As we discussed on the webcast, an adviser might not be informed at the outset that an enforcement referral has been made.  Some referrals are considered informally by SEC  Enforcement and then closed without action.  If  Enforcement decides to investigate the matter further,  Enforcement staff may conduct an informal inquiry, asking the adviser and/or other parties for voluntary document production and testimony.  At any point in the investigation,  Enforcement staff may decide to seek a formal order of investigation, which gives the Staff the ability to compel testimony and production of documents via subpoena.  Recent changes to SEC enforcement procedures have made it much quicker and easier for the  Staff to obtain a formal order of investigation. 

The results of an enforcement investigation can be anything from  closure with no action to an administrative proceeding or civil action filed against the firm and/or its employees.  Because of the agency’s current focus on cause-based examinations and collaboration among divisions, we may see an increase in enforcement referrals, but  we may also see more investigations being opened and then closed without action.  Whether a particular matter turns into a viable enforcement case depends on many different factors, including current agency resources and focus areas.