SEC Exams & Mock Audit FAQ
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Stay Exam-Ready with Proactive Compliance & Regulator-Focused Mock Reviews
SEC and state exams are inevitable—but surprises and deficiencies don’t have to be. LawVisory helps investment advisers, fund managers, and financial service firms prepare for, manage, and recover from regulatory exams through customized mock audits and real-time legal support.
Below are the most common questions we receive from compliance officers, founders, and RIA teams preparing for an exam or seeking to avoid one.
General Overview of SEC Exams
An SEC exam is a regulatory review of your advisory firm conducted by the Office of Compliance Inspections and Examinations (OCIE). It evaluates whether your business is complying with federal securities laws, particularly the Investment Advisers Act of 1940.
Common triggers include:
- Incomplete or outdated Form ADV filings
- Rapid AUM growth or newly registered firms
- Marketing or performance advertising issues
- Whistleblower complaints or red flags
- Risk alerts related to cybersecurity, crypto, ESG, or custody
The SEC has a goal of examining most advisers at least once every 5 years, but some are examined more frequently based on risk. Newly registered RIAs often face exams within their first 18–24 months.
You will need to file:
- Form ADV Parts 1, 2A, and 2B;
- Form CRS (for retail clients);
- Form U4 for each Investment Adviser Representative (IAR).
- A tailored Compliance Manual and core policies are also required under Rule 206(4)-7.
Mock Audit & Pre-Exam Preparation
A mock exam is a simulated version of a real SEC or state regulatory exam. LawVisory uses exam-style document requests, interviews, and walkthroughs to test your firm’s compliance and uncover issues before regulators do.
A mock exam:
- Identifies weaknesses in your compliance program
- Helps your team prepare for examiner interviews
- Reduces panic and delays during real audits
- Provides a written roadmap for remediation
- Shows regulators that you're proactive and serious about compliance
Our mock exam packages typically include:
- Customized document request list (simulating SEC letters)
- Review of books and records, Form ADV, PPMs, marketing, etc.
- Staff interviews and walkthroughs
- Gap analysis and risk scoring
- Written remediation plan and timeline
- Optional: Exam-day response coaching and compliance refreshers
:How long does a mock exam take?
What Happens During a Real SEC Exam
Examiners usually request:
- Advisory agreements and fee schedules
- Form ADV Parts 1, 2A, 2B, and CRS
- Trade records and performance data
- Marketing materials and social media content
- Compliance manual, policies, and annual reviews
- Custody documentation (if applicable)
- Financials and books and records
- LawVisory reviews all of these materials in advance during mock exams.
There are three main types:
- Routine exams (risk-based reviews of operations)
- Cause exams (triggered by complaints or irregularities)
- Sweep exams (focused on industry-wide trends or enforcement priorities)
Firms typically receive a two-week notice via an initial request letter, but the SEC can conduct unannounced exams in certain cases. LawVisory offers emergency audit prep when firms are notified.
After the Exam: Responses & Risk
The SEC will either:
- Close the exam with no findings
- Issue a deficiency letter identifying compliance gaps
- Refer findings to the Division of Enforcement for potential regulatory action
Do not panic. Work with legal counsel to:
- Draft a written response acknowledging each issue
- Explain corrective actions taken or planned
- Provide supporting documentation
LawVisory has helped dozens of firms respond to deficiency letters with strong results.
Yes. We provide on-site or remote legal support during live exams, including:
- Managing examiner communications
- Organizing documentation
- Coaching staff on interview prep
- Drafting timely response letters and documentation
State Exams, Risk Alerts & Special Topics
While the scope is similar, state exams are conducted by the securities regulator in your home state (or where you have clients). They may follow different formats or priorities. LawVisory prepares you for both SEC and state regulatory environments.
Based on current SEC exam priorities and risk alerts, key areas include:
- Marketing and advertising under the new Marketing Rule
- Custody of crypto and digital assets
- ESG strategy disclosures
- Cybersecurity and data privacy programs
- Conflicts of interest and revenue sharing arrangements
Ongoing Compliance & Support
Best practices include:
- Keeping your compliance calendar updated
- Conducting annual 206(4)-7 reviews
- Periodically reviewing marketing and social content
- Documenting all compliance testing
- Working with outsourced CCOs or legal partners like LawVisory
Yes. We provide:
- Post-exam remediation plans
- Ongoing outsourced CCO support
- Custom compliance service plans that include updates, testing, and strategy
- Audit protection clauses in monthly legal retainer plans
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