Regulatory Update: SEC Investment Advisor Compliance Program RISK ALERT
The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued this Risk Alert provides an overview of notable compliance issues related to Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940 (“Advisers Act”). Below are examples of notable deficiencies or weaknesses identified by OCIE staff in connection with the Compliance Rule:
“Inadequate Compliance Resources. OCIE staff observed advisers that did not devote adequate resources, such as information technology, staff and training, to their compliance programs…
Insufficient Authority of CCOs. OCIE staff observed CCOs who lacked sufficient authority within the adviser to develop and enforce appropriate policies and procedures for the adviser…
Annual Review Deficiencies. OCIE staff observed advisers that were unable to demonstrate that they performed an annual review or whose annual reviews failed to identify significant existing compliance or regulatory problems….
Implementing Actions Required by Written Policies and Procedures. OCIE staff observed advisers that did not implement or perform actions required by their written policies and procedures…..
Maintaining Accurate and Complete Information in Policies and Procedures. The staff observed advisers’ policies and procedures that contained outdated or inaccurate information about the adviser….
Maintaining or Establishing Reasonably Designed Written Policies and Procedures. OCIE staff observed advisers that did not maintain written policies and procedures or that failed to establish, implement, or appropriately tailor written policies and procedures that were reasonably designed to prevent violations of the Advisers Act. For example, staff observed advisers that claimed to rely on cursory or informal processes instead of maintaining written policies and procedures. In addition, staff observed advisers that utilized policies of an affiliated entity, such as a broker-dealer, that were not tailored to the business of the advisers….”
Review the Risk Alert here: https://www.sec.gov/files/Risk%20Alert%20IA%20Compliance%20Programs_0.pdf
