For legal and compliance professionals in the hedge fund industry, understanding the priorities of the SEC is critical in assessing risk, allocating resources and updating policies and procedures.  In particular, legal and compliance professionals need to be aware of examination priorities and enforcement trends because fumbling in the course of an examination or enforcement action could have real and adverse business consequences.  The SEC communicates its priorities indirectly and directly.  It communicates indirectly via enforcement actions and the resulting documents.  See, e.g., “Recent Enforcement Action Highlights SEC’s Concern with Preferential Redemption Rights Granted to Favored Hedge Fund Investors,” Hedge Fund Law Report, Vol. 4, No. 42 (Nov. 23, 2011).  And it communicates directly – albeit through the noncommittal prism of form disclaimers – via speeches by commissioners and high-level staffers.  Two important instances of such direct communications occurred on December 18, 2012, at the Regulatory Compliance Association’s Compliance, Risk & Enforcement 2012 Symposium in New York City.  At that event, Carlo V. di Florio, Director of OCIE, and Bruce Karpati, Chief of the Asset Management Unit (AMU) of the SEC’s Enforcement Division, jointly delivered the keynote address.  On the examinations side, di Florio described: how the SEC gathers information and assesses risk; the new presence examination program; and OCIE’s current examination priorities for hedge fund managers.  On the enforcement side, Karpati discussed: the Enforcement Division’s new approach to initiating matters; the AMU’s approach to risk assessment; ten seminal enforcement actions recently taken against hedge fund managers; current enforcement priorities; and compliance best practices for hedge fund managers.  This article summarizes the insights from both speeches that have direct bearing on preparation by hedge fund managers for examinations and enforcement actions.