Big Data is coming to exams.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations will be heightening the data demands in at least some investment advisor exams.
At the same time, SEC’s Investment Management Division is aiming to issue a recommendation to the agency to require more and more frequent data from investment companies.
OCIE’s new National Exam Analytics Tool, which the SEC unit’s head, Drew Bowden, called “revolutionary,” will allow an examiner to look at two to three years worth of trades––rather than just a couple of weeks worth of trades––to search for possible violations in how trades are allocated, how compensation is directed and other areas.
“It fundamentally changes what we can do on exams,” Bowden said Saturday at the Practising Law Institute’s SEC Speaks forum in Washington, D.C.
To aid in this effort, Bowden said quants will be part of the exam teams making site visits to advisors.
Commenting on OCIE’s announced plans to do shorter reviews in order to catch up on the oversight of investment advisors who have been registered for at least three years but who have never had an exam, Bowden said that since these newly formulated exams have never been done it is too early to tell how long they would take. He added that it’s also hard to say at this point whether doing this additional work with the same staff would lead to longer stretches of time between examinations for advisors who have been examined.
Diane Blizzard, associate director for rulemaking at the SEC’s Investment Management Division, on Friday said her unit wants to increase the amount and speed of data it is receiving from investment companies to aid compliance and risk monitoring.
“The information is not as frequent and detailed as we need,” Blizzard said.
At Saturday’s forum, OCIE chief for broker-dealer examinations Kevin Goodman said his team is devoting more attention to IRA rollovers, noting this type of activity has tons of assets and can be lucrative for registered reps.