information the SEC will seek during it.  When it conducts targeted reviews, the SEC’s examinations staff usually visits 25-50 registrants to assess their policies and procedures relating to the topic of the review. By publishing a Risk Alert prior to a targeted examination, the SEC’s examination staff is able to influence the conduct of far more firms than it will visit during the targeted review.

The second purpose for which EXAMS/OCIE issues Risk Alerts is to push information about the results from a targeted review out to registrants after a review of a targeted area has been completed.  This type of Risk Alert enables registrants to better understand policies, procedures, and practices that, in the Division’s view, may be more effective or less effective than others.  In reading these Risk Alerts, it is important to remember that they are not law and the Division will not cite a registrant for having policies and procedures that are not consistent with those identified in a Risk Alert so long as the registrant’s policies and procedures are reasonably designed to ensure compliance with the Federal securities laws as required by Rule 38a-1 under the Investment Company Act of 1940 (the SEC’s Fund Compliance Rule).

EXAMS Priorities

In 2013, the Division of Examinations began publishing its priorities for the current fiscal year. [The SEC’s fiscal year runs from October 1st to September 30th.] These priorities are typically published by February and they highlight the areas that the Division intends to focus its inspection activity on during the year. It is not uncommon to see areas listed in the Priorities being repeated from year-to-year.  Obviously, matters may arise that may divert its intention, but these Priorities provide registrants a list of areas/issues they may want to focus on in reviewing their operations. As noted above, when the Division reviews an area listed in their Priorities, it typically does so by visiting 25-50 registrants to review their policies and procedures related to the area/issue.

EXAMS Document Requests

Members of the CCO Committee have long shared with ICI copies of the document requests they receive from the SEC’s inspection staff in connection with routine, targeted, or specialized reviews. The Institute redacts identifying information from these documents and posts them on the Resource Center. As noted previously, we expect all members who access these documents to maintain their confidentiality by not sharing them outside your firm, including not sharing them with your outside counsel or consultants.

The SEC’s Division of Examinations (EXAMS) previously known as the SEC's Office of Compliance Inspections and Examinations (OCIE) is charged with conducting inspections and examinations of registrants. Members of ICI’s CCO Committee have long been encouraged by the ICI to share any document request lists they receive from the inspections staff with ICI so ICI can make these lists available as a resource to members of the CCO Committee. The sharing of such documents enables other members of the Committee that may be subject to the same or a similar inspection to anticipate what they may have to produce for the inspections staff if they, too, are visited as part of the review.  Importantly, too, even for those members that are not visited as part of the review, these document request lists enable them to ensure that their “house is in order,” thereby enhancing their own compliance efforts.  As new document requests lists are provided to the Institute, they are added to this section of the Resource Center to ensure this information remains current. The EXAMS staff may conduct routine inspections of advisers, transfer agents, fund underwriters or distributors, and mutual fund complexes where the inspection consists of reviewing the registrant’s compliance with applicable laws and regulations. Alternatively, it may conduct targeted reviews where the focus of the review is limited to a particular topic (e.g., business continuity, cybersecurity) where the review is both focused on ensuring compliance with legal requirements but, also, on gathering information for the Commission and its staff on various industry practices.  When EXAMS conducts targeted reviews, the staff tries to visit approximately 25 firms of all sizes to obtain information from a cross section of the industry relating to the subject of the review.  Generally speaking, the routine and targeted reviews are conducted by the SEC office in the region where the registrant’s principal place of business is located.  These reviews can be “desk exams,” where the staff merely seeks documents and information from the registrant by phone, letter, or email, but does not actually visit the registrant’s location; an on-site inspection of the registrant; or both.

The EXAMS staff may also participate in sweep examinations where a team comprised of SEC staff conducts reviews on a particular topic throughout the United States. These teams may include, in addition to EXAMS staff, staff from one of the Divisions of the SEC (e.g., Investment Management or Trading and Markets (or both) depending upon the topic of the sweep), as well as Enforcement staff. These types of reviews are very uncommon.

Regardless of the type of review conducted by EXAMS, the review typically begins with the registrant being provided a document request list that lists those documents that the staff seeks as part of the review.  If the staff plans to visit the registrant’s premises as part of the review, it may request some documents in advance of the visit the registrant’s premises or it may request that, when the staff visits, the documents be available for their review.

A couple of points to remember in connection with these reviews. First, according to EXAMS, the document request list the registrant receives should not be viewed as imposing legal requirements.  In other words, the fact that a registrant does not maintain a particular document included in the document request list (unless the document is, in fact required by law), should not be of concern to the registrant.  Secondly, in the past, when EXAMS staff conducted its review it would largely deal exclusively with the fund’s CCO or compliance staff.  Increasingly, however, it is not uncommon for the staff to ask to speak to representatives of business units or fund directors in connection with the staff’s review of the registrant.  Some funds have refused to make their Directors available for these reviews. For those funds whose Directors have met with the EXAMS staff, we understand that the staff has not expressed an objection to the board’s counsel or independent counsel being present. 

Fund Complex Exams (Funds, Adviser, Transfer Agent)

Routine Fund/Investment Adviser Exams

Routine Distributor/Broker-Dealer Exams

Specialized Reviews/Targeted Exams/Sweeps

The documentation provided by ICI that may be accessed by committee and task force members is restricted to members use only and not for distribution or reproduction. Documentation may be used internally at member organizations as needed to facilitate committee and task force initiatives.