The SEC approved the release the Study, prepared by staff in the Division of Investment Management (the "Staff"), who were assisted by 2 divisions and 4 offices - (i) Trading and Markets, (ii) Risk, Strategy, and Financial Innovation ..... (i) General Counsel, (ii) OCIE, (iii) Investor Edu. & Advocacy, (iv) International Affairs. Chairman Schapiro did not participate. 

     SEC Disclaimer.   The Commission has distanced itself from the Study - as it has expressed no view regarding the analysis, findings or conclusions contained herein.   The SEC's disclaimer applies to the Chairman and 4 Commissioners.  [C-I Note:  So, if the critics scathe the report, blame will go to DIM staffers.  Tough sledding!] 

All in all, the Staff reviewed 30 letters from 25 interested parties about the Study, including IA's, B/D's, state regulators, one SRO, and professional and trade associations.  Staff also met with interested parties representing a range of perspectives.  The Study is organized into these 5 sections:

1. Commission examinations of registered investment advisers.
2. Examinations of registered investment advisers over the past six years.
3. Impact of the Dodd-Frank Act on examinations of registered investment advisers.
4. Options to consider to address capacity constraints concerning examinations.
5. Staff recommendation.

For complete details, go to:   [SEC's Study on Enhancing IA Exams, Jan 2011].

Everyone else continue to executive summaries of the sections - after the jump.

2.  Examinations of registered investment advisers over the past six years.   Analyzes number and frequency of RIA exams over this period - which includes the 5 years preceding enactment of Dodd-Frank.  Factors to be considered:  number of RIA's;  (ii) number of OCIE examiners';  (iii) size and complexity of an IA's operations and the level of their cooperation;  (iv) scope, method and efficiency of exams.  Also discusses how the growth in the number of RIA's and assets under management (AUM), versus changes in OCIE staff numbers - disproportionate figures.   Interestingly, the number and frequency of RIA exams have declined during this period.

3.  Impact of the Dodd-Frank Act on examinations of registered investment advisers.   Analyzes projected changes in number of RIA's and OCIE staff after Dodd-Frank Act. and how the changes might affect RIA exams.  As drafted, the Private Fund Investment Advisers Registration Act (“Title IV”) could increase the percentage of RIA's being examined.  Any potential increase, however, may be offset by the need to divert exam resources to fulfill new exam obligations that the SEC now has under Dodd-Frank.  Further, the Staff expects the number of RIA's to grow in subsequent years, making it unlikely that OCIE staffers will keep pace with that growth.

4.  Options to consider to address capacity constraints concerning examinations.   discusses three options that Congress should consider in order to strengthen the Commission’s investment adviser examination program. Specifically, it discusses:

• imposing user fees on SEC-RIA's to fund their OCIE exams;
• authorizing one or more SROs to examine, subject to SEC oversight, all such RIA's; 
• authorizing FINRA to examine dual registrants for compliance with the Advisers Act.

In considering these alternatives, Section IV analyzes the ability of user fees and one or more SROs to augment the Commission’s efforts in overseeing investment advisers and improve the frequency of examinations of investment advisers. Section IV also analyzes alternatives to the current approach of examining dual registrants and registered investment advisers that are affiliated with a broker-dealer.

5.  Staff recommendation.   The recommendation is meant to address examination capacity concerns identified in the Study.  The Staff recommends that Congress consider the 3 options discussed to strengthen the Commission’s investment adviser examination program.