From reading Part 1 of our “Compliance Readiness 2014” series, you now should be familiar with the various SEC exam initiatives and focus areas, and from having watched our video series on preparing for an SEC examination (in case you missed it), a better understanding of what to expect during an examination.
Throughout this year, and as part of our FOCUS matters publication, we will continue to build upon our compliance readiness suggestions.
Before moving on, we wanted to share a recent request list with you that includes a specific format for the Trade Blotter (it lists 27 fields!). Here’s a copy of the SEC Request List.
We’ve also organized an Excel version of the trade blotter per the SEC’s specifications. The format will likely allow the SEC to upload the trade data into an application in order to more efficiently conduct various forensic testing around a firm’s trading process. This appears to be yet another indication of OCIE’s national exam initiative of further utilizing quantitative analysis.
We’re making available to you an SEC request list in an Excel Matrix format. Should you find it useful, here’s how we suggest you utilize it:
- Read through the request list to ensure you are familiar with each of the items being requested. You will notice that in “Column K” there is a brief explanation of what is being requested.
- Indicate whether you feel this request is applicable to your firm. For instance, if the SEC is requesting information specific to Private Funds, and you donot manage any Private Funds, then you would mark that particular item as “N.A.”
- Indicate who the owner of specific information is within the firm, the physical or electronic location of this information, the system and report name used to generate the information, and whether there is any lead time required to obtain the information.
- Incorporate this document into your 2014 Annual Review to demonstrate your firm’s compliance readiness efforts. (See Item 7 of the Regulatory Tab within Focus 1’s 2014 Compliance Program. The Matrix can be inserted after the Regulatory Tab for easy reference.)
This is a valuable exercise and will serve as a road map when the day comes that you are examined by the SEC. As always, please contact us with any specific questions.
Be prepared and be honest.
— John Wooden —