Although recent reports have indicated that the US Securities and Exchange Commission (SEC) is staffing its exam team with more private equity professionals, the Office of Compliance Inspections and Examinations (OCIE) is not currently recruiting additional private equity personnel, according to a source close to the SEC.
During his speech at the PEI Private Fund Compliance Forum in May, OCIE director Andrew Bowden revealed that the exam division was forming an industry taskforce (the Private Funds Working Group) and stated that the OCIE had “added individuals with private equity expertise to our team” in order to better inspect registered investment advisers in the private funds space. The comment was presumably in reference to Igor Rozenblit, the commission’s in-house private equity specialist who captains the new unit.
However, sources say the OCIE is not targeting additional talent from the industry. Currently, the division is focused on hiring experts with other areas of expertise, including hedge fund professionals, and building the private equity know-how in its current team. In September interview with pfm, Rozenblit said that the SEC had chosen to fill the 13-person unit with long-time examiners who are learning the private fund model, rather than starting with industry practitioners and turning them into examiners.
“Private equity experts might be being hired for other SEC offices or divisions, but that is not what the OCIE is looking for right now,” said a source familiar with the matter. The SEC declined to comment.
The statement contradicts recent reports such as Kinetic Partners’ Global Regulatory Outlook Viewpoint 2015. In the publication, the consulting firm’s director of regulatory compliance Donald Babbitt observes that the SEC is “staffing its ranks with private equity professionals, as the agency has been focusing on developing deeper scrutiny in the sector” and could be offering those hires higher pay.
Due to the fact that overall SEC expenditures rose 62 percent from 2006/07 to 2013/14 while the number of employees only rose by 22 percent, Babbitt implied that the SEC might be hiring in more highly paid positions, offering former industry professionals “long-term job security and an opportunity to be involved in policy making” as incentives to make the switch to the public sector.
In an interview with pfm, Babbitt said he had met examiners with private equity backgrounds during his clients’ presence exams.
In its FY 2015 Congressional Budget Justification, the SEC requests an additional 316 positions at the OCIE, including additional staff to examine registered private fund advisers, though it does not mention hiring professionals from the industry.
Currently, there is one listing on the USA Jobs website for a Supervisory Securities Compliance Examiner at the SEC. The qualification requirements do not entail any specific private funds or hedge fund expertise.