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SEC makes key hire as remit increases

The US Securities and Exchange Commission has appointed a chief for its examination programme, a 450-strong team of lawyers and accountants responsible for inspecting registered investment advisors, soon to include PE firms.

Andrew Bowden is leaving US law firm Legg Mason to head the Securities and Exchange Commission’s National Investment Adviser Examination Program.

The post had been vacant since last April following the retirement of Gene Gohlke, who headed the program for 30 years.

The examination program sits within the US regulator’s Office of Compliance Inspections and Examinations (OCIE). From there Bowden will lead a team of 450 lawyers, accountants, and examiners who are collectively responsible for the inspections of US registered investment advisers and investment companies.

As a result of Dodd-Frank, private equity and hedge firms managing more than $150 million in assets will need to register as investment advisors by next March. Currently the SEC oversees some 11,000 investment advisors, but that figure is expected to swell by another 8,000 as alternative investment firms began falling under the SEC’s remit.

The SEC is not realistically equipped to begin overseeing this number of registered investment advisors

Harvey Pitt

“The SEC is not realistically equipped to begin overseeing this number of registered investment advisors,” said former SEC Chairman Harvey Pitt at a conference sponsored by sister site Private Equity International earlier this year.

In an interview with PEI last May, OCIE Director Carlo di Florio said the agency would take a “risk-based approach” to examination, targeting private equity firms most prone to fraud or conflicts of interest. 

He continued:  “I expect [fund managers] to have a disciplined approach to identifying and managing conflicts of interest, not that they avoid each and every conflict. Handling conflicts requires judgment. Some should be avoided, but others can be mitigated with proper safeguards and carefully monitoring.”

A call put into Bowden’s office was not returned by press time.