I was chatting with a compliance examiner from the Securities and Exchange Commission and heard that the format for private fund exams had changed.
Given the complexity and diversity of business models for private funds, the SEC is trying to narrow the scope of its examination. Presumably to help in that effort, the SEC examiners are conducting a lengthy introductory call before they begin document requests and on-site review.
Expect an introductory call to last a few hours. The examiners will expect some members of senior management to be involved in all or a part of the call.
It sounds like the first contact from the SEC for an exam will be call to set up that introductory call. I did not hear a time frame for how far out the SEC will be willing to schedule the introductory call from the initial call.
This is a relatively new change and may not be true of all SEC offices.
I would guess that this introductory call may replace the Day One presentation for SEC examiners. I have been an advocate of having this presentation ready all the time for your firm and updating it periodically.
I expect there is still a place for that Day One presentation. It will be done on a phone call instead of in person. Perhaps the examiners will be open to the firm sending a copy of the powerpoint to help walk through the firm’s particular business plan, structure and compliance.
Even if the examiners don’t want a powerpoint during the call or toss it aside to ask questions during the call, the Day One Presentation is still a useful framework for senior management.
