Steps Advisers Can Take to Minimize the Risk That a Routine SEC Examination Ends With a Referral to Enforcement: Examination Process, Interview Preparation and Remediation Considerations (Part Two of Two)

In a recent program, Davis Polk partners Leor Landa, Amelia T.R. Starr and James H.R. Windels, along with associate Marc J. Tobak, provided their views on how advisers can prepare for SEC examinations in light of the current regulatory environment. This second article in our two-part series provides guidance on the steps that advisers can take to minimize the potential that the SEC’s Office of Compliance Inspections and Examinations refers the adviser to the Division of Enforcement. The first article discussed five areas identified by the panelists that frequently pose significant risk to investment advisers during the examination process. For more on mitigating enforcement risk, see “Seven Recommendations to Assist Private Fund Managers in Navigating Heightened SEC Examination and Enforcement Activity” (Jul. 11, 2013); “How Can Hedge Fund Managers Understand Recent SEC Developments to Mitigate Enforcement Risk?” (Feb. 21, 2013); and “What Do Hedge Fund Managers Need to Know to Prepare for, Handle and Survive SEC Examinations? (Part Three of Three)” (Feb. 18, 2011). For further commentary from Davis Polk, see “Event Focuses on Establishing Registered Alternative Funds, Hedge Fund Manager M&A and SEC Examination Priorities” (Jun. 14, 2012).

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