In The Hedge Fund Law Report, Hedge Funds Partner Discusses OCIE’s Risk-Based Approach to Hedge Fund Exams
A two-part series published by The Hedge Fund Law Report examines how a risk-based strategy informs the SEC’s National Exam Program. The first article published on July 12 discusses the steps that the SEC has taken in recent years to increase the number of advisers it examines each year and explores how the risk-based strategy employed by OCIE informs which advisers are selected for examination. The second article published on July 19 analyzes the types of exams OCIE conducts, recent trends in examinations, how the risk-based strategy translates into risk-based examinations and ways fund managers can determine the type of exam OCIE is conducting.
Remarks from hedge funds partner Joel Wattenbarger are featured in both pieces. “The fact that the SEC holds itself out as having a risk-based exam program does not mean that each year the SEC is only going to visit the advisers that it views as the highest risk,” Mr. Wattenbarger highlights. While OCIE assesses several risk factors when deciding which advisers to examine each year, the SEC also appears to want “to keep all advisers on their toes, so to speak,” he noted, as a reminder that any registered adviser can be examined by the SEC at any time.