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 … Continued
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 … Continued
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, … Continued
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, … Continued
As part of the examination process, the SEC will meet with senior management to discuss how each firm identifies and mitigates conflicts of interest and legal, compliance, financial, and operational risks. This initiative is designed to: (i) evaluate firms’ control … Continued
Dear Compliance Professional, As part of the examination process, the SEC meets with senior management to discuss how each advisory firm identifies and mitigates conflicts of interest and legal, compliance, financial, and operational risks. This initiative is designed to: (i) … Continued
On odd pairing indeed. But more closely related than you think. No-Action Letters let advisers know what actions under what specific circumstances are permitted. Enforcement actions let advisers know what actions under what specific circumstances are NOT permitted. Both are … Continued
Dear Compliance Professional, One of the best ways an investment adviser can show regulators that they have instilled a strong culture of compliance is through compliance training. And yet, based on the number inquiries we receive on the topic, advisers … Continued
Because sometimes we forget, here is an excellent description from an interview with Odell Guyton of Jabil, Inc. in the Wall Street Journal. Mr. Jabil is also a co-founder and board member of the Society for Corporate Compliance and Ethics. Compliance … Continued
Sometimes investment advisers busted by the SEC for intentional actions can offer lessons for their more law-abiding brethren. Two actions against investment advisers and certain of their executives are a case in point. One firm allegedly engaged in thousands of … Continued
Dear Compliance Professional, Happy New Year. Alas, it is only day 2 of the new year and I have already broken 80% of my resolutions (sadly, this is actually an improvement on last year’s efforts). Fortunately for you, however, the … Continued
In a letter to all FINRA member firms (the “FINRA Priorities Letter”), FINRA set forth its regulatory and examination priorities for 2014, highlighting significant risks and issues that could adversely affect investors and market integrity in the coming year. FINRA’s … Continued
The Securities and Exchange Commission announced the opening of registration for its Compliance Outreach Program’s National Seminar for investment companies and investment advisers. The event is intended to help these firms’ Chief Compliance Officers (CCOs) and other senior personnel to … Continued
According to a report just released by KPMG International, the Managed Funds Association and the Alternative Investment Management Associationlobal hedge fund managers are spending more than 7% of their total operating costs and more than 10 basis points (as a … Continued
SEC Chair Mary Jo White – who seems to speaking everywhere these days – assured compliance officers that if they act “within the law” they should not fear enforcement action. “Although we occasionally bring enforcement actions against compliance personnel, compliance … Continued
According to House Republicans, the SEC’s emphasis on regulation of private investment funds threatens to diminish its oversight of registered investment advisers. “The attention the SEC has paid to enhancing the regulatory scrutiny afforded to sophisticated investors suggests that the SEC has … Continued
Some really telling quotes by Harvey Pitt, the former SEC Chairman, from a NY Times article about compliance (in reference to SAC Capital Advisors and their (lack of a) culture of compliance): “When it comes to compliance, you have to … Continued
The Securities and Exchange Commission today announced charges against hedge fund adviser Steven A. Cohen for failing to supervise two senior employees and prevent them from insider trading under his watch. The SEC’s Division of Enforcement alleges that Cohen received … Continued
The SEC recently announced the second-ever Dodd-Frank whistleblower award. Based on data released by the SEC after the first full year of the new Dodd-Frank whistleblower program, as well as recent remarks by an SEC official, an increasing number of awards … Continued
“No sooner had a solution been found than a new solution was needed.”