Questions about SEC exams? Knowledge is half the battle. Separate the myths from the facts with Michelle Jacko of Core Compliance & Legal Services, Inc.1
MICHELLE JACKO: The answer is no, you don't have to allow them access. What you can do is you can say, ‘This is part of our books and records. I will show and demonstrate and have this person—OK?—be your point of contact for anything on that system. Anything you want, we will search, we will provide. This person will be Xeroxing and copying any books and records that you might need.
I can ask the examiners for an extension.
MICHELLE JACKO: Don't hesitate to ask for an extension. If it's just so voluminous, or negotiate with the staff and say, ‘Look, you're asking for five years' worth of documents. Is there any way we can shorten that period of time?' A lot of times they will.
The CCO doesn't need to be present.
MICHELLE JACKO: Why do you want the compliance officer present during exams? Because people get nervous? They might forget about the internal control and that compliance officer is able to articulate in what I'm going to call regulatory speak, ‘This is what we're doing, this is why they're doing it,' and get ahead of what the question is.
I can refuse to answer a question during an interview.
MICHELLE JACKO: They can ask you anything. They can ask you hypothetical questions. ‘What if, what would you do in this situation?' Okay? And you have to respond, and that's why you want to go through mock interviews.
I'm free to disagree with the staff's findings.
MICHELLE JACKO: Yes, it's okay for you to disagree with their findings. Not all the findings are accurate, and you can say why it's not accurate. I would strongly suggest if you do take that approach, though, work with counsel on that.
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