What does the term "regulatory examination" refer to for investment advisers?

The term "regulatory examination" refers specifically to the process where regulatory agencies, such as the Securities and Exchange Commission (SEC) or state regulators, conduct inspections of investment advisers' business practices. These examinations are critical for ensuring that advisers comply with applicable laws and regulations, protecting investors, and maintaining the integrity of the financial markets. The process typically involves a detailed review of the adviser's operations, including their compliance with fiduciary duties, recordkeeping practices, and disclosures made to clients.

This regulatory oversight is fundamental in identifying any potential violations or areas of non-compliance, thereby promoting accountability among advisers. Consequently, option C accurately captures the essence of regulatory examinations by emphasizing the inspection and evaluation of business practices by authorized agencies.

In contrast, internal audits conducted by advisers focus on self-assessment and are not formal examinations by external entities. Annual client reviews pertain to how an adviser evaluates and communicates investment performance with clients, but do not address regulatory compliance. Lastly, client surveys gauge satisfaction with services but do not involve regulatory scrutiny of the adviser’s practices. Thus, option C stands out as the correct definition of what a regulatory examination entails for investment advisers.