SEC Backing Off Proposal to Require Third-Party Compliance Audits

May 27, 2009

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According to a recent article in Investment News which quotes an official of the Financial Planning Association (“FPA”), the chairman of the U.S. Securities and Exchange Commission (“SEC”), Mary Schapiro, is backing off of her previously discussed, but never formerly considered by the SEC, proposal to require each federally registered investment adviser to engage a third-party to conduct an annual compliance audit of the investment adviser.

Based upon recent public comments by several other SEC commissioners during the past month, this report isn’t surprising. The fact that the third-party compliance audit requirement was not included with the SEC’s recently proposed surprise audit and SAS 70 Type II audit requirement was a telltale sign that there wasn’t a consensus among SEC commissioners for this approach.

Of course, this leads to the question of what, if any, additional reform efforts will the SEC support with respect to registered investment advisers. As the SEC’s position become clearer, RIA Compliance Consultants will keep its readers of these developments.

Posted by Bryan Hill
Labels: Custody, SEC, Third-Party Compliance Audit