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By David E. Wohl and John Bradshaw, from global law firm Weil Gotshal & Manges LLP.

Exam Risk Alert

On September 6, 2023, the SEC's Division of Examinations (Division) issued a risk alert outlining its risk-based approach to selecting advisers for examination and determining focus areas of such examinations.

With respect to adviser selection, the alert notes the Division's focus on:

(i) prior examination observations and conduct; (ii) supervisory concerns (e.g., disciplinary history); (iii) tips, complaints or referrals involving the adviser; (iv) business activities of the adviser or its personnel that may create conflicts of interest; (v) the length of time since the adviser's registration with the SEC or last examination by the Division; (vi) material changes in the adviser's leadership or key personnel; (vii) indications of the adviser's vulnerability to financial or market stresses; (viii) news or media reports concerning the adviser; (ix) information received from certain third-party data services regarding the adviser; (x) the adviser's disclosure history; and (xi) the adviser's access to client or investor assets or indications of gatekeeper or service provider compliance risks.

The alert further details how the Division determines the scope of a selected adviser's examinat......................

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