How to Prepare for an SEC Examination | Vigilant Insights

Vigilant Insights

Introduction

After almost $5 billion in SEC charges from enforcement activity in FY 2023, Firms are recognizing the importance of being prepared.

SEC Examinations can be quite stressful in the moment, but steps can be taken to help increase your chances of having a smooth interaction with the SEC.

SEC Chair, Gary Gensler, says that they have no intention of interfering with the operations of “honest business”, so it is important that your honest operations are evident.

5 Tips to Prepare for an SEC Examination

1. Fully Explain Your Business
   • SEC staff will have very little knowledge of your business.
   • Presenting them with information that easily explains how your Firm operates can help them focus their investigation on what is applicable.
2. Review Current Exam Priorities
   • Firms should be aware of what topics are most important to the SEC in 2024.
   • The Division of Examinations Exam Priorities and SEC Risk Alerts give helpful guidance and warnings for Firms working to remain compliant.
   • Since Examiners will likely focus on these topics, be sure to prepare responses for any inquiries related to the Exam Priorities.
3. Prepare for SEC Questioning
   • The SEC routinely interviews the Senior Management of the Firm.
   • Supervising staff should be able to speak to vital business operations and how the Firm maintains its Compliance Program.
   • Train staff for the kind of questions to expect during interviews and how to respond accurately and efficiently.
4. Prepare for Documentation Requests
   • The initial requests for documentation can be substantial.
   • Proper documentation for an SEC Examination should be an on-going process.
   • Risk Alerts typically describe what information is requested.
   • Outsourced Compliance Firms that regularly deal with SEC requests can provide insight.
5. Utilize a Mock SEC Exam
   • Mock Exams are one of the best preparation tools at your disposal.
   • Outsourced Compliance Firms are interacting regularly with the SEC and helping clients prepare for routine Examinations.
   • Choose a Compliance Firm with significant experience successfully handling SEC Examinations.

Vigilant’s Conclusion

Preparing for an SEC Examination can be daunting. The steps necessary to prepare can feel overwhelming considering the aggressive regulatory climate we are currently operating in.

Maintaining an awareness of the increasing number of SEC rulemaking, preparing staff, ensuring proper documentation, and performing practice Examinations is a resource-consuming task without professional guidance.
Outsourced Compliance can provide a cost-effective solution for Firms that want to focus more on their business operations.

The Vigilant team brings centuries of experience in the industry to the table and can help your Firm to prepare for the next call from the SEC or assist during an existing Examination. Reach out today with any concerns or assistance you may need.

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