National Exam Program Director Carlo V. Di Florio to Leave SEC

The Securities and Exchange Commission today announced that Carlo V. di Florio will leave the agency after leading its National Exam Program for more than three years.

Mr. di Florio will depart later this month to lead a new division of risk and strategy at the Financial Industry Regulatory Authority (FINRA). 

“Carlo has been an outstanding leader of the National Exam Program and has made a lasting impact on the SEC by working with his team to comprehensively strengthen the agency’s examination program,” said Mary Jo White, Chair of the SEC.  “Under his leadership, the program recruited experts, implemented risk and quantitative analytics units, deployed new technology and strengthened industry risk governance practices.  Carlo also has shown tremendous leadership in strengthening partnership and coordination among regulators nationally and internationally.” 

Mr. di Florio said, “It has been a great honor and privilege to serve alongside such a talented and dedicated team of exam professionals, who work tirelessly to protect the investing public and our markets by monitoring risk, promoting compliance, preventing fraud, and informing policy as the eyes and ears of the SEC in the field.  I would like to express my appreciation to my colleagues across the agency for their outstanding teamwork and collaboration, and I appreciate the leadership and support of the various chairmen and commissioners under whom I have served.”

Mr. di Florio was appointed Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE) in January 2010 and took the helm of the National Exam Program, which is comprised of a multidisciplinary team of more than 900 staff in 12 offices across the country.  The National Exam Program’s mission is to protect investors, ensure market integrity and promote capital formation by promoting compliance, preventing fraud, monitoring risk and informing policy.  SEC examiners conduct risk-targeted exams of regulated entities including broker-dealers, investment advisers, clearing agencies, transfer agents and self-regulatory organizations.  In addition to promoting compliance, monitoring risk, and informing policy, SEC exams also help prevent fraud and facilitate enforcement actions against insider trading, market manipulation, Ponzi schemes, abusive sales practices, conflicts of interest, and other violations of the federal securities laws.

Mr. di Florio led a comprehensive restructuring of the National Exam Program to strengthen the program’s strategy, structure, expertise, processes, and technology.  He has played a leadership role in strengthening coordination and collaboration among securities and banking regulators nationally and internationally.

Under Mr. di Florio’s stewardship, the collaborative restructuring of OCIE into a National Exam Program implemented a broad spectrum of improvements and best practices:

• Breaking down silos to establish a National Exam Program that facilitates information flow, teamwork, and collaboration across regions, programs and divisions, and utilizes central utilities to drive consistent risk analytics, operations, standards, processes, technology, training and communications.
• Driving specialization and expertise by recruiting a significant number of industry experts and establishing specialized working groups in key areas including derivatives, hedge funds, private equity, valuation, new and structured products, market structure and trading practices, fixed income and municipal securities, risk management, quantitative analytics and technology.
• Implementing a risk-focused exam strategy supported by a newly formed Risk Analysis and Surveillance Unit to aggregate, analyze and prioritize data from within and outside the SEC to help allocate resources to mission critical efforts.
• Fighting fraud by enhancing detection and prevention strategies, tools, and technologies, including asset verification, fraud risk analytics, and expertise.
• Strengthening firm governance, risk, and compliance by institutionalizing risk governance reviews of registrants that engage senior management, the boards of directors, business unit leadership, risk and control function leadership, and internal audit to evaluate the tone at the top, the culture, and the effectiveness of governance, risk management, and compliance enterprise-wide.
• Leveraging the power of technology to automate the exam process and facilitate risk assessment, exam planning, and execution, trade analytics, monitoring, testing, issues management, and record retention.
• Keeping pace with the rate of change, complexity, and firm innovation through the establishment of a Quantitative Analytics Unit comprised of quants to examine complex data sets and identify new and emerging risks in algorithmic/high-frequency trading and other investment and trading practices.
• Monitoring systemic and large firm risk through the establishment of a Large Firm Monitoring Unit that works with other SEC divisions and other regulators nationally and internationally to collaborate on risk assessment and monitoring without duplication of effort.
• Ensuring quality, consistency, and ongoing professional excellence through the establishing a Certified Examiner Training program to enhance skills, expertise and ongoing technical and leadership training for the SEC’s more than 900 examiners.
• Improving transparency and promoting compliance by sharing and publishing Risk Alerts and Exam Priorities to provide guidance to industry on key priorities, risk focus areas, and exam observations so firms can incorporate such guidance into their own risk assessments and program improvement efforts, thereby enhancing investor protection and market integrity.

In 2012, Mr. di Florio was recognized as one of the “100 Most Influential Corporate Governance Leaders” by The National Association of Corporate Directors. 

Prior to joining the SEC in 2010, Mr. di Florio was a partner in the Financial Services Risk & Regulatory Practice at PricewaterhouseCoopers (PwC) in New York, where he was a national leader in corporate governance, enterprise risk management, compliance, and ethics.  

Mr. di Florio, 46, received his LL.M with distinction from Georgetown University Law Center, his J.D. from Penn State University’s Dickinson School of Law, and his B.A. in Political Economy from Tulane University.

* * *

Following the departure of Mr. di Florio, Andrew Bowden will become the Director of the SEC’s National Exam Program.  Mr. Bowden came to the SEC in 2011, and was promoted to Deputy Director of OCIE in 2012.