Facing a growing divide between the number of SEC-registered investment advisers (RIAs) and its ability to examine them, on January 19, 2011, the SEC released its “Study on Enhancing Investment Adviser Examinations,” for congressional review.  The Study, mandated by Section 914 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), disclosed that RIA examinations had significantly declined in the last six years due to the increase in RIAs as well as RIA assets under management, and a concomitant decrease in Office of Compliance Inspections and Examination (OCIE) staff.  The Study’s authors predicted that this imbalance would continue to get worse as OCIE staffing cannot keep pace with future industry growth.  That, it said, was certain even though Congress, in the Dodd-Frank Act, had substantially lessened the SEC's workload in the immediate future by raising the asset threshold for SEC registration from $25 million to, in general, $100 million.  Based on its conclusion that the SEC still faces “significant capacity challenges,” the Study's authors recommended that Congress strengthen the SEC investment adviser examination program by either: (1) authorizing the SEC's imposition of "user fees" on RIAs to fund the program; (2) authorizing one or more SROs, subject to SEC supervision, to examine all RIAs; or (3) authorizing FINRA to examine dually registered broker-dealer/RIAs for compliance with the Investment Advisers Act of 1940, as amended.  This article summarizes the background of the Study and these recommendations.  Significantly, this article also details the process of an OCIE-led examination and thus provides a helpful guide for any hedge fund manager preparing for an SEC examination.  See also “What Do Hedge Fund Managers Need to Know to Prepare For, Handle and Survive SEC Examinations?  (Part Two of Three),” above, in this issue of the Hedge Fund Law Report; “What Do Hedge Fund Managers Need to Know to Prepare For, Handle and Survive SEC Examinations?  (Part One of Three),” Hedge Fund Law Report, Vol. 4, No. 4 (Feb. 3, 2011).