Three Steps to take for a Positive SEC Examination Experience

Your firm is notified that the SEC is coming. It spends weeks reviewing all policies and procedures and participating in a mock SEC exam, to help the registrants’ employees prepare. But what other steps should be taken to help achieve a positive examination experience?

Step 1 – Review Lessons Learned

Before an exam, it is prudent to take a step back and review what lessons were learned in past examinations and discuss takeaways and actions that were taken historically to move the compliance program forward.

As part of this process, Jacko Law Group (“JLG”) recommends documenting your analysis in a risk assessment report for your current compliance environment. Assess prior findings and how the firm represented corrective actions that were to be taken. As your business and the financial industry continue to evolve and regulations change, it is important to consider whether the corrective action taken no longer applies. Be prepared to discuss this during the examination and emphasize the steps you continue to take to address the area of concern and create a robust compliance environment.

Step 2 – Create a PowerPoint for the “Opening Ceremony”

The second step to take once the SEC concludes its exam of your firm is to prepare a specific document that can summarize where the firm is today, how the business has evolved since the last examination and the robustness of the compliance program. This may be best accomplished in a PowerPoint presentation. At the commencement of the onsite or interview portion of the examination, examiners typically will ask to speak with members of senior management. This is what I call the opening ceremony. Take that opening hour or two once SEC staff arrives and use a carefully and well-designed PowerPoint presentation and walk them through your current business model. Having a PowerPoint allows the presenters (i.e., your managers) stay on message and deliver the most meaningful information to the staff. It also may help facilitate a more streamlined examination process.

Topics to include are information on advancements in your compliance program, members of your compliance staff and key compliance initiatives taken, including training, continuing education for compliance personnel and new policies and procedures. Doing so may help your examination go much smoother.

Step 3: Provide “Homework Assignments” to Key Personnel

It is likely that the SEC will want to interview certain personnel on various compliance matters. Help personnel to prepare by conducting mock interviews, highlighting important disclosures and policies to review related to their subject matter area and discuss how to best provide dialogue related to advancements in internal controls deployed.

Closing Thoughts on the Exam Process

On a scale of 1-10, how concerned would you be if the SEC informed your CCO today that examiners are headed your way? Regardless of your answer, you’ll find that taking a proactive stance to address any current concerns is the preferred course of action.

Our team at JLG can help whether you’re starting with a clean slate or simply want to get a third-party expert’s view on where your firm’s compliance program stands and what needs to be done to improve your chances of receiving that coveted “No Findings” letter. JLG conducts mock SEC examinations and helps firms to prepare firms for SEC exams. Contact us today at (619) 298-2880 or online at to schedule a consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *