Earlier in 2017, the SEC’s Office of Compliance Inspections and Examinations examined a handful of investment advisers, focusing on the forms of electronic communications used by those advisers and their employees. Many speculate that these exams were part of a new sweep exam focused on electronic messaging. Meanwhile, an official-seeming information request list (Request List) became public, although the SEC has not formally confirmed the existence of an electronic communications sweep exam nor the authenticity of the Request List. This three-part series is designed to assist compliance professionals with managing the ever-evolving electronic communication technologies that many adviser employees are already using, or desire to use, in their daily business practices. Given the widespread belief that these electronic communication-focused exams are part of a sweep exam, this first article provides background on sweep exams, with particular focus on this electronic messaging exam and the potential drivers of SEC focus in this area. The second article
will break down the various components of the Request List and analyze the implications and consequences of certain requests. The third article
will examine best practices for advisers when designing their electronic communications policies, taking into account the items requested in the Request List, as well as how advisers that are not the subject of the electronic communications exam can nonetheless proactively prepare for future scrutiny in this area. For more on electronic communications, see “ACA 2015 Compliance Survey Covers Expert Networks, Fund Expenses and Electronic Communications (Part Two of Two)
” (Oct. 8, 2015); and “Survey Highlights Compliance Professionals’ Attitudes and Practices Concerning Electronic Communications Compliance
” (Feb. 9, 2012).