MAK & Associates is a Mumbai-based regulatory compliance consulting firm, founded in July 2017, delivering specialised SEBI compliance services, SEC RIA compliance consulting, corporate secretarial services, and end-to-end legal and compliance advisory for financial service firms in India and globally.
US SEC COMPLIANCE
On October 1, 2026, the U.S. Securities and Exchange Commission’s Division of Examinations (“EXAMS”) published The SEC Exam Handbook: A Practical Guide on Process and Engagement, replacing and expanding upon its previous examination brochure.[1, 2]
The Handbook is significant not because it creates new regulatory obligations – it expressly states that it does not – but because it provides regulated firms with considerably greater visibility into how an SEC examination may progress, from candidate selection and pre-examination planning through information requests, interviews, the exit conference and, ultimately, the disposition letter.[2]
For SEC-registered investment advisers (“RIAs”), whether headquartered in the United States or operating through offices, personnel or affiliates in other jurisdictions, the Handbook provides more than an explanation of SEC examination mechanics. It offers a practical framework for testing whether compliance policies, regulatory disclosures and day-to-day operations remain aligned.
The SEC has positioned the Handbook as a roadmap intended to make the SEC examination process more transparent and consistent, while emphasizing accessible and collaborative engagement. The Handbook states that EXAMS does not assume misconduct merely because a firm has been selected for SEC examination.[1, 2]
The additional transparency should therefore be understood as guidance on process rather than any relaxation of the Division’s examination mandate or expectations.
The Division continues to operate a risk-based examination program. Factors that may inform its risk assessments include prior examination history, supervisory concerns, tips and complaints, the length of time since registration or the previous examination, the nature of an adviser’s client base, products and services, conflicts of interest, changes in leadership or key personnel, media reporting, regulatory filings, and whether the firm holds or has access to client or investor assets.[2]
The SEC’s Fiscal Year 2026 Examination Priorities separately identify never-examined advisers, with particular emphasis on recently registered advisers, as an examination priority.[3]
The practical consequence is important: an adviser should not wait for an SEC examination notice before becoming examination-ready.
One of the more useful observations in the Handbook concerns what happens before an SEC examination is announced. As part of pre-examination planning, SEC staff may review an adviser’s regulatory filings and website to understand the business and determine the initial scope of the examination. The Handbook specifically notes that keeping filings current and accurate can make SEC examinations more efficient and can reduce the number of findings.[2]
This reinforces an important distinction between having compliance documents and maintaining an integrated compliance program.
Form ADV, the compliance manual, website disclosures, client agreements, marketing materials and the firm’s actual business practices should tell a substantially consistent story. A disclosure appearing in one document but contradicted by another – or a policy that does not reflect how personnel actually operate – may become apparent when examiners review different sources of information.
Periodic reconciliation of regulatory filings, policies, disclosures and actual business practices should therefore form part of an adviser’s broader compliance-testing and SEC examination-readiness process.
Once an examination is announced, SEC staff generally send a formal notice and an initial request for information. The Handbook states that the Commission expects that, in most circumstances, records should be available to staff within 24 hours, while in practice staff usually provides approximately two weeks to produce records in response to the initial information request. Reasonable extensions or rolling productions may be permitted where appropriate.[2]
This makes records management much more than an administrative function.
A firm may possess the records required under the Advisers Act but still encounter difficulty during an SEC examination if information is fragmented across employees, email accounts, communication platforms, portfolio-management systems, third-party service providers or different business locations.
Accordingly, SEC examination preparedness should include testing whether the adviser can locate, retrieve, organize, review and produce relevant records efficiently – not merely determining whether those records theoretically exist.
SEC staff may interview the CCO and other personnel to understand an adviser’s operations, controls and information supplied during the examination. The Handbook encourages SEC IA registrants to make knowledgeable personnel available because productive interviews can reduce misunderstandings and may reduce the number of meetings required.[2]
A well-written compliance manual is not sufficient if the individuals responsible for portfolio management, trading, marketing, operations or other functions cannot explain what they do, what controls apply to their activities, and how those controls operate in practice.
The Handbook also contains a noteworthy operational point for modern SEC examinations: for interviews conducted by videoconference, SEC staff states that it does not consent to the use of recording, transcription, artificial-intelligence note-taking tools or similar technologies. Firms that routinely use automated meeting transcription or AI meeting assistants should therefore ensure that such tools are appropriately disabled during SEC examination meetings.[2]
The Handbook repeatedly encourages ongoing dialogue between registrants and examination staff. Where staff appears to misunderstand a policy, practice or business arrangement, the registrant is encouraged to address the issue promptly rather than waiting until the conclusion of the examination. Firms are also encouraged to communicate difficulties encountered in responding to information requests and to inform staff about relevant developments or remedial measures.[2]
The management of an SEC examination itself is an important compliance function.
Responses should be accurate, coordinated and appropriately reviewed. Different employees should not inadvertently provide conflicting descriptions of the same process, while document submissions should be sufficiently responsive without unnecessarily producing information beyond what has been requested.
A well-organized examination process will ordinarily involve the CCO or another designated regulatory contact maintaining oversight of communications, document production, interviews and follow-up requests.
After interviews and examination analysis are substantially complete, SEC staff typically conducts an exit conference, as appropriate, at which identified issues may be discussed. The Handbook notes that registrants may provide clarification, additional information and information concerning remediation.[2]
The Handbook describes three potential forms of disposition: (1) the examination has concluded; (2) the examination has concluded without findings; or (3) staff requests that the registrant undertake corrective action. The third form is a deficiency letter.[2]
Importantly, the Handbook states that most SEC examinations conclude with a deficiency letter. Such a letter details findings of potential violations of federal securities law and other findings within the scope of the examination, but it does not provide a grade, peer ranking or description of best practices. Depending upon the circumstances, issues identified during an examination may also be referred to the Division of Enforcement or other authorities.[2]
Where a deficiency letter is issued, SEC staff will typically request a written response within 30 days, describing steps taken or planned to address the issues and prevent recurrence. The Handbook also notes that prompt and appropriate corrective action, while not dispositive, may be a mitigating factor when staff considers whether an examination finding should be referred to Enforcement. If staff has further comments on the response, it states that it will strive to provide them within 60 days or contact the registrant regarding timing.[2]
The practical lesson is that remediation should not necessarily begin only when the formal deficiency letter arrives. Where a legitimate compliance weakness becomes apparent during the examination, management should consider whether it can be addressed promptly and appropriately documented.
The timing of the Handbook is also noteworthy. On September 14, 2026, the Division of Examinations issued a Risk Alert concerning investment advisers’ annual compliance reviews. The Division reiterated that SEC-registered advisers must review, no less frequently than annually, the adequacy of their compliance policies and procedures and the effectiveness of their implementation under Rule 206(4)-7.[4, 5]
Viewed together, these publications reinforce an important distinction. An annual review should not simply involve changing dates in a compliance manual or confirming that policies remain on file. It should help determine whether the firm’s compliance controls are properly designed for its current business and whether they are actually functioning in practice.
A useful SEC examination-readiness framework therefore asks whether the adviser can demonstrate that:
1. | Regulatory filings and public disclosures remain accurate and consistent with the business actually being conducted. |
2. | Policies and procedures reflect current operations rather than historical or generic practices. |
3. | Compliance testing produces evidence that important controls are actually being implemented. |
4. | Books and records can be retrieved and produced efficiently, including records maintained electronically or by third-party service providers. |
5. | Key employees understand their responsibilities and can explain relevant business processes and controls clearly. |
6. | Material compliance issues are escalated, investigated, corrected and appropriately documented. |
7. | The annual compliance review connects identified risks, testing performed, findings, remediation and changes to the compliance program. |
The value of the Handbook is that firms can now assess these areas against a relatively transparent description of how EXAMS says an examination will proceed.
For SEC-registered investment advisers with operations extending beyond the United States, examination preparedness can involve an additional operational dimension.
This may include internationally headquartered SEC-registered advisers, as well as U.S.-based advisers with investment professionals, research teams, affiliates, service providers or other operations located in jurisdictions such as Hong Kong, Singapore, India and other international financial centres.
The fundamental SEC compliance obligations do not become separate merely because portions of an adviser’s business are conducted in different jurisdictions. From an SEC examination-readiness perspective, the adviser should therefore consider whether its compliance framework operates consistently across the parts of the organization relevant to its SEC-regulated activities.
Depending upon the adviser’s business model, practical questions may include whether:
These considerations are not limited to advisers headquartered outside the United States. A U.S.-headquartered RIA with material offshore operations can encounter many of the same issues.
The broader lesson is therefore one of operational consistency: the SEC compliance program should reflect how the adviser actually operates as an organization, rather than how the organization appears from any single office or regulatory filing.
The SEC’s new Exam Handbook should ultimately be viewed as an opportunity. It does not amend the Investment Advisers Act, change existing rules or independently impose new legal obligations. The Handbook expressly states that it represents the views of EXAMS staff, is not a rule, regulation or statement of the Commission, has no legal force or effect, and creates no new or additional obligations.[2]
What it does provide is something particularly useful to compliance professionals: a regulator’s explanation of how the SEC examination process is expected to progress and what firms can expect during that process.
Investment advisers should use that transparency proactively.
A strong SEC compliance program should not merely be capable of responding to an SEC examination. It should already operate in a manner that allows an examination to demonstrate existing controls rather than requiring the firm to reconstruct its compliance framework after the regulator arrives.
MAK & Associates is a Mumbai-based regulatory compliance consultancy providing advisory and support services relating to SEC investment adviser compliance, including compliance policies and procedures, annual review support, regulatory filings, and examination readiness.
For assistance with SEC compliance requirements or to discuss your firm’s compliance support needs, please visit www.maknassociates.com.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. Regulatory requirements should be evaluated based on the particular facts and circumstances applicable to each investment adviser.
[1] U.S. Securities and Exchange Commission, “SEC’s Division of Examinations Announces New Exam Handbook,” Press Release No. 2026-99, October 1, 2026. SEC Press Release 2026-99
[2] U.S. Securities and Exchange Commission, Division of Examinations, The SEC Exam Handbook: A Practical Guide on Process and Engagement, published October 1, 2026. SEC Exam Handbook (PDF)
[3] U.S. Securities and Exchange Commission, Division of Examinations, Fiscal Year 2026 Examination Priorities, November 17, 2025. SEC 2026 Examination Priorities
[4] U.S. Securities and Exchange Commission, Division of Examinations, “Examinations Observations Regarding Investment Adviser Annual Compliance Reviews,” Risk Alert, September 14, 2026. SEC Risk Alert (PDF)
[5] U.S. Securities and Exchange Commission, “Compliance Programs of Investment Companies and Investment Advisers,” Advisers Act Release No. IA-2204, December 17, 2003 (adopting Rule 206(4)-7). SEC Release IA-2204
About The Author
Kiran Krishnan is the Co-Founder and Principal Consultant of MAK & Associates, a Mumbai-based legal and compliance firm. Kiran is a regulatory compliance professional with 9 + years of experience across SEC (US) and SEBI (India) frameworks, including advising SEC-registered investment advisers on mock examinations, annual reviews, and regulatory filings.
The views expressed here are his personal views.
