On October 1, 2026, the SEC’s Division of Examinations (EXAMS) published The SEC Exam Handbook: A Practical Guide on Process and Engagement, which replaces and expands on the Division’s previous examination brochure. Many fund managers have never been through an exam, or haven’t been through one in years. For them, the handbook gives the clearest public picture yet of how an exam runs from start to finish. Below, we walk through each stage and the resources most relevant to fund managers.
How Firms Are Selected for an Exam
The SEC’s exam program is risk-based. According to the handbook, several factors that inform selection apply directly to fund managers:
- prior exam history
- how long it has been since registration or the last exam
- products and business activities that may create conflicts of interest
- material changes in leadership or key personnel
- whether the firm holds or has access to client and investor assets
The SEC typically does not tell a firm why it was selected. The handbook states plainly that being selected is not, in itself, a signal that something is wrong. Before reaching out, staff conduct pre-exam due diligence, which typically includes reviewing the firm’s filings and website.
The Exam Process: Step-by-Step
The Announcement Call
Most exams begin with a brief call from staff to the chief compliance officer (CCO) or other regulatory contact. The handbook notes that staff want to hear on this call about any other ongoing regulatory inquiries that could slow a firm’s responses. Where possible, staff will also work with the firm on scheduling.
The Initial Information Request
Next, a formal letter arrives with the initial request for information. For registered investment advisers, the request is made under Section 204(a) of the Investment Advisers Act of 1940. The SEC expects that records generally be available within 24 hours, but the handbook says staff usually allow two weeks for the initial request. Supplemental requests may follow throughout the exam, and staff may grant reasonable extensions or rolling productions where appropriate. If a firm withholds documents on privilege grounds, the handbook explains that staff expect a privilege log. Formatting expectations are laid out in the SEC’s Data Delivery Guidance.
Third-Party Requests and Asset Verification
This step is especially relevant to private funds. Staff may contact custodians, administrators, and auditors directly to verify the existence and integrity of client assets. Staff may also reach out to clients, investors, or other knowledgeable parties to gather or confirm information.
Interviews and On-Site Visits
Exams usually include an initial interview with the CCO, followed by additional interviews with other personnel. The handbook explains that some questions may seem basic, because staff are trying to understand the business from the firm’s perspective. An on-site visit may also include a tour of the office. For video interviews, staff encourage cameras and screen sharing. Staff do not record meetings and do not consent to recording, transcription, or AI notetaking tools.
How an Exam Wraps Up
After interviews and analysis, staff typically hold an exit conference to discuss any issues identified, and they often ask senior management to attend. Under federal law, firms receive a disposition letter within 180 days of the later of two events: the end of any on-site work, or receipt of all requested records. In limited, complex cases, that period can be extended for another 180 days.
There are three possible outcomes: the exam has concluded, the exam has concluded without findings, or staff request corrective action. The last is a deficiency letter, and the handbook notes that most exams end with one. Firms are typically asked to respond within 30 days, and staff aim to provide any further comments within 60 days of that response. The handbook adds that a deficiency letter is not a grade or peer ranking. It also clarifies that if a letter doesn’t mention an activity, that silence doesn’t mean the activity complies.
Key SEC Resources Highlighted in the Handbook
The handbook closes with a list of online resources. These are the most relevant for fund managers:
- Examination Priorities: the Division’s annual outline of focus areas for the coming year
- Risk Alerts: observations the Division shares from its exams
- Compliance Outreach Program: SEC events for engaging with registrants
- Data Delivery Guidance: how the SEC expects electronic files to be produced
- Division of Investment Management: FAQs, no-action letters, and other adviser resources
The handbook also points to the Examination Hotline (202-551-EXAM or examhotline@sec.gov). Firms can use it to confirm a staff member’s identity or raise concerns they couldn’t resolve with their exam team. The handbook reflects the views of EXAMS staff and is not a rule or regulation.
What’s Next
If you have questions about how the exam process may affect your fund’s operations, reach out to Steve Vlasak, Business Development Partner, Alternative Investments, at svlasak@richeymay.com.
