Category Archives: Compliance Program
 

SEC Risk Alert – Investment Adviser Compliance Programs

December 17, 2020

On November 19th 2020, the Office of Compliance Inspections and Examinations (“OCIE”)  of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC-registered investment advisers with regard to SEC Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940. In its Risk Alert, the SEC noted that Compliance Rule deficiencies are among the most common discovered by OCIE during SEC registered investment adviser examinations. Click here to read the SEC’s Risk Alert for Investment Adviser Compliance Programs.

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Financial Exploitation of Elderly and Vulnerable Clients

September 06, 2017

An investment adviser firm and its investment adviser representatives are uniquely placed to spot signs of financial exploitation that may be happening to their investment advisory clients. An investment adviser representative is often on the front lines of a client’s finances and becomes quite familiar with a client’s habits, preferences, and personal situation. This knowledge can help the investment adviser representative spot unusual patterns and suspicious requests, whether made directly by the client or by a third party.

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Business Continuity and Succession – SEC and Nebraska Proposed Rules

July 21, 2016

The Securities and Exchange Commission (SEC) has proposed a new business continuity and transition plan rule that would require investment advisers to develop business continuity and transition plans tailored to the specific needs of their investment advisory business. In its guidance on the new rule, the SEC noted that investment advisers increasingly rely on technology to carry out both vital and day to day functions. When those technological processes are not available, either due to severe weather, system failure, or other causes, investment advisers should have a plan in place to minimize any harm or disruption to their clients’ interests. An investment adviser should also consider what it would do if key personnel are lost or unavailable, or if the investment adviser’s physical office is temporarily or permanently unusable. Click here to read the SEC’s proposed rule in its entirety.

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Investment Advisers Need Strong Policies and Procedures for Supervising Social Media

June 23, 2015

Social media and networking websites are considered forms of advertising covered by Rule 206(4)-1, Advertisements by Investment Advisers, under the Investment Advisers Act of 1940 (“Investment Advisers Act”) and similar state securities regulations.  In a National Examination Risk Alert issued in 2012 by the Office of Compliance Inspections and Examinations of the U.S. Securities and Exchange Commission (“SEC”), the term social media is described as:

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Websites a Common Place for Advertising Deficiencies

June 02, 2015

Nearly all investment adviser firms have at least one if not more websites and their prevalence continues to grow, but have you reviewed your investment adviser firm’s website recently? Websites are a great way to advertise your firm’s business and attract new clients, but they can also be a treasure trove for securities regulators.

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NASAA’s Model Rule on Business Continuity and Succession Planning for State Registered Advisers – Do You Have Your Business Continuity and Succession Plan Prepared?

May 27, 2015

The North American Securities Administrators Association, Inc. (“NASAA”) has created a model rule on Business Continuity and Succession Planning (“NASAA Model Rule”) for state registered investment adviser firms.  NASAA’s Model Rule provides guidance to state registered investment advisers when creating Business Continuity and Succession Plans (“BCP”) for their registered investment adviser firms.   The most common purpose of the BCP is to have processes and procedures in place to ensure that critical business functions can continue during and after a disaster or other significant business interruption, whether internal or external.

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Developing Your Investment Adviser’s Compliance Calendar for 2014

December 04, 2013

Determining ongoing compliance requirements may seem overwhelming to many registered investment advisers.  Complying with the rules and regulations under the Investment Advisers Act of 1940 (“Investment Advisers Act”) and similar state investment adviser regulations must be a central part of an investment adviser’s fiduciary duties.  Investment advisers have a variety of duties to perform throughout the year in order to comply with the requirements of the Investment Advisers Act and similar rules of state securities regulators.  Having a well-organized process can help streamline an investment adviser’s ongoing compliance requirements.  To help manage the ongoing compliance process, registered investment advisers should consider developing a compliance calendar that can serve as an effective and proactive tool to assist the investment adviser with meeting its ongoing compliance requirements. Developing a compliance calendar can help strengthen an investment adviser’s written compliance policies and procedures that must be developed pursuant to Rule 206(4)-7 of the Investment Advisers Act and similar state rules to detect, prevent, and correct possible regulatory violations that can occur throughout the year.

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Investment Advisers Must Customize Their Compliance Programs

October 01, 2013

As we previously indicated, many investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) still have trouble meeting the requirements of Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Investment Advisers Act”).  Pursuant to Rule 206(4)-7, investment advisers registered with the SEC are required to establish and maintain written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and the rules under the Investment Adviser Act. Most state securities regulations have similar requirements and many state registered investment advisers also have trouble complying with these requirements.

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A Refresher on the Requirements for Investment Advisers’ Written Policies and Procedures

September 25, 2013

Rule 206(4)–7 under the Investment Advisers Act of 1940 (“Investment Advisers Act”) became effective in February of 2004, yet for many investment advisers this continues to be a common area where regulatory deficiencies are found.  Under Rule 206(4)-7, investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) are required to adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act. While Rule 206(4)-7 does not detail specific items that investment advisers must include in their policies and procedures, the final rule release indicates that investment advisers are required to “consider their fiduciary and regulatory obligations under the [Investment] Advisers Act and to formalize policies and procedures to address them.” Most state securities regulations have similar requirements for state registered investment advisers; however, every registered investment adviser must familiarize itself with the specific regulatory requirements of its governing regulatory authority.

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Developing and Implementing an Effective Customized Compliance Programs

September 19, 2013

RIA Compliance Consultants is hosting a webinar during which we will provide an overview of the requirement for an investment adviser to develop written supervisory policies and procedures in accordance with Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Investment Advisers Act”). Under this rule U.S. Securities and Exchange Commission (“SEC”) registered investment advisers are required to adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act and the rules that the SEC has adopted under the Act. Most state securities regulations have similar requirements. During this webinar, RIA Compliance Consultants will:

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