Compliance Solutions for Investment Advisers

The 4 Most Typical Code of Ethics Violations

As stated in the recent SEC Risk Alert, four typical code of ethics violations identified during examinations of investment advisers include:

  1. Access persons not identified. The SEC staff observed that certain advisers did not identify all of their access persons (e.g., certain employees, partners or directors) for purposes of reviewing personal securities transactions.
  2. Codes of ethics missing required information. The SEC staff observed that certain advisers’ codes of ethics did not specify review of the holdings and transactions reports, or did not identify the specific submission timeframes, as required by the Code of Ethics Rule.
  3. Untimely submission of transactions and holdings. The SEC staff observed that certain access persons submitted transactions and holdings less frequently than required by the Code of Ethics Rule.
  4. No description of code of ethics in Form ADVs. The SEC staff observed that certain advisers did not describe their codes of ethics in their Part 2A of Form ADVs and did not indicate that their codes of ethics are available to any client or prospective client upon request.
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