The SEC recently informed the House Financial Services Committee that they are working on a proposal that would allow third party compliance reviews to supplement ones that are already being conducted by the SEC. The Wall Street Journal notes that roughly 10% of investment management firms are examined by the SEC annually, so a potential increase of reviews will add to the trend of increasing enforcement actions.
There will be over 800 enforcement actions by the SEC in FY2015 and disgorgement and penalties will reach $4.19 billion. This is up from 755 total actions in FY2014 and $4.16 billion in disgorgement and penalties.
The Wall Street Journal also noted that the SEC examines around 40% of all broker-dealer firms via FINRA each year.
If you haven’t had a recent compliance examination, don’t be surprised if you get one in 2016.