As Marc Wyatt assumes the top spot at the SEC's examination unit on a permanent basis, he looks to increase oversight of the advisor sector even in the face of limited resources.
Wyatt has led the Office of Compliance Inspections and Examinations, perhaps the division most visible to advisors, on an interim basis since April, and previously had served as deputy director of the division.
In a statement, SEC Chairwoman Mary Jo White praised Wyatt's "strong leadership," saying that he will help "guide the agency as it focuses on examining a range of critical issues important to investors, assessing market-wide risks, and analyzing data to identify illegal activity."
Karen Barr, president and CEO of the Investment Adviser Association, expects Wyatt to extend OCIE's efforts to communicate more effectively with the companies that it regulates, offering clearer guidance about emerging areas of concern and the types of documents it expects advisors to produce when an examiner visits a firm.
"I think it was the right move. He's experienced and knowledgeable about our industry. He has continued OCIE's policies of being more transparent, which we appreciate," Barr said in an interview. "I think that's helpful to everyone in the industry."
Many advisors closely watch OCIE for its risk alerts, cautionary guidance that's meant to help firms improve their compliance framework, while also serving as a warning about the areas that examiners are likely to review when they visit a practice.
Earlier this month, OCIE issued a risk alert summarizing the findings of exams of funds and advisors that outsourced the role of chief compliance officer. In September, OCIE provided an update on its ongoing cybersecurity examination initiative.
As head of OCIE, Wyatt will also oversee the National Exam Program, the unit that dispatches examiners to review investment advisors, broker-dealers and other registered firms.
The shortfall in advisor examinations has been a lingering issue at the SEC. For years, White and her predecessors have been appealing to Congress for more funds to help increase oversight of the RIA sector, where the average advisor is examined just once every 10 years.
OCIE has not been able to add as many examiners as it would like, so the division instead has been working to bolster its technical capacity to mine and analyze data to focus its efforts on the firms engaging in the riskiest practices.
SEC staffers have also been exploring a proposal to enlist a third-party organization to help with advisor examinations.
The IAA has been vocal in its support for a funding mechanism to expand advisor examinations while keeping them in-house at the SEC. Even without more money, however, Barr argues that OCIE could do more with the staff it has.
"We would definitely like to see OCIE continue its progress toward becoming more efficient and conducting additional examinations," she says. "They could deploy their examiners to do shorter, more focused exams in order to reach more investment advisors."
Wyatt joined the SEC in 2012 as a specialist focused on examinations of advisors who work with hedge funds and private-equity funds, two industry segments brought under the SEC's exam purview by the Dodd-Frank Act. Before joining the SEC, Wyatt, a Chartered Financial Analyst, worked as a principal and senior portfolio manager at a global hedge fund.
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