WASHINGTON — For years, industry observers have
Now, the commission's efforts — including more targeted examinations, reassigning personnel, and heightened risk and data analysis — is boosting exam rates, according to Peter Driscoll, director of the Office of Compliance Inspections and Examinations.
Last year, the commissions examination rate for advisors spiked by 40%, Driscoll said at the annual SEC Speaks conference. But, the actual exam rates might be somewhat less impressive — the SEC examined 11% of advisors in 2016 and 15% in 2017. So far this year, the commission is on pace for a 20% examination rate, he said. And, while,the trend is going in a positive direction, the commission is eager to expand its coverage of the fast-growing RIA sector.
The improvement is due to an internal reorganization under which roughly 100 exam staffers transferred from the broker-dealer and market oversight units to the division that oversees investment advisors and investment companies, Driscoll said.
"It's worked better than we ever thought it would in terms of getting our coverage up in that space," Driscoll said of OCIE's reorganization.
Through a collaborative cross-agency process, staffers have generated risk alerts and exam initiatives focusing on areas like cybersecurity and retirement advice where they see the potential for significant investor harm. Examiners now arrive at a firm's office with a narrow and targeted set of priorities, a sharp contrast from OCIE's past approach of pouring through every aspect of a practice in an exam.
CEO Ron Kruszewski received praise for leading the firm's wealth management unit to a record for revenue, despite costly legal setbacks.
As Vice President, Underwriting Research and Development, Jackie Waas is involved in investigating and developing underwriting innovations, with an emphasis on concept development, research, presenting new ideas, and participating in concept validation activities.
She started her career with RGA in 2018 as Director of Underwriting Services, where she supported direct-to-consumer accelerated offerings, including assisting with the auditing of the e-underwriting program and helping develop digital health scores while supporting the Digital Health Data team.
Prior to joining RGA, Jackie was an Underwriting Business Consultant and automated underwriting systems subject matter expert with Legal & General America for four years after working in an underwriting capacity with the company for nine years. She also had five years of underwriting experience with AXA Equitable and formerly worked as a marketing manager for Steele Rubber Products.
Jackie received a Bachelor of Arts with a major in communications and a minor in psychology from Lenoir-Rhyne University in North Carolina. She is a Certified Fellow of the Academy of Life Underwriting, a Fellow of the Life Management Institute, and a Fellow of the Financial Services Institute. She is also an Associate, Reinsurance Administration; Associate, Insurance Agency Administration; and an Associate, Insurance Regulatory Compliance. Jackie also holds the Professional, Customer Service Institute designation, and she is a member of the Association of Home Office Underwriters.
Guizhou Hu is Vice President, VP, Head of Risk Analytics at RGA, where he supports global RGA underwriting initiatives and produces internal and external thought leadership pieces based on RGA's in-depth risk analytics. Before joining RGA in 2018, Guizhou served as Vice President, Chief Decision Analytics, for Gen Re and as a Senior Vice President for BioSignia Inc. Guizhou holds a medical degree from Beijing Medical University and a Ph.D. in Philosophy from Cornell University.
"Gone are the days of these full-scope exams that we did in 2003, 2004," Driscoll said. "Now we're very focused in terms of one or two areas that we believe are high risk. And the goal is to focus on the high-risk areas and move quickly and get our coverage up, because we realize that's a huge risk for the investment public if we're not getting to a large number of IA firms."
OCIE's work is driven by market surveillance and data analysis, Driscoll said. In particular, examiners are eyeing firms that show a pattern of hiring registered representatives who have prior disciplinary records.
"In an era when firms are trying to grow — particularly the middle-market firms — to bring in as many reps as possible," Driscoll said, "we worry that they're taking on reps that may have been let go from another firm or may have had a disciplinary issue. So we track where those reps go."
"If we see firms gathering folks that have a lot of disclosures or have a prior action against them, that will lead us to focus on that particular firm as a high-risk firm," he added.
To avoid being viewed as a "
"We'll go back in to see if they've fixed certain findings that we've had," he said. "And if they don't fix those findings, or we feel that they haven't fixed them adequately, we'll often refer that recidivist conduct over to enforcement."
