A major goal of a chief compliance officer at a registered investment adviser is to avoid have to face the Securities and Exchange Commission’s enforcement staff. I’ve never spent much time reading its enforcement manual. It’s been updated. The last update was in 2017.
There are updates to the Wells process when one becomes the target of a potential enforcement action. The manual states that you normally have four weeks to respond. The manual includes a list of helpful attributes to a Wells notice response. One clarification is that an offer of settlement should be included in the response. Stick to disputed factual or legal issues.
The manual includes the practice of permitting a settling party to simultaneously address any waivers or disqualifications that might result from a settlement. “By providing potential parties to an SEC action with greater visibility into the collateral effects of a settlement, these updates conserve Commission resources, enhance the transparency of its processes, and protect investors by driving significant efficiencies in the resolution of investigations.”
I’ll leave the rest to the SEC enforcement practioners.
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