Compliance Solutions for Investment Advisers

Monthly Archives: February 2015

Conflicts of Interest in Investment Allocation

Conflicts of interest in allocating investment opportunities among your advisory clients can arise in a multitude of situations, including: Accounts subject to performance fees versus those that do not pay performance fees; Accounts that pay a higher investment management fee versus those that pay lower management fees; Accounts that have a strategic relationship with your

ADV Part 2A Disclosures

The SEC’s website specifically lists “Form ADV Disclosures” as a risk that may be present as part of an investment adviser’s everyday operations. Some of the specific risks listed are: Inaccurate, omitted, or unclear disclosures; Out of date disclosures; Misrepresentation of services offered; and Failure to disclose potential conflicts of interest. After going through many,

The Compliance Manifesto

In a recent speech an SEC official said that the presence of robust, effective compliance programs would allow companies to reap significant credit in their dealings with regulators. He spoke about the ways the SEC supports compliance and ethics programs. Informal Guidance – He urged companies to walk the walk – to demonstrate a highly

Duty to Disclose

Investment advisers have a fiduciary duty to act in the best interests of their clients. A central tenant of this duty is full and fair disclosure of all material facts to clients. So what you tell your clients about your business and whether you conduct your business consistent with those disclosures goes to the very

Common Registration Deficiencies

Applicants for investment adviser registration should not only be concerned about the accuracy of their firm’s primary registration documents (i.e., Form ADV Part 1 and Part 2A), but also that these documents, along with the firm’s advisory agreements, are consistent amongst each other. The most common areas of inconsistency are as follows: The types of

Do You Have a Mobile Device Policy?

With the proliferation of smart phones, iPads and table computers in the advisory business, I would suggest that all advisers probably would benefit from developing and implementing policies and procedures regarding their use. Here are some issues you should consider: What are employees permitted to access from their mobile devices? If employees have the capability

Check Those U-4s – They are Probably Outdated

Are you really at the same weight you were in 2003? You would be positively amazed at how quickly the information on the Form U-4 can become outdated. Why? Because unlike the ADV 1, you can renew an investment adviser representative’s Form U-4 by just paying your registration renewal fees. There is no system requirement

SEC Exam Priorities – Cybersecurity

As part of its 2015 exam priorities, the Office of Compliance Inspections and Examinations (OCIE) cited their continued focus on cybersecurity issues. If you remember back, in April of 2014 OCIE issued a Risk Alert detailing its initiative to assess cybersecurity preparedness.  OCIE’s cybersecurity initiative was designed to assess cybersecurity preparedness in the securities industry and to

3 Types of Compliance Testing

Transactional Tests Transactional tests (also known as quality control tests) are compliance tests that are conducted contemporaneously with the activity in question and are used to detect deviations of actual transactions from firm policies or regulatory standards. Examples of transactional testing include checking personal trades submitted for pre-approval against any watch or restricted lists and

Marketing Review Checklist

Advertising and marketing will always be a primary area of concern for regulators. Underscoring this is the SEC most recent Presence Exams Letter which listed “Marketing” as its first substantive subject. That letter stated that the Office of Compliance Inspections and Examinations (commonly referred to as “OCIE”) would consider whether an adviser: ” . .

7 Ways to Prepare for a SEC Exam

Make sure your compliance program and its implementation are up to par; Know if you have custody and make sure you have satisfied any attendant requirements; Conduct a through risk assessment; Establish a culture of compliance at the top of your advisory firm; Be disciplined in your record keeping; Conduct compliance testing to find the

Alert – Information Security

The purpose of this compliance training material is to familiarize you with key issues regarding information security. Overview One of the most pressing compliance issues for investment advisers is how to satisfy SEC requirements in the area of information security. The following checklist will allow you to take measure of your advisory firm’s existing information

The Annual Review Process Part 2 – The Methodology

Dear Compliance Professional, In the first installment of this series on the annual review process, we learned that the primary goals of the annual review are to determine the adequacy and effectiveness of your policies and procedures in light of your firm’s businesses, advisory services, and regulatory requirements. This installment will discuss the methodology for conducting the annual review. We

Annual Review Process – The Goals

Dear Compliance Professional, Advisers Act Rule 206(4)-7 (commonly referred to as the Compliance Rule) requires SEC-registered investment advisers to conduct an annual review of the adequacy and effectiveness of their policies and procedures. Many states have also, either expressly or implicitly, adopted some variation of the SEC annual review requirement. Failure to conduct an annual review

Common ADV Deficiencies

Regulatory examiners always look for inconsistencies between an advisory firm’s Form ADV Part 1 and Part 2. In fact, inconsistencies between these documents is one of the leading deficiencies found by SEC and state examiners during a regulatory audit. The problem lies in the fact that there is overlap in the information called for in

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