Mock Examination
What Is a Mock Examination for RIAs? Mock exams typically replicate the structure of a real examination: an initial document request, a review of the firm’s written policies against actual practice, interviews with key personnel, and a final report identifying deficiencies along with recommended corrective steps. Because the process is conducted by an independent party […]
Document Request List
What Is a Document Request List? The document request list is usually the first concrete signal of what an exam will focus on. Standard requests often include the firm’s Form ADV and amendments, written supervisory procedures, code of ethics, client account statements, advertising materials, trade records, and correspondence. Some requests are tailored to specific risk […]
Books and Records Rule (Rule 204-2)
What Is the Books and Records Rule (Rule 204-2)? Rule 204-2 covers a broad range of records: trade blotters, client account records, communications with clients, advertising and marketing materials, written policies and procedures, and documentation supporting performance claims, among others. Most records must be kept for five years, the first two in an easily accessible […]
Deficiency Letter
What Is a Deficiency Letter? Deficiency letters range from minor documentation gaps to serious compliance program failures, and the letter usually itemizes each issue found during the exam individually rather than as a general summary — meaning a single letter might cover anywhere from one or two minor findings to a dozen or more issues […]
State Examination
What Is a State Examination for Investment Advisers? Advisers below the roughly $100 million AUM threshold typically register with their home state rather than the SEC, which means their examinations come from the state securities division instead of the SEC’s Division of Examinations. Many states participate in coordinated exam programs and follow guidance from NASAA, […]
SEC Examination
What Is an SEC Examination? The SEC doesn’t examine every registered adviser every year — exam selection is risk-based, informed by factors like firm size, business practices, prior exam history, and areas the SEC has flagged as national priorities for that year. Exams typically begin with a notification letter and an initial document request, followed […]