OCIE Reports Widespread Noncompliance by Municipal Advisers
The SEC’s Office of Compliance Inspections and Examinations (OCIE) reports widespread compliance failures among municipal advisers reviewed as part of its 2014-15 examination sweep. OCIE staff “frequently observed” supervision failures including the failure to adopt and implement written supervisory procedures and appoint a responsible principal. OCIE also faulted frequent failures to file and amend registration documents and to maintain required books and client and financial books and records. By publishing the results, OCIE “hopes to encourage MAs to reflect upon their practices, policies, and procedures in these areas and to make any necessary improvements.” Municipal advisers became subject to SEC registration and jurisdiction pursuant to the Dodd-Frank Act.
OUR TAKE: This Risk Alert is the warning shot across the bow for municipal advisers. OCIE often publishes these types of examination findings and recommendations as a foreshadowing of impending enforcement actions.