Compliance Solutions for Investment Advisers

Compliance Training

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 seem to continually struggle with how to provide their supervised persons with the requisite compliance training. This post offers some straight-forward, no-cost training resources that are sure to bring a smile to a regulator’s face.*
As part of a dynamic and effective compliance program, your firm should develop training to augment the policies and procedures it has implemented to govern the manner in which your advisory personnel carry out their particular roles and responsibilities. However, training does not always need to be structured as a formalized program (e.g., training modules with tests at the end of each module) in order to “count” as training. Put another way, the perfect does not need to be the enemy of the good. Sometimes good is good enough. This is especially true when your firm does not have the time nor the resources to spend creating the perfect training program.
The impetus behind this newsletter is that there is an abundance of resources floating around out there that you can use to satisfy your firm’s training requirements. For example, on our Web site, a visitor will find White Papers that cover, among other things, the following subjects:
  • Insider Trading
  • Data Security
  • Social Networking
  • Fixed Income Best Execution
In addition, our Web site has an extensive Frequently Asked Question section that runs the gamut of investment adviser compliance topics. Each one of these can serve as training material for your firm’s advisory personnel.
Of course, it is not just our Web site that has such information. If you check out the (much inferior) Web sites of other compliance consulting firms, you will find helpful information that can be used for compliance training purposes.
Clients are always asking how we keep up with all the changes in rules, regulations, no-action letters, enforcement actions and the always elusive best practices of the investment advisory profession. We do so by casting a wide net for all potential sources of information and paring it down to those we find most useful. What follows is a list of some of the sources we use to stay on top of the industry’s ever-changing compliance requirements. Now you can use these same resources to create training material for your advisory firm.
SEC Web Site
The SEC’s web site has vastly improved over the last few years and is a virtual treasure trove of information. It is on the SEC Web site where you can find all Proposed and Final SEC Rule Releases, No-Action Letters, Enforcement Actions, Frequently Asked Questions on various topics, Compliance Alerts, Special Studies (e..g, “Soft Dollar Practices”) and CCO Outreach material. There is no better way to provide your advisory personnel with really memorable training then by having them read an actual SEC Enforcement action. While training can sometimes seem theoretical, seeing how a particular violation of the rules can lead to an enforcement action tends to get the point across in a very real way.
To keep your supervised persons up to date, you can also sign up to be on the distribution list for the latest SEC news. In this way, you can receive Enforcement Actions, notices of Proposed Rules, notice of the enactment of Final Rules, and No-Action Letters as the SEC issues them. You can sign up for news and alerts on the SEC Home Page (www.sec.gov).
Law Firm Web Sites
Law firms often post excellent, in-depth compliance material on their Web sites. Over the years, we have gathered an extensive library of information on such important topics as advertising, marketing, best execution, soft dollars, social media and data security. Here are some excellent law firm Web sites that we consult on a regular basis:
Once on a Web site, find the publication section and begin downloading relevant articles.
Web Sites of State Securities Regulators
This is obviously a must for state-registered advisers, but surprisingly, some states have excellent material that SEC-registered advisers can use for training purposes. The Alaska Division of Banking and Securities (of all places) has a wonderful discourse on investment adviser compliance. I found a very useful chart with typical disclosure document inconsistencies on the Web site of the New Mexico Securities Division. Connecticut has detailed information on compliance deficiencies.Though gathered during the course of their audits of state-registered advisers, I can assure you that they apply just the same to SEC-registered advisers. By my reckoning, that leaves 47 other state Web sites to find useful training material.**
Other Suggestions
Do a Google search on various compliance subject matter areas and you will be surprised what presentations, articles, charts and guidance pops up. Individuals or firms who have given presentations at seminars tend to eventually post those presentations in the public domain. After all, when you put effort into creating something, you want as wide an audience as possible.
There are also numerous blogs that focus on compliance issues. While a single blog post typically is not in and of itself sufficient for compliance training purposes, very often posts will contain links to more robust material.
If you belong to any organizations such as the National Society of Compliance Professionals or the Society for Compliance and Ethics, you can find great training material on their Web sites as well. As an aside, these are two organizations that your firm’s chief compliance officer should join as it shows regulators that your firm has a commitment to keeping up with trends in compliance.
If you have any other suggestions where to find great information, please let me know and I will post it on my blog.
Until then, happy hunting.
_________________________
*I have personally never seen a regulator smile. I did, however, once see an SEC examiner grimace, but realized later that it was just stomach discomfort.
**Not to keep plugging the virtues of our Web site, but you can access the Web sites of all 50 state regulators directly from our Resources page (see Regulatory References)
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