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SEC enforcement still full steam ahead

While the Securities and Exchange Commission awaits confirmation of its new chairman, Jay Clayton, the agency's enforcement efforts will continue, although some priorities may shift, current and former officials within the enforcement division's asset management unit said Friday at the Investment Advisers Association's compliance conference in Washington.

Robert Kaplan, partner in the law firm Debevoise & Plimpton who served as co-chief of the asset management unit when it was created in January 2010, said that regardless of changes in administrations, “the SEC is overwhelmingly staffed by professional staff.” While Mr. Clayton is known as a transactional lawyer, predicting a future chairman's stance on enforcement “is just largely unknown,” with some past Republican chairmen “as aggressive as anybody,” said Mr. Kaplan.

Recent enforcement priorities include valuations, conflict of interest and investor disclosure. Going forward, valuation cases “are much more going to be policy and procedure cases,” said Mr. Kaplan, who noted that “there has been an enormous commitment of resources to the private fund space” from enforcement officials at the SEC.

His successor and current co-chief of the asset management enforcement unit, Anthony Kelly, said enforcement officials “still consider (firms') compliance officers as partners.” With a “hugely successful” whistleblower program in place, failing to self-report lapses “is a huge risk,” Mr. Kelly said.