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SEC Focusing on Compliance at Brokerage and Advisory Firms

The SEC is scrutinizing brokerage and advisory firms to see whether “enough resources have been allocated to compliance functions,” according to Carlo di Florio, Director of the SEC’s Office of Compliance Inspections and Examinations.  As reported by InvestmentNews, Mr. di Florio recently spoke about the SEC’s efforts to meet with boards and senior management to discuss compliance issues.  Specifically, the SEC is monitoring head count as a key indicator – “If we see [head counts] go down while business is heating up in certain ways, that means a firm is cutting in the wrong way.”

As a separate topic, Mr. di Florio also discussed how the SEC examination and enforcement staffs are working together to identify issues and bring cases in the investment management area.  He noted that previously the two staffs worked independently and had “two distinct processes.”  The SEC’s asset management unit is the first division to use this new approach.