Numerous factors are taken into consideration when the SEC’s Office of Compliance Inspections and Examinations (OCIE) compiles its annual list of registrants to audit. In a recent conference call conducted by the SEC’s Fort Worth Regional Office, some insight into this process was covered. While this information doesn’t keep you from an examination, it may provide you some guidance into why you “made the cut.”
The Role of ORAS
The Office of Risk Assessment and Surveillance (ORAS) plays a central role in determining registrants to examine. They generally provide the initial list of registrants to the OCIE regional offices, who then pare down the list to roughly 150 – 170 firms per year.
What Are the Potential Triggers?
ORAS and the OCIE sift through various parameters when paring down the list. Filling multiple “buckets” keeps you towards the top of the list. Some of the categories for consideration include, but are not limited to:
- ADV/U4/U5 filings
- Historical findings
- Inherent risk profile
- Workforce disciplinary history
- Operational changes in accounts or assets
- Firms with the same Chief Compliance Officer
In most cases, firms will appear on the initial list if
- They are a new registrant
- Two plus years and never audited
- Ten plus since the last audit
- Another agency has referred
- There have been tips, complaints, etc. filed against an individual or the firm.
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About Red Oak Compliance Solutions
Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes.