Regulatory Alert

David Grim, the Director of the SEC's Division of Investment Management, testified on October 23, 2015, before the House Subcommittee on Capital Markets and Government Sponsored Enterprises. At the outset he noted that there are approximately 12,000 investment advisers registered with the SEC, with almost $67 trillion in regulatory assets under management, which represents an 8 percent increase in the past year.

Mr. Grim described a number of Investment Management initiatives the SEC had undertaken recently, including proposing a new program that would call for Third Party Compliance Reviews and another instituting an organizational change focusing on Risk Monitoring.

He stated that the Investment Management Division staff is working in conjunction with the staff of the SEC's Office of Compliance Inspections and Examinations (OCIE) to develop a recommendation for the Commission's consideration that, if proposed and adopted, would establish a program of third-party compliance reviews for registered investment advisers. Mr. Grim pointed out that the reviews would not replace examinations conducted by OCIE, but would supplement them in order to improve compliance by registered investment advisers.

He also stated that pursuant to Section 965 of the Dodd-Frank Act, the Division of Investment Management had established a new risk and examinations office to monitor trends in the asset management industry and to carry out the Division's limited inspection and examination program.