Regulatory Exams, Inquiries and other Administrative Matters
Parker MacIntyre regularly represents advisory firms in connection with a host of regulatory inquiries and other administrative matters, such as enforcement proceedings by regulators. All SEC- and state-registered advisers are generally subject to routine audits/inspections, whereby regulators will periodically make arrangements to visit (or show up unexpectedly) for the purposes of inspecting the adviser’s books and records, reviewing its compliance policies and procedures, and generally auditing the firm for any potential rules violations. Parker MacIntyre attorneys assist clients at all stages of this process: (i) beforehand, and in anticipation, of an audit; (ii) during the audit itself; and (iii) afterwards, potentially in connection with a deficiency letter or other remedial activities. Some of Parker MacIntyre’s Compliance Plans include a service whereby our attorneys will conduct a mock books and records examination, thereby producing a simulated deficiency report that firms can use to improve their compliance programs prior to being examined by the regulators.
Audits/inspections may in some cases give rise to formal enforcement actions by regulators. This process generally involves a handoff by the audit staff to enforcement attorneys working for the regulator. In other instances, enforcement matters arise due to complaints by aggrieved investors or by investigative activity by the regulator. In any event, an enforcement proceeding is a formal legal proceeding—and a serious matter. Regulators may file formal charges in an administrative court, a civil court, and—in egregious cases—with the assistance of a prosecutor, in a criminal court. In administrative and civil cases, regulators are generally empowered to suspend or even revoke a registration, and can levy significant monetary penalties as well. An adverse decision against a firm or an individual may have further regulatory implications such as disclosure requirements or perhaps “statutory disqualification,” which refers to the process whereby a person becomes by operation of law ineligible to participate in certain areas of the securities industry.
Parker MacIntyre has extensive experience defending advisers in all sorts of enforcement actions, from matters involving compliance deficiencies to allegations of securities fraud. Indeed, three of our current attorneys are former state securities division directors, while another is a former assistant attorney general who prosecuted securities law violations. And all of our attorneys—at every level—have significant experience in dealing with both federal and state regulators and regulatory matters. Notably, our attorneys have nearly 100 combined years of securities litigation, arbitration and administrative experience. For a more complete discussion of Parker MacIntyre’s extensive litigation and arbitration capabilities, please see our firm’s Financial Services / Securities Litigation and Arbitration practice area description.
We routinely represent investment advisers in regulatory matters involving the SEC, as well as the various state securities commissioners. For example, we have recently assisted a number of clients in connection with enforcement matters pending before the Georgia Commissioner of Securities. Additionally, we have advised clients undergoing examination by the SEC’s Office of Compliance Inspections and Examinations (OCIE) as well as similar departments within the securities bureau of the state of North Carolina. We have also counseled a number of clients recently in regards to their individual assessment of an initiative advanced by the SEC relating to possible self-reporting of undisclosed conflicts of interest related to so-called 12b-1 marketing fees charged by advisers.