SEC Comments on Examination Deficiencies
and Other Relevant Issues

John Walsh, associate director and chief counsel in the SEC's Office of Compliance Inspections and Examinations, spoke recently at the IA Week's 6th Annual Fall Conference in New York. In his presentation, he noted the top five exam deficiencies seen by the SEC in its exam program are related to:

1. Portfolio Management
2. Personal Trading
3. Books and Records
4. Advertising
5. Brokerage Arrangements

Mr. Walsh also noted that in the current environment, compliance officers should focus on compliance and suitability issues with respect to the sales of financial products to seniors, and nuts and bolts operational issues, including the processes and procedures related to the transfer of funds, interface with transfer agents and the handling of redemption fees.

Finally, Mr. Walsh revealed the SEC is currently engaged in another sweep exam, the focus of which is to determine how firms are protecting customer data . This sweep appears to be an attempt by the SEC to address the prevalence of identity theft in our society, and should be a clear message that the protection of customer data by the financial industry is of growing importance and should be addressed by the respective firms providing financial services.