Unique Issues With Fully Remote OCIE Exams, and How Sponsors Can Withstand the Agency’s Focus on Alternative Data (Part One of Two)

Although many fund managers’ operations were disrupted to some degree during the pandemic, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has barely skipped a beat. Shifting to a fully remote examination process for which it has been preparing for years, OCIE has maintained rigorous scrutiny of fund managers throughout the pandemic. What has evolved, however, is how it is conducting those reviews and the types of issues on which it is focusing. Those topics were addressed at a Practising Law Institute (PLI) webinar moderated by Barry R. Goldsmith, partner at Gibson Dunn, and featuring Marc E. Elovitz, partner at Schulte Roth & Zabel; Ken C. Joseph, managing director and head of disputes consulting at Duff & Phelps; Barry W. Rashkover, partner at Sidley Austin; and Andrew Weilbacher, director of Promontory Financial Group. This first article in a two-part series forecasts what to expect from an OCIE exam during the pandemic, as well as the agency’s focus on alternative data. The second article will describe OCIE’s concerns about electronic communications, liquidity-related issues and affiliate transactions. For additional coverage of PLI panels relevant to private funds, see our two-part series “OCIE Priorities and Tips for Fund Managers to Navigate and Examination” (Apr. 7, 2020); and “Proposed Advertising Rules and Other Recent SEC Regulatory Reforms” (Apr. 14, 2020).

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