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Securities Division – Audit Unit

Quarterly Report – First Quarter 2012

The Audit Unit in the Missouri Securities Division releases a quarterly report that provides information on audit activities, common deficiencies and best practices.

Audit Statistics for the First Quarter 2012
  2nd Quarter Year to Date

Number of audits opened (onsite audits and desk audits)

11

11

Number of audits closed (onsite audits and desk audits)

10

10

Number of pre-registration examinations commenced (total)

24

24

Number of “for-cause” audits

0

0

Number of audits referred to Enforcement Section

0

0

Number of new registered broker-dealer firms

28

28

Number of new registered investment adviser firms

18

18

Number of investment adviser firms applying for Missouri registration pursuant to the Dodd-Frank “Switch”

13

13

Number of new notice-filed federal-covered investment adviser firms

56

56



Top 5 Deficiencies

The Audit Unit inspects broker-dealers and investment advisers and notes deficiencies in their compliance with Missouri statutes and regulations. The following were the top five most common deficiencies found in the first quarter of 2012:

  1. Inappropriate or misleading hedge/arbitration clauses;*

  2. Inconsistencies between ADV Part 1 and Part 2;*

  3. Inaccurate or misleading information on the adviser’s website;

  4. Failure to update client suitability information; and

  5. Inconsistent disclosure of fee structure.


*Most common deficiencies since the first quarter of 2011.

Timeline for Investment Advisers Switching From Federal to State Registration

The Commissioner of Securities has issued an advisory release regarding the application timeline for advisers switching from federal to state registration. The release is available on the Securities Division’s website (http://www.sos.mo.gov/securities/iaswitch/advisoryList.asp?nID=AR-12-01).

For more information on switching from federal to state oversight, please visit the Securities Division’s IA Switch website at www.sos.mo.gov/iaswitch.


 

Missouri Securities Division
Investor Protection Hotline: (800) 721-7996
General: (573) 751-4136   Facsimile: (573) 526-3124
Email: securities@sos.mo.gov
600 West Main Street
Jefferson City, MO 65101Driving Directions