Compliance Manual Pitfalls
Remember that whispered voice in Field of Dreams. . . “If you build it, he will come?” Well, the SEC has its own version . . . “if you put it in your manual, we will make you prove you … Continued
Recent SEC Examination Request Letter
It is always helpful to see what the SEC is asking for when they start off their examination of an investment adviser:
2019 SEC Examination Priorities
The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission has released its 2019 examination priorities. You will not be surprised to see that cybersecurity is still on the list. Anti-money laundering will also figure … Continued
3 Ways to Reduce Potential SEC Penalties
One day you might find yourself in a situation where you have discovered – through the normal operation of your compliance policies and procedures or through your compliance testing – that your advisory firm has come up short in some significant manner. … Continued
5 Most Frequent Compliance Topics Identified in Investment Adviser Exams
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) identified the following five areas of compliance deficiencies or weaknesses frequently found during its staff’s examinations of SEC-registered investment advisers:
SEC 2017 Examination Priorities
The SEC’s Office of Compliance Inspections and Examinations has published its examination priorities for 2017. The priorities focus on electronic investment advice, money market funds, and financial exploitation of senior investors. In addition, the priorities “reflect a continuing focus on … Continued
Common Compliance Deficiencies – Failure to Disclose
An investment adviser has a fiduciary duty to act in the best interests of its clients. A central tenant of this duty is full and fair disclosure of all material facts to clients. What you tell your clients about your … Continued
SEC Audits – Expect the Unexpected
As most of you know (and dread) the SEC sends out a document request list about two weeks prior to the on-site portion of the audit. However, be prepared to provide other documents on the fly. For example, examiners have … Continued
Undisclosed Compensation Arrangements
Such arrangements may include, among others, undisclosed solicitation arrangements. It is not uncommon to have a discussion with a client about whether they can pay a certain person for client referrals. Often they cannot because the person is not qualified … Continued
An Ounce of (Compliance) Prevention
The enforcement staff gives credit to registrants that demonstrate effective compliance programs and a genuine commitment to ethical principles. Advisers should focus on persuading the enforcement staff of the quality and depth of a firm’s compliance culture and its record … Continued
5 Exam Focus Areas for New Advisers
The SEC has been engaging in shorter, more streamlined “presence exams” for newly registered advisers. The following five focus areas make up the bulk of these exams: Marketing; Portfolio management; Conflicts of interest; Safety of client assets; and Valuation. Streamlined … Continued
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. … Continued
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 … Continued
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 … Continued
Cherry-Picking
I was reviewing some of the more interesting and relevant SEC Enforcement cases and came across the cherry-picking scheme of J.S. Oliver Capital Management, a San Diego-based investment adviser, and its President, Ian Mausner. According to the SEC complaint, they engaged … Continued
Risk Assessment Process
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
Important Lessons for SEC Advisers
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
SEC Exam Initiative
Dear Compliance Professional, The SEC today announced that its Office of Compliance Inspections and Examinations (OCIE) is launching an initiative directed at investment advisers that have never been examined, focusing on those that have been registered with the SEC for … Continued
SEC Exams – Update #2
During this recent spate of exams, the SEC is really drilling down on custody.
SEC Exam Priorities – Update
Dear Compliance Professional, As part of its 2014 Exam priorities, the SEC announced that the “staff will utilize a number of strategies to conduct focused, risk-based examinations of the adviser population that has been registered for more than three years … Continued