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DBO Initiates Coordinated Examination Survey Of Investment Advisers

Last week, the California Department of Business Oversight emailed a "Formal Examination Demand: Response Required" to investment advisers stating that the Department is conducting a "coordinated survey of registered firms and their business practices prior to implementation of Regulation Best Interest."  The aggressive email warns that participation in the survey is required and threatens disciplinary action for failure to respond.  According to the notice, completion of the survey should take about one hour.

Some recipients of this notice are likely to be understandably chary because the email was not sent from the Department's ".gov" domain.  Rather, it was sent from a ".com" domain.  Also, I could find no announcement of the survey on the Department's website.

The Department's notice states that the the responses will be sent to the Securities Division of the Kentucky Department of Financial Institutions with a copy to the Department.  The notice states that the states participating in the survey have entered into an agreement to share the survey and this "should preserve the confidentiality of the information received . . .".  However, the Department cannot by private agreement override either the California Public Records Act, Cal. Gov't Code § 6250 et seq. or the California Information Practices Act, Cal. Civ. Code § 1798 et seq.  

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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