© 2019 SourceMedia. All rights reserved.
Voices

Prank call? Nope, it's a surprise SEC audit

Getting through a crisis situation can be a real test for a new business. This past summer, we faced the biggest challenge in our four-year history: an SEC audit.

Sherry-Delaney-2018

At first, I couldn’t believe it. I actually thought it was a prank call.

When we got the phone call, the firm was without a chief compliance officer. Our former CCO, one of four founding partners, had left two weeks prior and we hadn’t started looking for a replacement. To make matters worse, my husband (also a partner) and I were about to go on a long-planned trip to Europe.

We were relieved to find out that the audit was part of a new effort by the SEC to take a closer look at newer firms, and not because of any red flag. They gave us two weeks to gather everything for the audit list, which contained about 16 items — no small undertaking for a young company with a small number of full-time employees.

We worked double duty, handling trading in the mornings and pulling paperwork in the afternoon. We submitted everything by the deadline, took the trip of a lifetime and passed the audit. What’s more, we emerged stronger as a company and I learned what it takes to overcome a business challenge.

Lead by Example
Throughout this entire process, I was deep in the trenches with the rest of the employees. I was wearing a multitude of hats to ensure that we met the requirements of the audit, while continuing to provide our clients with the same outstanding customer service. No job was beneath me.

Most importantly, I know how to do every single job at this firm, from running reports, to managing daily operations to trading. I may not be responsible for these tasks on a daily basis, but I know how to do them, and that’s essential to managing a crisis and getting your employees bought in. You have to create the culture you want by setting the right example.

Have Confidence
When you’re in the thick of a crisis and answering to people in authority, it may seem like the best thing to do is defer to their judgements without question. That’s a mistake.

During the follow-up period of the audit, we found several places where the auditors got the facts wrong. We spoke up again and again to make sure everything was accurate. You can’t be afraid to correct the record.

As an entrepreneur, you have to not only know your business inside and out, you have to stand firm when you’re right, even when the person you’re pushing back against is an SEC auditor.

Keep Your Sense of Humor
When it comes to overcoming a challenge, I like to laugh instead of cry.

Throughout the audit, we went to great lengths to build a rapport with the auditors. When they told us we were in the clear and we’d be getting an official notification in the mail, I mused that I wanted them to send an “attagirl” letter.

It’s easy to fall in the trap of seeing them as adversaries. But, they’re human too and you have to remember that. You’re a firm of people trying to take care of other people.

For reprint and licensing requests for this article, click here.