OCIe published another of its Risk Alerts. This one focuses on investment adviser compliance.
The five topics identified are:
- Compliance manuals---tailoring to adviser's needs; need to update; annual reviews mandatory and need to address adequacy of the policies and procedures; and not adhering to the policies and procedures
- Regulatory filings---need to update ADVs; file form PF and form D; inaccurate disclosures in those forms
- Adviser custody---advisers need to comply with the custody rule; issues re: on-line account access; failure to have surprise audits by an independent accountant; failure to recognize adviser has custody
- Code of ethics rule---access persons not identified; codes missing required information; untimely collection of holdings and transaction information; failure to describe the code of ethics in advisers' ADVs
- Books and records---failure to keep required books and records at all or inaccurately and untimely; inconsistencies in recordkeeping
Implications for Advisers
- Manuals must be tailored to each adviser's needs and operations
- Policies and procedures are evergreen---set-up a schedule for reviews and updates
- Staff compliance function sufficiently with properly qualified staff
As usual, the SEC staff note that lapses and failures in these areas have resulted in enforcement actions.