In a recent speech, SEC Chairman Mary Schapiro highlighted how the Office of Compliance Inspections and Examinations targets registrants that “pose higher risk.”  She said that OCIE uses filings and public information to uncover red flags including (a) “claiming returns that are consistently high…even when the markets are down or are mixed,” (b) overstatement of assets, (c) non-disclosure of affiliates, (d) misrepresenting custodial arrangements, and (e) lying about credentials.  She said that the new Office of Risk Analysis and Surveillance guides the targeting strategy.