EXAMS to IAs and BDs: “Talk to Us Before We Write About You”

The SEC's Division of Examinations (EXAMS) is the primary point of contact between the SEC and most investment advisers (IAs) and broker-dealers (BDs). In a recent speech, Director Keith Cassidy offered a clear view of how EXAMS sees its role: less as a "gotcha" regulator and more as a transparent, predictable, and engagement-oriented supervisory function. The speech also suggests a continued effort to align EXAMS more closely with the SEC's operating and policy divisions, particularly Investment Management and Trading & Markets, rather than emphasizing its role as a pipeline to Enforcement.

Takeaways

• This was a speech about process, not priorities. Cassidy spent little time discussing what EXAMS will examine and significant time discussing how examinations should be conducted.
• The tone was notably collaborative. Examinations were framed as a supervisory dialogue rather than an adversarial exercise, with repeated emphasis on transparency, consistency, and communication.
• EXAMS wants engagement before conclusions are reached. Firms were encouraged to use the examination process, particularly exit conferences, to provide context, correct misunderstandings, and challenge observations they believe are unsupported.
• The Division is leaning further into its supervisory role. The emphasis on outreach, examiner accountability, and coordination with Investment Management and Trading & Markets suggests a greater focus on practical implementation, consistency, and compliance outcomes.
• Expect more consistency and fewer surprises. Efforts to improve coordination across offices and divisions point to a push toward more predictable examination outcomes and more uniform regulatory messaging.
• Examinations are becoming a more important regulatory forum. The speech suggests that regulatory expectations will increasingly be communicated, tested, and refined through the examination process rather than solely through rulemaking, deficiency letters, or enforcement actions.
• A more collaborative EXAMS is not a softer EXAMS. The speech does not signal reduced scrutiny. Rather, it reflects a preference for resolving issues through engagement during the examination process when possible.

What This Means for IAs and BDs

The practical takeaway is straightforward: treat examinations as advocacy opportunities, not simply compliance exercises. EXAMS is signaling that it wants firms to engage early, provide context, and address concerns before findings are finalized. Firms that can clearly explain their business model, risks, controls, and compliance framework will be better positioned to shape the factual record and influence how staff understands the issues under review.

More broadly, the speech suggests that examinations are increasingly where regulatory expectations are communicated, tested, and applied in practice. As EXAMS emphasizes outreach, consistency, and dialogue, firms should view examinations not merely as oversight events, but as opportunities to educate staff, build credibility, and influence outcomes before conclusions are reached.

The opportunity is not less oversight. Rather, it is greater ability to influence how that oversight is applied. The message to investment advisers and broker-dealers is clear: engage early, engage substantively, and use the examination process to shape the record before findings are finalized.

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