Brian Daly Quoted on SEC’s Increased Examination of Non‑U.S. Advisers
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Hedge Fund Law Report and Private Equity Law Report have quoted Akin Gump investment management partner Brian Daly in its article “Exams of Non‑U.S. Advisers: The SEC’s Authority and Trends (Part One of Three).” The article examines the U.S. Securities and Exchange Commission’s (SEC) authority to conduct examinations of non‑U.S. advisers and the recent increase of those exams.
According to Daly, Section 408 of the Dodd-Frank Act, which exempts certain investment advisors from having to register with the SEC and thus its examinations, is a “very generous exemption that basically allows a non‑U.S. adviser to be exempt from registration, assuming that it has less than $150 million being managed from a U.S. place of business.”
Regarding the recent increase in the examination of non‑U.S. advisers, Daly said, “Once the staff got very good at doing remote exams – and the SEC did transition very quickly and more or less seamlessly to a fully remote exam environment – I suspect what happened was somebody internally suggested that they do more non‑U.S. exams because they’ve gotten remote exams down now.” He added, “I don’t think there’s any particular mission or focus other than just a natural extension of the remote exam process to managers located outside the U.S.”
Looking to the future, Daly expects this trend to continue to increase, given the SEC’s success with remote exams, saying, “Having demonstrated that the SEC staff can effectively manage remote exams with non‑U.S. registrants, every impetus would be to continue that process because it is cheaper and more efficient than sending people overseas.”
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