Category Archives: Compliance Violations

The Examiners are Coming – Is your Investment Adviser Ready?

July 01, 2013

Over the past year, we have written several articles warning investment advisers to prepare for regulatory examinations as both the U.S. Securities and Exchange Commission (“SEC”) and state securities regulators have indicated that investment advisers should expect to see an increase in the number of exams being conducted.  RIA Compliance Consultants is seeing the effects of more frequent investment adviser exams.  Lately, we have experienced an increase in the number of calls from clients and prospective clients because they have recently been trough an SEC or state investment adviser exam or have been notified by an SEC or state securities regulator that their investment advisers will be audited in the near future.  One of the most common inquiries we are receiving is regarding what we can do to assist with preparing or updating the investment adviser’s written policies and procedures.  Too often, we are hearing that, although the investment adviser has been registered for some time, the investment adviser does not have customized written supervisory policies and procedures or has not properly maintained current and customized policies and procedures.

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Coordinated Examinations Result in the Release of Recommended Best Practices for Investment Advisers

October 19, 2011

As the approaching deadline nears for mid-size investment advisers (those with assets under management between $25 and $99 million) to switch from U.S. Securities and Exchange Commission (“SEC”) registration to state registration, many state securities regulators are making preparations for increased regulatory oversight. As these efforts are taking place, the North American Securities Administrators Associations (“NASAA”) recently released “an updated series of recommended best practices that investment advisers should consider to minimize the risk of regulatory violations.” These best practices were developed after a series of coordinated examinations were conducted between January 1, 2011 and June 30, 2011. Examinations were conducted by 45 state and provincial securities examiners of 825 investment advisers. According to Jack Herstein, NASAA President and Assistant Director of the Nebraska Banking and Finance Department, Bureau of Securities, “Our goal in identifying deficiencies and recommending best practices is to help investment advisers strengthen their internal compliance programs and improve the services they provide to clients.”

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Broker Dealers and Investment Advisers Need to Have Policies and Procedures in Place for Social Media Use

October 04, 2011

A recent FINRA enforcement action highlights the need for broker dealers and investment advisers to implement policies and procedures for social media use. FINRA alleged the registered representative created websites related to her firm without obtaining firm approval, on several occasions she falsely stated online that she was not affiliated with any broker dealer, and she was using her Twitter account to give stock recommendations without making the necessary disclosures.   As a result of this alleged conduct, FINRA fined her $10,000 and suspended her from associating with a broker dealer for one year.

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Massachusetts Investigating Social Media Use By Investment Advisers

September 22, 2011

The Massachusetts Securities Division recently sent out a survey to track use of social media by investment advisory firms for business purposes.  The survey not only asked about social media use but asked whether investment advisory firms have supervisory policies and procedures in place for social media supervision and record retention.

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SEC Takes Disciplinary Action Against Chief Compliance Officer

November 07, 2008

The U.S. Securities and Exchange Commission (“SEC”) recently issued an order bringing sanctions against an individual who had served as an investment adviser’s president and chief compliance officer regarding investment pools operated by an associated person of the investment adviser.

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