Tag: Document Request

I’ve come across a new document request list for a presence exam from the SEC’s Atlanta Regional Office. The exam period for the letter begins March 31, 2012 – the Dodd-Frank deadline for new advisers to register with the SEC. The SEC has said presence exams will target new advisers or those that manage private funds. The exams also may focus on just one or two topics.

Previously, I posted an examination letter that focused on fees. This new letter focuses on valuations.

The letter requests investment committee minutes, valuation policies and procedures, any models used in valuing investments, and any third party valuation reports.

Time to sit down and run through a mock document request again.

Sources:

• SEC document request letters provide new insights into ‘presence exams’ by IA Watch
• Presence exam request letter – valuations (.pdf)

We’ve had the first siting of the new document request letter for the new presence exams. IA Watch has obtained a copy of the letter issued from the Atlanta Regional Office.

This letter sets the exam period to start on March 30, 2012. That addresses some concerns that the SEC would look at period prior to a firm’s registration as an investment adviser.

It’s clear from the request list that the examiners will be looking closely at fees. Among the items is a “schedule of fees earned by the Adviser from each portfolio company and whether they were credited back to clients. It goes on to ask for all compensation received by the adviser, besides management and performance fees. Further, it asks for the total expenses reimbursed by each portfolio company.

Notably missing from the letter are items related to marketing, custody, portfolio management, and valuation. You may remember that the SEC’s Presence Exams are set to concentrate on five areas:

• marketing
• portfolio management
• conflicts of interest
• safety of client assets
• valuation

It looks like this Atlanta RO letter is focused on conflicts of interest.  I’m going to guess that this document request is just one of several versions, with each version concentrating on different area.

Sources:

• New document request letter for presence exams
• First peek at new SEC ‘presence’ exam request letter reveals heavy emphasis on fees by IA Watch