Compliance Solutions for Investment Advisers

Common Deficiencies

In order to provide state-registered investment advisers with a better understanding of what they need to do to “stay out of trouble” we analyzed all the state-level compliance material (e.g., examination request lists, deficiency letters, policy notices, speeches) we have assembled over the years to develop a list of compliance issues that are of greatest concern to all state regulators.

As a matter of first course, we thought it best to list the deficiencies most commonly found by state regulators.

  • Registration – inconsistencies between Parts I and 2A of Form ADV and failing to amend Form ADV in a timely manner.
  • Preparation and maintenance of books and records – not maintaining suitability information, not properly safeguarding records and not backing up data.
  • Unethical business practice deficiencies involved missing or no contracts and other contract-related issues, and misrepresenting qualifications, services and fees.
  • Supervision – failure to have any written supervisory/compliance procedures or having inadequate procedures in place.
  • Financials – deficiencies included inaccurate financials, insufficient or inaccurate net worth, no bank reconciliations and poor financial conditions.

 

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