Alert November 18, 2008

SEC’s Office of Compliance Inspections and Examinations Posts Core Initial Information Request for Investment Adviser Examinations

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has posted on the SEC website a “Core Initial Request for Information” (the “Core Request”) that it will use in investment adviser examinations.  The Request indicates that it is focused on advisers that provide only traditional money management services to non‑fund clients, and that for an adviser whose business is broader in scope, e.g., the adviser sponsors a family of registered investment companies, sponsors one or more privately offered funds, participates in PIPES offerings, participates in a wrap fee program, is also registered as a broker‑dealer or acts as a manager of managers, the Core Request will be supplemented to address the additional activities and relationships.  Although not as lengthy or detailed as the controversial inspection request letter released by the SEC’s Northeast Regional Office, the Core Request covers a wide range of information, including results of, and output from, transactional (quality control) and periodic (forensic) testing designed to evaluate the effectiveness of an adviser’s compliance policies and procedures.  As with past SEC staff information requests, the Core Request includes a number of items that are not reflected in the SEC’s rules regarding books and records required to be kept by investment advisers.