The SEC’s Office of Compliance Inspections and Examinations reviewed a handful of investment advisers in 2017, focusing on the forms of electronic communications used by those advisers and their employees. At the time of those exams, many speculated that they were part of a sweep exam initiative focused on electronic messaging. On December 14, 2018, the SEC confirmed the accuracy of those speculations in a risk alert entitled, “Observations From Investment Adviser Examinations Relating to Electronic Messaging,” which discussed the results of those limited-scope exams. In light of the recent issuance of this risk alert, fund managers should revisit their policies and procedures concerning electronic communications. 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. The 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
breaks down the various components of the types of requests made by SEC examiners and analyzes the implications and consequences of certain requests. The third article
examines best practices for advisers when designing their electronic communications policies and discusses how advisers can proactively prepare for future scrutiny in this area. For more on electronic communications, see “ACA 2018 Compliance Survey Examines Electronic Communications, Personal Trading and Corruption Risk (Part Two of Two)
” (Jun. 14, 2018).