Division of Securities Examinations

ExaminationsExaminations of Investment Adviser firms need not cause stress or worry. In order to help avoid confusion and to make the process run more smoothly, the Division of Securities has put together the following "tool kit" to inform firms about the process, assist in preparation, and answer frequently asked questions about exams.

 

Get Informed

The "What to Expect from an Examination" presentation provides an overview of the examination process. View the presentation to learn about our statutory authority, the purpose behind examinations, and a timeline of the process from start to finish.

Each year, the Division releases a list of "Examination Priorities" to assist firms in anticipating the areas of particular focus for Examiners. These priorities are created based on a review of the previous year where enforcement trends, rule changes, and common deficiencies are analyzed. 

 

Be Prepared

The easiest way to ensure that an examination runs smoothly is to be prepared with all the necessary documents and proof of procedures that will be requested by Division staff. The following links will provide information on the documents to have updated and on hand when an examiner calls, and will provide insight into the documents staff members reference when conducting an examination.

  • Examiners will generally request documents made and maintained in the normal course of advisory business, such as each firm’s client list, current Form ADV Part 2, advisory contract, trade blotter, and so forth. View the following link for a more encompassing list of the documents that examiners may request during the examination.

  • Examiners will reference the Form ADV Part 1 and Part 2 instructions to confirm that proper disclosures are provided.

  • Due to an uptick in cybersecurity attacks on all types of businesses, the Division implemented a new Cybersecurity Rule in July of 2017. Examiners will be checking for compliance with this rule, so in order to prepare, the Division is providing a handy checklist to assist in creating cybersecurity policies and procedures that meet Division standards.

  • All Investment Adviser firms are required to adhere to the Gramm-Leach-Bliley Act (“GLBA”) Privacy of Consumer Financial Information Rule by creating a Privacy Policy. During an examination, examiners will review and compare these requirements with the firm's current policies.

 

Provide Feedback

The Division is always striving to improve our own policies and procedures surrounding how examinations are conducted. Therefore, feedback from firms following examinations is an important part of how reviews of methods, communication, and outcomes are analyzed. If your firm has recently been examined, please take a minute to provide comments on the process.