SEC Accelerates Examination of Newly-Registered Investment Funds
Client Alert | 1 min read | 02.21.14
On February 20, 2014, the SEC's Office of Compliance Inspections and Examinations struck fear into the heart of many newly-registered investment funds by announcing a new initiative to ramp up examinations of funds never previously inspected. The cute name of the program: the "Never-Before-Examined Initiative." The link to the SEC's release is here. The SEC's release is being sent to all registered investment advisers who have not previously been examined.
For the most part, the SEC's release repeats areas of focus well-known to investment funds who have been examined in the past. An ordinary inspection by the OCIE staff will include the following:
- Review of materials to determine if the adviser's compliance program is effective. This includes hiring and empowering a Chief Compliance Officer to administer the program.
- Review of books and records focusing on identification of conflicts of interest and other similar risks, disclosure of material facts concerning conflicts, and actions by the adviser to adopt policies and procedures that properly mitigate and manage those conflicts and risks.
- Review of disclosures concerning the adviser's business, investment activities, and investment performance. Marketing materials will particularly be scrutinized to ensure disclosure of material facts (and that the adviser has not omitted material facts).
- Review of the adviser's portfolio decision-making practices, particularly including allocation of investment opportunities.
- Review of procedures for those advisers who have custody of client assets. (Note that "custody" has a far broader meaning in the investment fund world than what a plain meaning of the term might imply.)
We continue to counsel advance preparation for your first inspection. Compliance firms, law firms and others are well-situated to do a "dry run" for the data that the SEC will collect and analyze. Consider whether any such advance work can and should properly be protected from ordinary disclosure.
Insights
Client Alert | 5 min read | 12.12.25
Eleventh Circuit Hears Argument on False Claims Act Qui Tam Constitutionality
On the morning of December 12, 2025, the Eleventh Circuit heard argument in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 24-13581 (11th Cir. 2025). This case concerns the constitutionality of the False Claims Act (FCA) qui tam provisions and a groundbreaking September 2024 opinion in which the United States District Court for the Middle District of Florida held that the FCA’s qui tam provisions were unconstitutional under Article II. See United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). That decision, penned by District Judge Kathryn Kimball Mizelle, was the first success story for a legal theory that has been gaining steam ever since Justices Thomas, Barrett, and Kavanaugh indicated they would be willing to consider arguments about the constitutionality of the qui tam provisions in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). In her opinion, Judge Mizelle held (1) qui tam relators are officers of the U.S. who must be appointed under the Appointments Clause; and (2) historical practice treating qui tam and similar relators as less than “officers” for constitutional purposes was not enough to save the qui tam provisions from the fundamental Article II infirmity the court identified. That ruling was appealed and, after full briefing, including by the government and a bevy of amici, the litigants stepped up to the plate this morning for oral argument.
Client Alert | 8 min read | 12.11.25
Director Squires Revamps the Workings of the U.S. Patent Office
Client Alert | 8 min read | 12.10.25
Creativity You Can Use: CJEU Clarifies Copyright for Applied Art
Client Alert | 4 min read | 12.10.25
Federal Court Strikes Down Interior Order Suspending Wind Energy Development
