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Simon Koziel

Preparing for Your SEC Audit

“If you haven’t started preparing for an SEC exam, you’re already behind,” said panelist Jeffrey Squires of Vista360, at the IAWatch Fall Compliance Conference 2012.  “And if you haven’t had an exam lately, that means there is one on the way.”  And Andrew Bowden, associate director of the SEC Office of Compliance Inspections and Examinations, stated in his opening remarks that new registrants should expect to be examined during the first year of registering – 25% of new registrants are visited within the first 12 to 24 months after registering.

For the 1,504 newly registered hedge funds and private equity firms, these are probably not comforting words!  For the first time, private investment funds with AUM as low as $150 million need to be concerned about SEC examinations.  Listed below are a few guidelines on preparing for an SEC audit1.

  • Download the SEC document requests and understand them.
  • Have a fire drill with your employees.  Pull the data you will need for the on-site exam.  Gather your team together and make them aware of what will be expected from them when the exam takes place.
  • Work out the logistics of the exam.  For example, where will you place the examiner in your office?
  • Is your code of ethics up to date?  Pull out your compliance manual and make sure that it reflects all of the newest industry regulations.
  • Make sure that communications between senior management and the chief compliance officer about developing compliance and risk assessment procedures are well documented.

And, we might add that a robust CRM system like ProTrak Advantage CRM can make your SEC audits much less painful.  With ProTrak, you can forget about having to search through your hard copy files for copies of due diligence/subscription documents, legal contracts, account holdings, copies of investor statements, etc. because they will all be just one click away on ProTrak’s investor profile screen.  And, you will have instant access to all investor emails, calls and meeting notes on the same profile screen.  Clients who have converted from other CRM systems say that ProTrak is much more intuitive and easy to use than competing programs and examiners have said that ProTrak was the most user-friendly software they had seen.


1 From  blog by Beth Connolly on September 25, 2012.

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