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Department of Insurance, Securities and Banking

Examinations of DC-registered Broker-Dealers and Investment Advisors

DISB conducts inspections or examinations of DC-registered broker-dealers and investment advisers. DISB’s on-site examinations follow the agency’s risk-based examination program guidelines and may be conducted on a surprise basis. DISB also has a “Meet and Greet” program designed for new investment advisers and broker-dealer firms (“Registrants”). See D.C. Official Code §31-5606.01 and §31-5602.06, and 26 DCMR §B185.

DISB “Meet and Greet” Program for New Registrants

Within 180 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

Except for the initial Meet and Greet, all examinations may be conducted on a surprise basis, meaning that the Registrant will not receive prior notice that the Examination Division will be conducting an examination. DISB examiners conduct an extensive pre-examination review of your firm and its activities before an on-site inspection to minimize your firm’s business disruption. Following the exam, there will be an exit interview and discussion with the manager about the preliminary findings and any issues 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 may be conducted on a surprise basis, there are still steps you can take to prepare for any examination:

  1. Make sure that you have readily accessible all the books and records required by Rule 181 for IA and Rule 120 for BDs, including documentation of your compliance program and activities.
  2. Make sure that your files are reasonably organized and up to date so that the examiners can easily find the documents they need.
  3. Be prepared to provide the examiners with a copy of your supervisory or procedures manual.

During an on-site examination, the examiners will need access to the following:

  1. A clear place to work and review documents,
  2. A copier, fax machine, or other electronic equipment that allows the examiners to bring or send documents back to their offices, and
  3. 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 most efficiently.

If you have further questions about DISB’s examination process, contact Stephen Bouchard at [email protected] or call (202) 442-7800. Please note, however, that information concerning specific inspections/examinations is generally non-public information that may not be disclosed.