Published on Mar 22nd, 2023 |

SEC Increase On Recordkeeping For Exams | Brian Dillon’s Insights

Vigilant Insights

Vigilant’s Director, Brian Dillonwas quoted in a Board IQ article regarding recent examination document production requests from the SEC related to the use of text messages and other electronic communication.

This topic has been under heightened scrutiny by the SEC recently.

Brian covered the following areas below in his quotes throughout the article:

  1. The document production request with regard to electronic communications  is more detailed and specific than usually the case during routine examinations.
  2. The potential for deficiency letters and possible enforcement cases during these types of examinations if registrants are not maintaining the required books and records.
  3. Importance to make sure recordkeeping policies and practices are consistent and up to date.
  4. Brian stated an important point that Fund boards should consider asking about is regarding the fund adviser/sub-adviser and distributor practices in this area including “training program[s], record retention practices as well as their monitoring and surveillance procedures”.
  5. Directors can also consider the training programs the advisor/sub-adviser and distributor uses to make sure employees understand the firm’s specific requirements and make sure they know what is and isn’t allowed.

Vigilant's Conclusion

Vigilant’s Conclusion

Recordkeeping and the use of so called off-channel communications continues to be a “hot topic” and is seeing a continued increase in focus by the SEC.

During the Investment Company Institute (“ICI”) Investment Management Conference this week, the following was covered below relating to recordkeeping and the SEC’s pace in this current regulatory environment:

  • The Administration is extremely, tightly controlled surrounding messaging.
  • While disclosed as an opinion by a member of the SEC, the individual encouraged the audience to become more engaged on these rulemakings as they will all have an impact in some way.
  • There is no relief in sight regarding the SEC’s pace in this regulatory environment which was expressed by ICI.
    • Commissioner Uyeda did note that the SEC has been making rulemakings on unrealistic expectations.
  • With over a dozen Proposed Rules out from the Commission at the moment, there is a steady cadence of adoptions coming our way.

With no slow down in sight, it is important to maintain a compliance program that remains consistently up to speed with the SEC’s pace. Whether you may need full or limited support, Vigilant is here to help provide you with a customized Compliance Solution.

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