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SEC Pitches 'Surprise Exam' For Investment Advisers

Law360 (May 14, 2009, 12:00 AM EDT) -- In a bid to reduce the likelihood that an investment adviser could make off with client funds without being detected, the U.S. Securities and Exchange Commission on Thursday proposed new safeguards to toughen up investor protection, including an annual “surprise exam” for advisers from an independent accountant.

The SEC is seeking public comment.

Recent SEC enforcement actions have targeted firms and principals with allegations that they misused client money and covered it with false account statements showing funds that weren’t actually there, and the commission wants...
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