SEC Announces Examination Priorities for 2015 - And New Year’s Resolutions for CCOs

As the SEC has been doing at the start of each year in recent years, the SEC announced its examination priorities for the new year. For 2015, the SEC’s priorities focus on three general areas: (i) protecting retail investors and investors saving for retirement; (ii) assessing market-wide risks; and (iii) using enhanced data analytics to identify illegal activity.

The SEC highlighted certain additional priorities, and of these we think the following are more noteworthy to our investment adviser and registered investment company clients:

  • “Alternative” investment companies – the SEC Staff will continue to assess “liquid alt” funds, focusing on (i) leverage, liquidity, and valuation policies and procedures; (ii) adequacy of internal controls such as staffing, funding, board oversight, compliance personnel, and back-offices; and (iii) marketing practices;
  • Cybersecurity – the SEC Staff will continue their efforts to examine those investment advisers’ controls and compliance indicated in its cybersecurity initiative launched in 2014;
  • Proxy voting – The SEC Staff will examine investment advisers’ compliance with their fiduciary duty in voting proxies on behalf of investors;
  • Never-Before-Examined Investment Companies -- The SEC will conduct focused, risk-based examinations of selected registered investment company complexes that have not been examined; and
  • Private equity fees and expenses – The SEC Staff will continue its examinations in this area, given the high rate of deficiencies that they have found.

Accordingly, we believe investment adviser and registered investment company clients should review their policies and procedures in the areas the SEC Staff has highlighted as examination priorities for 2015. In particular, some areas were previously covered in examination priorities or other risk alerts in 2014, e.g., cybersecurity; private equity fees and expenses; and “liquid alts”. Clients who fall into the never before examined category should also review their practices.

In addition to reviewing the foregoing areas, and bearing in mind the SEC’s record year for enforcement, we offer some “resolutions” for 2015 from a compliance standpoint.

1. Take a “fresh look” at your compliance program

“This October marked the 10th anniversary of the compliance date for Rule 38a-1 which requires funds to adopt, implement and annually review compliance policies and procedures reasonably designed to prevent violations of the federal securities laws and also requires that funds designate a chief compliance officer. The rule…stresses the importance of strong compliance programs in preventing violations of law as well as the important role that compliance professionals play in ensuring a strong culture of compliance.” - Norm Champ, Director, Division of Investment Management (complete speech)

With the focus of SEC examinations shifting and becoming more concentrated, compliance officers must be committed to developing and employing a strong compliance program. Enrichment of firm policies and procedures already in place can be accomplished by adopting a more “risk-based” approach to review of the program. By incorporating concrete forensic testing into the procedures already on the books, firms are showing the SEC that they are enthusiastic about, and cognizant of, the need to improve their program on a continuous basis to keep up with the changing regulatory environment.

To reinforce a strong compliance program and stay in line with industry best practice, many firms are adopting compliance calendars that incorporate not only regulatory deadlines, but also outline ongoing responsibilities throughout the year, including periodic review of areas such as Business Continuity, Restricted List maintenance, and proper documentation of employee attestations.

A simple way to aid in the creation and application of a strong compliance program is to consider engaging with a third party to conduct an unbiased review of the firm’s compliance program on a periodic basis.

2. Make compliance more “user friendly”

Whether we like it or not, the onus of fostering a culture of compliance often falls on compliance professionals. Many see the compliance team as “hall monitors” because of the important obligations that fall under their purview. While it may not seem like it, there are many ways to incorporate the concepts of compliance into everyday life within the firm. Most organizations conduct yearly employee training to cover company policies and procedures. By combining general company training with compliance training, employees are more apt to take the compliance program aspects equally as serious as those communicated on a general firm level. However, the compliance team should be mindful not to allow the specific compliance concepts to be buried within the wealth of information provided during these meetings. One way to ensure to keep the attention of employees during training sessions is to make the information directly applicable to the firm by discussing enforcement cases that involve comparable firms and subsequently the consequences of non-compliance with SEC rules and regulations.

3. Be prepared!

Making sure your firm is in a good position to welcome the SEC Staff for an examination should be high up on your “to-do” list for 2015. Using recent examination request letters and the SEC’s Examination Priorities for 2015 can provide a useful roadmap for a potential examination.

Andrew Bowden, OCIE’s Director, shared the thought process of the SEC in issuing their examination priorities and risk alerts: the SEC believes that when they share their “areas of focus, many industry participants independently review their controls in the areas we have identified.”

During the 2014 ICI Securities Law Developments Conference, Director of the Division of Investment Management, Norm Champ, also emphasized risk monitoring as an important area of focus, saying that “[e]nhancing the Division’s ability to monitor and better understand the investment management industry has been a focus — both by launching new initiatives to monitor risk and by sharpening the existing tools at our disposal.”


Chair Mary Jo White reiterated that enforcing the SEC’s rules and regulations is at the forefront of their priorities. “Aggressive enforcement against wrongdoers who harm investors and threaten our financial markets remains a top priority, and we brought and will continue to bring creative and important enforcement actions across a broad range of the securities markets”.

By “resolving” to implement the above ideas and practices, firms can be better prepared for an SEC examination, and for a better outcome from any examination.

SEC3 can assist your firm in helping you create and implement your compliance projects and guide you on your compliance priorities.

For further information, please contact your regular SEC3 representative or contact us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .


Get the latest compliance news and insights - delivered weekly. The SEC3 Communique covers all compliance topics. CCO3 focuses on CCO topics.
tip: check both to keep informed!


2018 - Are you ready for your next SEC exam?

The pool of registered investment advisers that will be subject to an SEC exam in 2018 is at the highest level seen in years. The SEC projects it will examine... read more »

Navigating the Changes to Form ADV

On August 25, 2016, the U.S. Securities and Exchange Commission adopted numerous substantive and technical amendments to Form ADV. While the adopting release required advisers to begin complying with the... read more »

Overlooked Benefits of E&O/D&O

While asset managers should always be aware of the protections provided by their E&O/ D&O coverage, there are more reasons than ever to think about it now. The SEC continues to... read more »

SEC3 Newsletter

Commentary: How Compliance Officers & Firms Can Help Limit CCO Personal Liability This article originally appeared on the Thomson Reuters Regulatory Intelligence subscription service for compliance and risk professionals and is... read more »

Wishing One-and-All a Happy, Healthy and Prosperous New Year

We hope each of you found some peace and tranquility in the company of loved ones this holiday season and want to wish one-and-all a happy, healthy and prosperous New... read more »

Understanding How to Mitigate Liability and Navigate Insurance Options (Part II)

In June, we shared our thoughts around common insurance gaps and insurance riders that CCOs as well as managers should understand. One of the gaps we shared related to pre-claim... read more »


Chief Compliance Officer Roundtable: Breakfast Briefing - February 7, 2018

When: February 7, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Upcoming Events - September & October 2017

Upcoming Events Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. SEC3 is teaming up with industry experts in NYC to discuss...

May 23, 2017 - Webcast: WannaCry Ransomware: Were You Really Protected or Just L…

When: Tuesday, May 23rd, 2017 | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. We...

June 14, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Willkie Farr & Gallagher LLP | 600 Travis Street | Suite 2310 | Houston, TX Barry Barbash from Willkie Farr & Gallagher LLP,...

June 13, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Haynes and Boone, LLP | 2323 Victory Avenue | Suite 700 | Dallas, TX 75219 Validated parking is available in the garage attached...

May 31, 2017 - Chicago

9:00-9:30 a.m - Networking and Continental Breakfast 9:30-11:00 a.m - Program Location: Baker & McKenzie LLP | 300 East Randolph Drive | Suite 5000 | Chicago, IL 60601 Kristin Gonzalez and Jerome Tomas...

May 17, 2017 (NYC WIMF)

This event is by invitation only. Please email to learn more.

May 15, 2017 (NYC Chief Compliance Officer Roundtable)

9:00-9:30am - Networking and Continental Breakfast 9:30-11:00am - Program Location: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone:...

Webcast: The Most Insidious Cybersecurity Threat Is Also The Least Understood

When: Tuesday, April 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. Ransomware, the...

CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO. Attendees will learn: What terms and conditions should Chief Compliance Officers be...

Webinar: CCO Liability (Part III): Managing Liability: Navigating Indemnities an…

When: Tuesday, February 21, 2017 Schedule: 11:00am ET / 10:00am CT / 9:00am MT / 8:00am PT / 7:00am AT Description of Webinar: The National Society of Compliance Professionals is pleased to host...

Webcast: SEC 2017 Examination Focus Area – Cybersecurity Testing

Penetration Testing & Vulnerability Assessments - Examining the SEC & FINRA Requirements When: Wednesday, January 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder,...

Chief Compliance Officer Roundtable: Breakfast Briefing

When: October 20, 2016 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Thomas Westle and Janaya...

Practicing Law Institute - Hedge Fund Management 2016

When: September 15, 2016 Where: New York & concurrent webcast | 1177 Avenue of the Americas | New York, NY 10036 Schedule: 9:00 am – 5:00 pm Janaya Moscony, President of SEC3 will...


When: April 13, 2016 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 22nd Floor Boardroom Thomas Westle and Janaya Moscony, along with industry experts,...