The SEC’s Division of Investment Management is working on two ways to make its Risk and Examinations Office effective.

According to the SEC’s website, REO was established in October 2012 to implement Section 965 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The provision requires IM to have a staff of examiners to perform inspections and exams of registrants under its purview.  REO also was created to provide IM with quantitative risk analysis capabilities, and the unit maintains a monitoring program that provides ongoing financial analysis of the investment management industry.  REO has the authority to conduct its own exams.  However, REO staff will join staff from the SEC Office of Compliance Inspections and Examinations on their exam visits where practical.

This new exam unit will present novel challenges for the IM industry.