On-site Examinations of DC-registered Broker-Dealers and Investment Advisers
DISB conducts on-site inspections or examinations of DC-registered broker-dealers and investment advisers. DISB’s on-site examinations follow the guidelines of the agency’s risk-based examination program and are conducted on a surprise basis. DISB also has a “Meet and Greet” program designed for new investment adviser and broker dealer firms (“Registrants”).
DISB “Meet and Greet” Program for New Registrants
Within 90 days of registration, DISB will contact new Registrants for this meeting. During this time, Examinations Division staff introduces themselves to the Registrant, provides the Registrant with a copy of the investment adviser or broker dealer rules, describes the examination process, and answers any questions the Registrant may have about the examination process or the Department.
DISB On-site Examinations
All examinations, except for the initial Meet and Greet, are conducted on a surprise basis, meaning that the Registrant will not receive prior notice that the Examination Division will be conducting an examination. To minimize the disruption to your firm’s business, DISB examiners conduct an extensive pre-examination review of your firm and its activities prior to the on-site inspection. Following the exam, there will be an exit interview and discussion with the manager about the preliminary findings and any issues that they have identified during the examination. If you are new to the examination process, there are ways you can prepare.
Tips for Preparing for Your On-site Examination
Although examinations are conducted on a surprise basis, there are still steps you can take to prepare for an examination:
- Make sure that you have readily accessible all the books and records required by Rule 181 for IA’s and Rule 120 for BD’s, including documentation of your compliance program and activities.
- Make sure that your files are reasonably organized and up to date so that the examiners can easily find the documents they need.
- Be prepared to provide the examiners with a copy of your supervisory or procedures manual.
On the day of the examination, the examiners will need access to the following:
- A clear place to work and review documents,
- A copier, fax machine, or other electronic equipment that allows the examiners to bring or send documents back to their offices, and
- Appropriate personnel to be interviewed by the examiners --principals, supervisors and managers.
The key to a successful examination is cooperation. Examiners will be asking for a lot of documents and information, so work with the examiner to provide the material in the most efficient manner.
If you have any further questions about DISB’s examination process, contact Senayet Meaza at Senayet.email@example.com or call (202) 442-4794. Please note, however, that information concerning specific inspections/examinations is generally non-public information that may not be disclosed.