SEC Division of Examinations publishes Exam Handbook: what investment advisers, broker-dealers, and other registrants should know

Introduction

The US Securities and Exchange Commission (SEC), through its Division of Examinations (EXAMS), published The SEC Exam Handbook: A Practical Guide on Process and Engagement (the Handbook), announced on October 1, 2026.¹ The Handbook replaces and expands the Division’s “Examination Information for Broker-Dealers, Transfer Agents, Clearing Agencies, Investment Advisers, and Investment Companies,” bearing the same SEC Number (SEC 2389)² and follows remarks by EXAMS Director Keith Cassidy on September 16, 2026, previewing a “modern and expanded replacement” for that brochure.³ The Handbook describes what investment advisers, broker-dealers, funds, transfer agents, clearing agencies, and other registrants (collectively registrants) can expect during an exam and establishes mutual expectations for a collaborative engagement between EXAMS staff and firms.

What the Handbook does (and does not) change

The Handbook introduces no new exam policies. It is a staff statement, not a rule, regulation, or statement of the Commission, and has no legal force. Instead, it consolidates EXAMS’s existing practices and procedures into a single public resource, providing firms with a roadmap to help navigate the examination process.

EXAMS is organized into five specialized programs: the Investment Adviser/Investment Company Examination Program, Broker-Dealer and Exchange Examination Program, FINRA and Securities Industry Oversight Examination Program, Clearance and Settlement Examination Program, and Technology Controls Program.

The Handbook emphasizes a collaborative, non-adversarial posture in which staff does not assume misconduct at the outset. It also details the factors EXAMS weighs when selecting firms for examinations, the conduct of staff interviews and on-site visits, and deficiency letters in which exam staff describe potential securities-law violations.

What the Division’s collaborative tone may mean for exams

The Handbook’s collaborative posture is likely to make examinations more dialogue-driven, as EXAMS staff seeks a shared understanding of a firm’s business and how it addresses key risks. The Handbook itself does not identify focus areas; EXAMS’s annual examination priorities do,⁴ and the Handbook notes that those priorities are not exhaustive. Because fiscal year 2027 began on October 1, firms will be watching for EXAMS’s 2027 priorities, which had not been released as of this writing.

In our view, three areas stand out:

1. New products. The Handbook notes that making internal subject-matter experts available is particularly helpful in exams relating to new products or practices, and thematic initiatives may test how firms have adapted to new rules and evolving market practices.
2. Complex conflicts of interest. The Handbook lists products, services and business activities that may create conflicts among its risk-selection factors; we expect exams to test the accuracy and completeness of disclosures and the strength of conflict-management controls.
3. Cyber and operational resilience. The Handbook does not single out cyber, but Technology Controls Program is one of EXAMS’s five programs, and on-site visits may include a review of a firm’s control environment, though the Handbook does not prescribe a uniform approach for such visits.

Selection, pre-exam planning and announcement

EXAMS selects registrants through risk-based assessments informed by factors including prior exam history; supervisory and disciplinary concerns; tips, complaints, and referrals; time since registration or the last exam; client base; conflict-creating products and activities; changes in key personnel; vulnerability to financial or market stress; media reporting; regulatory filings; and access to client assets. The reason for an exam is non-public, and selection “is not, in itself, a signal that something is wrong.”

Before announcing an exam, staff will likely review a firm’s filings and websites, and the Handbook notes that current, accurate filings can reduce findings. A stale Form ADV (or Form BD or Form CRS) or inconsistent disclosures can therefore shape an exam before it formally begins, so firms may wish to review filings, websites, and client-facing disclosures now. Most exams begin with a brief call to the Chief Compliance Officer (CCO). During that call a firm may want to flag other ongoing regulatory inquiries that may slow responsiveness. Unannounced exams follow adapted procedures, including an information request upon arrival.

Responding to information requests

The EXAMS information request specifies how registrants must format and transmit responsive documents. The Handbook does not address a difficult question: when do examiners’ instructions on how to format a production require the registrant to create a new record? Registrants frequently argue that examiners cannot require them to create new records outside of the Commission’s rulemaking power to define required books and records, and this topic is currently the subject of litigation.⁵ If that litigation clarifies the question, EXAMS may update the Handbook.

Production timing. The Commission expects records to be available to staff within 24 hours in most circumstances; though staff usually provide two weeks to respond to the initial request. Staff may issue supplemental requests with varying deadlines, will grant reasonable extensions or rolling productions where appropriate, and generally does not return produced records.

Third parties. Staff may request information directly from custodians, administrators, auditors, and other service providers, including for asset verification, and may contact clients and customers to verify information. Firms may benefit from coordinating with key vendors in advance so that the firm understands whether third-party records are consistent with the firm’s own records and representations.

Interviews, exit conferences and key deadlines

After the announcement call, staff may conduct an initial interview with the CCO or other regulatory contact to understand the firm’s business and operations. Because this interview can shape the scope of the entire exam, the CCO and other participants may prepare in advance, including with a clear and accurate overview of the business and compliance program. Exams may include an on-site visit, during which staff may ask for an office tour to understand workflow and the control environment.

EXAMS does not record interviews and instructs participants not to do so. The Handbook notes that staff do not consent to recording, transcription, AI notetaking tools, or similar technologies. Firms may consider updating their meeting protocols accordingly for any meetings with staff. 

Staff will be in contact throughout the exam about outstanding requests and potential findings. The Handbook asks firms to raise any staff misunderstanding of their policies or practices “as soon as possible” and to keep staff informed of remedial actions. Staff communications are not legal advice.

Staff typically request that senior management or board members attend the exit conference, which offers a chance to correct inaccuracies, supply overlooked materials, and describe remediation. A disposition letter will issue within 180 days after the later of completion of any on-site portion or receipt of all requested records (extendable for an additional 180 days in certain complex examinations). Most exams conclude with a deficiency letter, to which staff will typically request a written response within 30 days, and staff strive to provide any further comments within 60 days of that response. While not dispositive, prompt and appropriate corrective action may be a mitigating factor in whether a finding is referred to the Division of Enforcement.

Examination outcomes and enforcement exposure

A disposition letter will state that the exam (1) has concluded; (2) has concluded without findings; or (3) requires corrective action (a deficiency letter). No response is expected for the first two. No outcome forecloses Commission action, including enforcement. Deficiency letters do not mandate a particular fix or describe best practices, and silence on an activity does not mean it complies. Staff may refer issues to the Division of Enforcement, a self-regulatory organization, state regulators, or criminal authorities, and (typically when exigent circumstances exist) may refer to Enforcement without an exit conference or deficiency letter. Staff may also share exam information with other regulators without disclosing that it has done so.

Staff generally do not comment on the adequacy of proposed corrective actions, and the absence of comment is not concurrence. An effective response addresses each factual finding and legal issue and assesses available remediation, without making commitments the firm cannot complete. If a firm cannot meet the 30-day deadline, the Handbook asks it to request an extension from the exam team as soon as possible. Tracking each corrective action with supporting evidence, and confirming completion in the next annual compliance review, helps avoid repeat findings.

Protecting privilege during an exam

The Handbook directs registrants to provide a privilege log when withholding or redacting information on privilege grounds. Because privilege issues can arise at any stage of an exam, firms may benefit from distinguishing communications made for the purpose of obtaining or providing legal advice from routine business or compliance communications and evaluate each privilege assertion carefully.

Exam-readiness practices

• Label privileged material clearly at the time it is created.
• Decide whether to assert privilege before producing any document.
• Control production carefully to avoid inadvertent waiver.
• Consider engaging outside counsel as soon as EXAMS announces the exam; initial correspondence often sets the tone for the entire engagement.

Privilege logs

When a registrant withholds a document on attorney-client privilege or work product grounds, the Handbook states that the Registrant should provide a privilege log that identifies each withheld document and provides sufficient information for staff to evaluate the claim, including: (1) the creator’s identity and position; (2) the identities and positions of all recipients or others informed of its substance; (3) date of creation; (4) a brief description, including subject matter; (5) the reason it is withheld, including the specific privilege claimed; and (6) the specific request to which it relates. Privilege assertions for redacted portions of produced documents are to be logged in the same manner.

Practical tips: Prepare the log alongside production and make each entry specific enough to support the privilege claim without revealing privileged content.

Key takeaways to consider

• The Handbook creates no new policies and has no legal force, but it replaces the Division’s prior examination brochure with a more comprehensive public roadmap.
• Expect a more collaborative, dialogue-driven examination, but remain prepared for rigorous scrutiny of new products, conflicts of interest, and cyber and operational resilience.
• Review filings, websites, and disclosures, and test whether core records can be produced within the Handbook’s 24-hour expectation and whether an initial production can be completed within the typical two-week response period.
• Protect privilege proactively. Label privileged materials when created, decide whether to assert privilege before producing documents, and control production to avoid inadvertent waiver. Consider engaging outside counsel as soon as EXAMS announces the exam. Prepare detailed privilege logs alongside each production that address every element EXAMS identifies, including privilege assertions for redactions, with entries specific enough to support each claim without revealing privileged content.
• Brief personnel and meeting participants in advance that staff interviews may not be recorded or transcribed and disable any AI notetaking or transcription tools before meetings with staff.
• Treat the exit conference as an advocacy opportunity, and craft deficiency responses that address each finding and track corrective action with evidence.
• Remember that collaboration does not limit enforcement exposure: staff may share information with other regulators, refer matters without an exit conference, and silence from staff does not signify agreement.

Because the handbook is staff guidance, it took effect upon publication. Our team can help you assess its operational impact and support your firm throughout the examination process. Contact us with any questions.

If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 https://www.sec.gov/files/exam-handbook.pdf. 
2 https://www.sec.gov/info/cco/ccons2007exambrochure.pdf; https://www.sec.gov/submit-filings/forms-index. 
3 Keith Cassidy, Director, SEC Division of Examinations, EXAMS Accessible and Integrated, Remarks at the Investment Company Institute’s Compliance, Risk, and Legal Conference (Sept. 16, 2026), https://www.sec.gov/newsroom/speeches-statements/cassidy-exams-accessible-integrated-091626. 
4 SEC, Division of Examinations, Fiscal Year 2026 Examination Priorities (Nov. 17, 2025), https://www.sec.gov/files/2026-exam-priorities.pdf. 
5 See SEC v. Institutional S'holder Servs., Inc., No. 2:26-mc-0078 (E.D. Pa. filed Sept. 4, 2026) (pending subpoena enforcement action in which respondent publicly challenged an examination request as requiring it to “create” burdensome reports it did not maintain; the outcome, even on other grounds, may shape future challenges of this kind).}