If historical trends continue, at least one out of ten examinations of investment advisers and investment companies conducted by the SEC Office of Compliance Inspections and Enforcement (OCIE) will be referred to the Division of Enforcement (Enforcement). To avoid becoming subject to sanctions or used to send a message to the industry, hedge fund managers must keep a close watch on areas that Enforcement considers priorities. In addition, as the SEC Division of Investment Management (IM) churns out new rules, guidance and restrictions, hedge fund managers face a corresponding expansion of their compliance obligations. The current initiatives and priorities of Enforcement and IM were some of the topics discussed during a recent day-long seminar hosted by the SEC as part of its Compliance Outreach Program. SEC Chair Mary Jo White delivered opening remarks, and participants included Enforcement Director Andrew Ceresney, IM Director David Grim and OCIE Director Marc Wyatt. The first two segments of the seminar featured Diane C. Blizzard, Associate Director of IM; Jane Jarcho, Deputy Director of OCIE’s National Exam Program; and Anthony S. Kelly, Co-Chief of the Asset Management Unit (AMU) of Enforcement. Our two-part series highlights the key insights from those presentations. This second part examines the priorities and operations of each of Enforcement and IM. The first part discussed SEC initiatives, including the Compliance Outreach Program itself, and also explored OCIE’s characteristics, current campaigns and examination priorities. For more on Enforcement, see “Current and Former SEC, DOJ and NY State Attorney General Practitioners Discuss Regulatory and Enforcement Priorities” (Jan. 14, 2016); and our series on “The SEC’s Broken Windows Approach”: “Conflicts of Interest and Expense Allocation Concerns” (Sep. 24, 2015); and “Compliance Resources, CCO Liability and Technology Concerns” (Oct. 1, 2015).