Category Archives: Record Keeping

SEC Proposes Rule Recommending Amendments to Form ADV and the Investment Advisers Act Books and Records Rule

June 16, 2015

On June 12, 2015, the U.S. Securities and Exchange Commission (“SEC”) published in the Federal Register a proposed rule recommending amendments to the Form ADV. Additionally, the proposed rule addresses amendments proposed to the Books and Records Rule, Rule 204-2, under the Investment Advisers Act of 1940 (“Investment Advisers Act”) and several technical amendments proposed to rules under the Investment Advisers Act to remove transition provisions that were adopted but are no longer necessary. The proposed amendments to the Form ADV would require investment advisers to provide additional information that will help the SEC and investors to better understand the risk profile of the individual investment advisers and the industry in general. The proposed amendments to Rule 204-2 of the Investment Advisers Act would expand the records investment advisers are required to maintain related to performance calculations and performance related communications. In a press release dated May 20, 2015, SEC Chair Mary Jo White is quoted as stating, “Investors will have better quality and greater access to information about … investment advisers, and the SEC will have more and better information to monitor risks in the asset management industry.”

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Requirements for Investment Advisers Electronically Maintaining Required Books and Records

September 11, 2013

Under Rule 204-2, “Books and records to be maintained by investment advisers,” of the Investment Advisers Act of 1940 (“Investment Advisers Act”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) is required to make and keep true, accurate, and current certain books and records relating to its investment advisory business. Although most state securities regulators have adopted the same or similar books and records requirements, state registered investment advisers need to make sure that they are familiar and complying with the books and records requirements of the appropriate state securities regulator. Under Rule 204-2(g), SEC registered investment advisers are permitted to maintain all required records electronically, if the investment adviser establishes and maintains procedures: “(i) To maintain and preserve the records, so as to reasonably safeguard them from loss, alteration, or destruction, (ii) To limit access to the records to properly authorized personnel and the [SEC] (including its examiners and other representatives); and (iii) To reasonably ensure that any reproduction of a of non-electronic original record on electronic storage media is complete, true, and legible.” SEC registered investment advisers must also ensure that electronically maintained records are arranged and indexed in a manner that permits easy location, access, and retrieval and upon request by the SEC investment advisers must be able to promptly provide: “(A) A legible, true, and complete copy of the record in the medium and format in which it is stored; (B) A legible, true and complete printout of the record; and (C) Means to access, view, and print the records.” SEC registered investment advisers must also separately store, for the time required under Rule 204-2 for preservation of the original record, a duplicate copy of the record on any medium allowed under Rule 204-2.

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25% Discount on Complete Sample Forms Package

December 20, 2012

RIA Compliance Consultant’s is offering a 25% discount now until December 21, 2012, on our Complete Sample Forms Package to assist in implementing your investment adviser’s ongoing compliance program. Please use the code: SEC2012 at checkout to receive this discount.

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State Privacy Laws and Investment Advisers’ Recordkeeping Requirements

August 16, 2012

Recently, Maryland and Illinois have passed employment privacy laws that could potentially have an effect on investment advisers and their recordkeeping requirements under both state and SEC rules. Delaware passed a similar privacy law that protects students from infringement by educational institutions. Maryland was the first state to pass a law of this kind in May 2012. Illinois followed a couple months later in July 2012. Several other states have similar bills on the docket for their state legislatures and members of Congress also have a bill to deliberate.

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Illinois Becomes Third State to Pass Privacy Law Conflicting with SEC Social Media Compliance Regulations for Investment Advisers

August 01, 2012

Today Illinois Governor Pat Quinn signed a new law that makes it unlawful for employers to request passwords to social media accounts or from demanding access to social media accounts from potential and current employees. Illinois became the third state to pass such legislation after Maryland and Delaware recently adopted similar laws in May and July. After signing the law Governor Quinn said, “Members of the workforce should not be punished for information their employers don’t legally have the right to have. As use of social media continues to expand, this new law will protect workers and their right to personal privacy.”

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States Passing Privacy Laws that Conflict with FINRA and SEC Social Media Compliance Regulations

July 17, 2012

Keeping up on the new rules and regulations regarding social media use can be a difficult task for investment advisers and broker-dealers.  Recently, the U.S. Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) have each issued alerts and notices to investment advisers and broker-dealers offering guidance on social media use.  The SEC issued an alert in January of this year and FINRA has issued Regulatory Notice 10-06 and Regulatory Notice 11-39; these alerts and notices generally require investment advisers and broker/dealers to monitor and archive any business communications their employees have with clients.  Now, many states and even the federal government have bills under consideration that would limit employers’ access to its employees’ social media accounts.  If these laws are passed they could make it even more difficult for investment advisers and broker-dealers to keep adequate records and ensure compliance with the social media rules and regulations.

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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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Investment Advisers Should Expect More Frequent Regulatory Exams

September 13, 2011

With the upcoming regulatory switch of mid-sized investment advisers from the U.S. Securities and Exchange Commission (“SEC”) to state securities regulators and Congress considering whether to authorize a self-regulatory organization (“SRO”) for investment advisers, we believe that the frequency of investment adviser examinations is going to rise.

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Maintaining Investment Advisor Books and Records

July 12, 2011

A registered investment advisor is required to make and keep true, accurate, and current certain books and records relating to its investment advisory business.  For investment advisors registered with the U.S. Securities and Exchange Commission (“SEC”), these required books and records are outlined in Rule 204-2 of the Investment Advisers Act of 1940 (“Advisers Act”).  Each investment advisor registered with the SEC should familiarize itself with the requirements of Rule 204-2 in relation to the documents and reports that need to be maintained, where and for how long the documents must be maintained, and how the documents may be maintained.  Most books and records requirements for state registered investment advisors are the same as or similar to the SEC requirements, but you need to make sure that you familiarize yourself with the requirements of the appropriate regulatory authority for your investment advisor.

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