What to Do if You Receive an SEC or State Exam Notice

Receiving an SEC or state exam notice can trigger anxiety for any Registered Investment Adviser (RIA), but with the right approach, the process can be manageable and even beneficial. Regulatory exams are a routine part of the compliance landscape—and how you respond can make all the difference.

Here’s what to do if your firm receives an exam notice and how to prepare for a successful outcome.

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### 📬 Step 1: Stay Calm and Read the Notice Carefully

Regulatory exams are common. Receiving a notice does not mean your firm is in trouble—it could be a routine review, risk-based exam, or part of a broader sweep.

- Identify the exam type (routine, cause, or sweep)

- Note the deadline for document production

- Review the list of requested materials and instructions

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### 🗂 Step 2: Start Gathering Requested Documents

Common requests include:

- Form ADV Parts 1 & 2 and amendments

- Compliance manual and Code of Ethics

- Client agreements and advisory contracts

- Trade blotters and transaction records

- Marketing and performance materials

- Financial records and fee calculations

- Personal trading records for access persons

- Annual reviews and testing results

- Cybersecurity and business continuity policies

Organize files by category and ensure they are complete, accurate, and up to date.

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### 🧑‍💼 Step 3: Assign Roles and Communicate Internally

Designate a point person (usually the CCO or managing partner) to:

- Coordinate document collection

- Communicate with the examiner

- Serve as the firm’s primary contact

Ensure key staff are aware of the exam and understand their roles.

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### 💬 Step 4: Prepare for Examiner Interviews

Examiners may request to speak with:

- Compliance officers

- Portfolio managers

- Operations staff

- Senior management

Train your team to answer questions honestly and confidently. If unsure, it’s okay to say, “I’ll confirm and follow up.”

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### 🔍 Step 5: Conduct an Internal Review

Before submitting documents:

- Double-check accuracy and completeness

- Identify and address any red flags (e.g., missing disclosures, outdated policies)

- Reconcile inconsistencies across documents

- Fix any small issues proactively—regulators appreciate transparency

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### 📞 Step 6: Communicate Professionally

- Be timely and courteous in all communications

- Clarify unclear requests early to avoid mistakes

- Keep a record of all correspondence with regulators

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### 📄 Step 7: Participate in the Exit Interview

After the exam, the regulator will often conduct an exit interview to discuss preliminary findings. Be prepared to:

- Ask clarifying questions

- Provide follow-up documentation if needed

- Take notes and remain professional

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### 📬 Step 8: Respond to the Deficiency Letter (If Applicable)

If issues are found, you’ll receive a deficiency letter outlining them. Your response should:

- Acknowledge the issues

- Explain how you plan to correct them

- Include a timeline for implementation

- Demonstrate a proactive compliance culture

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### 🛡 Final Thoughts

An SEC or state exam is not something to fear—it’s an opportunity to strengthen your compliance program. By responding professionally, preparing thoroughly, and learning from any findings, you can turn the exam experience into a valuable learning process for your firm.

The key is to be organized, transparent, and proactive—starting from the moment the notice arrives.