Tag: Introductory presentation

Getting Ready for Your SEC Exam – Introductory Presentation

presentation

The phone rings and the caller ID pops up with US Securities and Exch… You swallow hard. They are coming. What now?

One thing a private fund manager can do to smoothly take the SEC through an exam is to have an introductory presentation when they walk in the door.

The SEC examiners will have read your firm’s Form ADV and looked at your firm’s website. They may also have run a quick web search for any stories. That three things are unlikely to give them much insight into the operations of your firm. The better they understand your firm, the less likely they are to be concerned. (Assuming you are not actually lying, cheating or stealing.)

The goal of the presentation should be to provide an understanding of the firm, that your firm is treating its investors well, that your firm understands the regulatory requirements, and that your firm is serious about compliance.

These are some things I have in my opening presentation:

  • History of the firm
  • Ownership of the firm
  • Overview of each fund: closing date, investment period, size
  • Investment strategy for each fund
  • Types of investors (look at Form PF filing)
  • Case study for an investment: why we bought it, what we plan to do with it, how to make money from it
  • Key personnel
  • Overview of compliance program
  • Fees and revenue paid to the firm and how calculated
  • Custody and how you comply with the custody rule
  • Valuation policy and procedures
  • Marketing
  • Conflicts in the firm and how they are managed
  • Address key regulatory compliance requirements
    • Code of ethics
    • Political contributions
    • Disaster recovery/business continuity
    • Placement agents
    • Anti-money laundering

The presentation is not a pitch to investors, so it’s not time to sell the firm or use a pitchbook. (You likely could take some elements from the pitchbook for this opening presentation.) You want to sell compliance.

I recommend putting together the opening presentation now and updating it every quarter. Once that call comes from the SEC you are going to be crunched for time. It’s much easier to update the presentation than create a new one.

Create an Introduction for the SEC

Welcome SEC Examiners

The chances are greater than ever that the Securities and Exchange Commission will show up in your lobby. Be prepared and have an introductory presentation for them.

The SEC’s Office of Compliance Inspections and Examinations is continuing on its presence exam initiative. Those exams are shorter which means the examiners can get to more fund managers. For those fund managers that registered before Dodd-Frank, OCIE is rolling out its new .

An introductory presentation is your chance to tell the examiners the story of your firm and the story of your compliance program. If done well, it can show the examiners that you are thoughtful about compliance and keep the examination focused on the right issues.

It’s not an investor pitch. You’re not trying to convince the examiners to invest with you. You are trying to convince them that there is no fraud, deception or manipulation at your firm.

Organize the presentation around a powerpoint and use it as your storyboard. The Chief Compliance Officer should lead the presentation. It may be useful to have one or two key employees present who are involved in the compliance program to help answer questions and take notes.

Put the powerpoint together today. Don’t wait for the SEC document request letter. You will be too busy gathering documents to put together the presentation. You can update the presentation each quarter to keep it up to date. When the SEC says they are coming, you merely need to polish the presentation and not create it from scratch.

Two good starting points are an investor pitch and annual meeting materials. Those should have background information and current investment information that you will want to include. Then you can layer in the compliance program information.