Sylvia M Scott’s paper titled “With Hedge Funds a Priority of the SEC’s Examination Program, Advisers Need to Know How to Avoid Becoming an ‘Enforcement Referral'” appears in the September/October 2011 issue of National Society of Compliance Professionals (NSCP) Currents newsletter. It lists best and inadvisable practices for hedge fund professionals undergoing an inquiry from the Securities and Exchange Commission‘s (SEC) Office of Compliance, Inspections, and Examinations (OCIE). The list, divided into “dos” and “don’ts,” includes such “dos” as be prepared, familiarize oneself with regulations pertinent to one’s firm, and address miscommunication.
As for “don’ts,” the paper suggests examinees not “wing it” during an interview but provide thoughtful responses, even if that means asking for additional time. One should never lie to regulators or behave in a dilatory manner, which can only make matters worse. Further, individuals should not let deadlines pass without receiving an extension. The above examples represent just a few of the seven recommended “don’ts.”
Scott’s article appeared with materials for the Practicing Law Institute’s 2011 Hedge Fund Enforcement & Regulatory Developments conference.