SEC enforcement priorities for 2016 are broken down by registered investment companies, private funds and retail advisers, Anthony S. Kelly, co-chief of the enforcement division's asset management unit, told the group.
For investment companies, SEC enforcers are looking closely at valuation, conflicts of interest and governance, while private funds are scrutinized for valuation, conflicts of interest, and how fees and expenses are allocated. “On the private equity side, we'd expect to have more fees and expense cases as we move forward,” said Mr. Kelly, whose unit is also continuing to refine its aberrational performance data initiative that uses proprietary risk analytics to evaluate private fund returns with abnormal performance.
Mr. Kelly dismissed concerns that compliance officers at money management firms are being targeted. “We go out of our way to look at the facts and circumstances of each case,” he said.
Given some recent cases holding them personally liable, compliance officers at money management firms “are understandably concerned that they might have a target on their back,” Ms. Barr told Ms. Stein.
Mr. Wyatt of OCIE also sought to dispel the notion that the agency looks at only 10% of money manager activity. “There is a misperception among the industry that the other 90% go unnoticed,” when in practice SEC officials look at all sources of information before narrowing in on that 10% to examine, he said.
“No one manages a complex business such as ours by looking at one number.” OCIE's new office for risk and strategy, created to streamline risk assessment, market surveillance and quantitative analysis, “will lead our exam program's risk-based, data-driven and transparent approach to protecting investors,” Mr. Wyatt said.
While the Department of Labor is considered well ahead of the SEC when it comes to a new fiduciary standard, “the concept is a priority” of Ms. White, Mr. Grim said. “She thinks it is the right answer and wants to make that happen. It's a key risk for us, so we are going to continue to collect the data.” n