The Securities and Exchange Commission failed by a wide margin to meet its own goals for bringing timely enforcement actions against registered investment advisors in 2018, according to a new statement from the SEC’s Inspector General.

Specifically, the SEC first filed an enforcement action within two years of opening an inquiry or investigation into an investment advisor in just 49% of cases, the IG found. This performance does not meet the SEC’s annual target of 65 percent, the SEC IG Carl W. Hoecker said.

“As we reported last year, the timeliness of Enforcement investigations remains a concern,” Hoecker said.

In addition, the average number of months the SEC took between opening a matter under inquiry or investigation into an advisor and commencing an enforcement action was 25 months. 

“This also did not meet the annual target of 20 months,” the IG found.

The deluge of new advisors and other SEC-regulated entities at a time when the agency has had a hiring freeze in place have both impacted the timeliness of enforcement, the SEC said.

The organization “continues to face a number of challenges and issues that are having a significant impact on its limited resources,” the IG said.

In fact, the SEC’s Office of Compliance Inspections and Examinations (OCIE) completed more examinations in FY 2018 than at any point in the last decade, according to the SEC’s FY 2020 Congressional Budget Justification.

The SEC told Congress that “the size of the SEC-regulated community continues to grow in volume and complexity, and significantly exceeds existing resource levels.”

The universe of SEC-registered investment advisors has indeed reached a record high of nearly 13,000 advisory firms—up 3.3% from last year, according to the “2019 Evolution Revolution” report, an annual industry scorecard released by the Association.

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