SEC Releases Its 2014 Annual Report

November 21, 2014

The SEC release its 2014 Annual Report. SEC Chairman Mary Jo White began the report by stating that the SEC brought a record number of enforcement actions, proposed and adopted rules that strengthened the nation’s financial system and increased transparency, promoted compliance through detailed, risk-based examinations of registrants and furthered enhanced transparency through our disclosure review program.

The Report stated that the SEC brought a wide range of actions against investment advisers in Fiscal Year 2014, including cases involving fraud, actions stemming from the use of proactive risk identification initiatives, actions to ensure the safety of client assets, and cases enforcing the investment adviser pay-to-play rules and the SEC’s new whistleblower anti-retaliation authority. In October 2014, the SEC charged three investment advisory firms for violating the “custody rule,” which requires firms to meet certain standards when maintaining custody of their clients’ funds or securities.

The Report also noted that under the SEC’s new authority to bring anti-retaliation enforcement actions, the SEC charged a hedge fund adviser, with engaging in prohibited principal transactions and then retaliating against the employee who reported the trading activity to the SEC.

The SEC also provided statistics, including the percentage of registered advisers inspected over the past 6 years. In 2014, 10% of the SEC’s registered investment advisers were inspected.

The SEC discussed its inspection plans for fiscal year 2015. OCIE, the inspection arm, will continue to implement improved processes and procedures that have been identified as part of OCIE’s ongoing improvement process. Significant improvement initiatives in the areas of strategy, people, processes, and technology have been completed in the last few years or are currently underway. The SEC expects that these improvements, which include enhancements to the exam program’s risk assessment processes, will lead to more effective coverage of registered entities. Furthermore, certain targeted initiatives aimed at high risk firms and activities have already been implemented and it is anticipated that these efforts will result in improved coverage levels in fiscal year 2015.

Click to access the SEC Annual Report.


Investment Advisers, Investment Companies