RCA Asset Management Thought Leadership Symposium Highlights Regulators’ Examination and Enforcement Priorities, the New SEC Examination Paradigm and Liability Concerns for CCOs and General Counsels

On November 10, 2011, the Regulatory Compliance Association held its Annual Fall Asset Management Thought Leadership Symposium (RCA Symposium) in New York City.  Panelists repeatedly emphasized the trend towards increased regulatory scrutiny of hedge fund managers.  The SEC’s Division of Enforcement (Enforcement Division) anecdotally confirmed this sentiment the day before the RCA Symposium when it announced that it had filed a record 735 enforcement actions against a variety of market professionals during fiscal year 2011.  Through these actions, the SEC has demonstrated its willingness to hold not only firms liable for their compliance failures, but also those individuals that provided inadequate oversight of their firms’ compliance programs.  See “Three Recent SEC Orders Demonstrate a Renewed Emphasis on Investment Adviser Compliance Policies and Procedures by the Enforcement Division,” Hedge Fund Law Report, Vol. 4, No. 45 (Dec. 15, 2011).  Speakers at the RCA Symposium addressed numerous topics, including: examination and enforcement priorities for the SEC and the NFA; the different types of SEC and NFA examinations; recent examination experiences and advice on preparing for examinations; the reality of CCO and GC liability for compliance failures; and the need for operational changes in light of new regulations impacting hedge fund managers.  This article summarizes key points discussed during the RCA Symposium on each of the foregoing topics.

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