When the regulators show up at the door to conduct an inspection, will you be ready? Through our participation in more than 100 regulatory examinations as Chief Compliance Officers, we provide expert guidance to clients through Mock SEC Examinations.
We offer cost-effective solutions that are flexible and tailored to meet our clients’ specific needs.
An Alaric Mock SEC Mock Examination replicates a routine SEC inspection of the investment adviser and/or investment company. The Mock Examination provides an assessment of the adequacy and effectiveness of the registrant’s compliance policies and procedures and compliance program.
The Mock SEC Exam is typically an inspection of records in response to normal advance document and information requests from the SEC. It can also entail detailed interviews of key adviser personnel, and pertinent review and focused forensic testing of processes and activities designed to uncover material gaps and/or weaknesses in our client’s business operations and regulatory compliance control environment.
Because of our deep experience as CCOs, we are in the unique position of understanding our clients business operations, current regulatory trends and having the hands-on experience to help clients identify issues in their businesses and compliance programs before they become violations.
An Alaric Mock SEC Examination includes, but is not limited to, the following:
- Adequacy and Suitability/Customization of Compliance Policies and Procedures
- Compliance Program Monitoring and Testing Activities
- Conflicts of Interests, Custody, Valuation, and Allocation of Investments
- Portfolio Management Processes
- Registration and other Regulatory Reporting
- Books and Records Maintenance and Retention Requirements
- Investor Subscription (including AML screening) and Redemption Processing
- Marketing and Other Promotional Activities
- Investor Disclosures, Communications and Complaint Handling
- Fee Arrangements, Calculations and Expense Allocations for Funds
- Investor Privacy/Information Security Safeguards and Cybersecurity
- Business Continuity and Disaster Recovery Planning and Testing
Project Processes and Stages
The Mock Exam will be conducted according to the following five stages:
Stage 1- Review Documents and Materials
Perform a thorough review of various documents and other information which the Firm will be requested to produce in response to a detailed request which Alaric will furnish two weeks prior to commencement of the onsite portion of the engagement. Insofar as may be practicable, Alaric encourages the Firm to produce as many documents and other materials in electronic format, as soon as practicable, so that these may be reviewed prior to commencement of the onsite portion of the engagement. The balance of the Firm’s production, including materials in hard-copy format, will be reviewed onsite.
Stage 2 – Interview Key Representatives
Perform detailed interviews of the lead supervisors of and/or other appropriate representatives from all pertinent key functional areas of the Firm (e.g., marketing, portfolio management, trading, middle/back-office operations, financial reporting and control, investor service, legal, compliance, risk management and technology support). The purposes of these interviews will be for Alaric to both (i) understand and verify actual Firm compliance practices and (ii) to assess Firm officer and employee familiarity with pertinent requirements of the Firm’s compliance program and the expectations of SEC examiners in these regards. Certain interviews may be accompanied by demonstrations of various Firm operational processes.
Stage 3 – Onsite Testing
Perform limited testing of facets of the Firm’s compliance program during the onsite portion of the engagement. This testing will be focused, in particular, on those compliance monitoring and testing aspects of the program (i) as Alaric determines is called for, in accordance with a risk-based assessment of the Firm’s business, and (ii) as the parties shall mutually agree, in writing, prior to commencement of the onsite portion of the engagement.
Stage 4 – Prepare Summary Report
Provide a summary report which would set forth, on a risk-ranked (high to low) topical basis, Alaric’s (i) material findings regarding strengths as well as weaknesses, if any, in the Firm’s compliance program and (ii) recommendations for such remedial action that may include additional testing, monitoring and/or other internal controls or processes as is indicated for the Firm to better conform with industry compliance best practices as well as the expectations of SEC examiners and other regulators.
Stage 5 – Review Report with Client
Discuss and review, in detail, with members of the Firm’s senior management Alaric’s findings and recommendations noted in the summary report.
The material and information provided herein is for general informational purposes only. You should not rely upon the material and information provided herein as a basis for making any business, legal or any other decisions. Also note that actual proposals for SEC Mock Examination Services are customized based upon the specific needs of the client at the time of the request.