Do’s and Don’ts of Document Production For the SEC

Although not comprehensive, the team at Jacko Law Group, PC (“JLG”) believe the following list provides a great starting point for firms on what to do and what not to do during document production for review by the U.S. Securities and Exchange Commission’s (SEC’s) Division of Examinations.

DO: 

  • Pace a high priority on maintaining a professional level of communication with examiners.
  • Alert and inform your employees that SEC will have staff onsite to conduct a regulatory exam. Clearly state that any employee who receives a question from the SEC should make note of the request, not provide any information, and immediately inform the compliance department. 
  • Take time to analyze the SEC’s request for documents to ascertain the examiners’ areas of focus. Outside counsel specializing in regulatory exams can help determine if regulators are targeting a specific aspect of your compliance program. 
  • Seek experienced outside counsel can provide additional guidance and assistance. The attorneys at JLG can work with your team to sidestep potential pitfalls that accompany SEC exams.
  • Decide if your firm will reserve attorney-client privilege during document production or waive it. If privilege is held, the SEC will require a log that cites why specific communications are privileged.
  • Read and become familiar with the SEC’s certification of completeness of production that requires a person to certify under penalty of perjury that he or she has made a diligent search of all files in his or her possession. Have a production protocol in place from the outset.
  • Double or triple check that all your documentation is in order and readily accessible when SEC examiners arrive. This will ensure your firm don’t waste the SEC’s time and create needless frustration searching for information.
  • Create an “Opening Ceremony” PowerPoint for the SEC’s onsite entrance interview. This is a best practice that often sets a firm apart in a positive, yet objective way. It’s an opportunity to summarize your business model and highlight your compliance program. Along those lines, consider whether a brief memorandum or narrative may be needed to describe the purpose and flow of your firm’s internal controls. More detail on this idea will be presented in a subsequent blog in this series.


DO NOT…

  • Destroy any relevant documents once your firm receives word of a pending SEC exam. Immediate steps should be taken to ensure employees preserve all electronic and paper files and records. 
  • Forget there is no substitute for the truth and no good reason not to be forthright. When in doubt, consult counsel.
  • Underestimate the integral role your firm’s IT department can have. Technical issues often arise when producing documents, and your staff will need to work with IT personnel from the SEC to ensure a seamless process.
  • Ignore any of the SEC’s requests. If asked to provide documentation you do not believe to be relevant, or if some of the SEC’s requests appear too onerous, you can discuss the matter with examiners. Be certain having that discussion is worth it. Nothing is more problematic during the exam process and potentially more perilous than having your firm perceived as more of an impediment than facilitator.
  • Provide documentation that exceeds the scope of the SEC’s request.
  • The last and most important to remember:

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