New SEC Personnel Emphasize More Focused Adviser Examinations

The U.S. Securities & Exchange Commission ("SEC") has significantly increased its examination and enforcement efforts in recent times. SEC examinations may be routine or based on specific cause. Cause examinations typically begin with an unannounced visit from the SEC. The purpose of the SEC examinations are to protect investors by determining whether advisers are complying with the law, adhering to the disclosures that they have provided to their clients, and maintaining appropriate compliance programs to ensure compliance with the law. While few businesses expect to become the subject of government investigations, it happens every day. Planning for an SEC examination is a critical part of an adviser's operations and preparation is vital. The SEC will continue to hire and appoint experienced personnel designed to strengthen SEC examinations. On January 4, 2010, Mr. Carlo V. di Florio was named the Director of the SEC's Office of Compliance Inspections and Examinations ("OCIE"), which was formerly headed by Lori Richards. Mr. di Florio was formerly with PricewaterhouseCoopers ("PwC"), where he was a partner in the Financial Services Regulatory Practice and one of the PwC's national leaders in corporate governance, enterprise risk management, and regulatory compliance and ethics. As head of OCIE, Mr. di Florio is required to oversee the SEC's nationwide examination programs for investment advisers, broker/dealers, mutual funds, credit rating agencies, and self-regulatory organizations among other entities. Mr. di Florio has experience with investigating corporate fraud, corruption, conflicts of interest and money laundering and has directed international teams and engagements across numerous jurisdictions around the world.[1] "A strong inspections and examinations unit is instrumental to the SEC's investor protection efforts. Investors rely on our examiners to ensure that their financial professionals comply with the law," said SEC Chairman Mary Schapiro, in a statement. "Carlo brings the energy, insight, and experience necessary to ensure that we keep pace with the rapid changes in the industry and continue to build upon the reforms of the past year."[2] Mr. di Florio will also work closely with the SEC's recently created investigative units and their leaders as follows: asset management, headed by Bruce Karpati and Robert Kaplan; market abuse, led by Daniel Hawke; structured and new products, Kenneth Lench; foreign corrupt practices, Cheryl Scarboro; and municipal securities and public pensions, Elaine Greenberg. Remember, the best time to consider your options is before you get the call.

We advise our clients with regard to registration, compliance obligations, informal inquiries, no-action letters, examinations, formal investigations and enforcement actions. We also draft compliance manuals, create internal controls and perform mock audits.

Please feel free to contact Daniel G. Viola at 212.573.8038 (or regarding your compliance needs or with any questions.


[1] [2] Id.

Cheryl Spratt