December 17, 2018 the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a new National Exam Program Risk Alert Relating to Electronic Messaging. The purpose of the risk alert is to remind SEC registered investment advisers of their obligations when their supervised persons use electronic messaging and to help SEC registered investment advisers improve their systems, policies, and procedures by sharing the SEC staff’s observations from its investment adviser examinations.
Category Archives: Books Records
Spreadsheet for Investment Adviser to Document that Authority to Initiate First-Party Transfer Between Different Custodians Doesn’t Constitute Custody
October 22, 2018
Does your federally registered investment adviser firm have authority to initiate first-party transfers between the client’s accounts at different qualified custodians?
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.”
Investment Advisers Need to Look Beyond the Books and Records Requirements to Prepare for an SEC or State Securities Regulator Examination
September 18, 2013
Under Rule 204-2, the “Books and Records Rule,” of the Investment Advisers Act of 1940 (“Investment Advisers Act”), every investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) must make and keep true, accurate, and current certain books and records relating to its investment advisory business. Most state securities regulators have the same or similar recordkeeping requirements. All records required to be maintained by investment advisers under the Books and Records Rule or similar state securities regulations are subject to examinations by the SEC or state securities examiners. In order to be fully prepared for an SEC or state securities regulator examination, investment advisers may need to look beyond the books and records specifically outlined under the Books and Records Rule or similar state securities regulations. SEC or state securities examiners may, and often do, request additional records that are not specifically required under the Books and Records Rule or similar state securities regulations. Many of these additional records specifically relate to or are incidental to records that are required under the SEC or state securities regulatory books and records requirements. Examples of additional records that may be requested include:
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.
Registered Investment Adviser Recordkeeping Requirements
August 28, 2013
Rule 204-2 (the “Books and Records Rule”) under the Investment Advisers Act of 1940 (“Investment Advisers Act”) requires investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) to make and keep true, accurate, and current certain books and records relating to its investment advisory business. Most books and records requirements for state registered investment advisers are the same as or similar to the SEC requirements, but each investment adviser needs to make sure that it is familiar with the requirements of the appropriate governing authority. Generally, investment advisers will be required to maintain and preserve most books and records in an easily accessible location for five years from the end of the fiscal year during which the last entry was made on the record or, in the case or marketing pieces or other forms of communications, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated the document. The most recent two years of the required books and records must be maintained in an appropriate office location of the investment adviser. Information must be provided on the Form ADV Part 1 if any of the investment adviser’s books and records are kept in a location other than the investment adviser’s principal office location.
Best Practices and Guidance for Social Media and Email Communication use for Investment Advisers
June 19, 2013
Social media presents a challenge for investment advisers in their effort to comply with the Investment Advisers Act of 1940 (“Investment Advisers Act”) and other regulations. The Risk Alert regarding Investment Adviser Use of Social Media issued by the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations states that investment advisers using social media should adopt and review their policies and procedures periodically; “Firms should create usage guidelines on appropriate and inappropriate use of social media and should consider adopting policies and procedures to address conducting firm business on personal social media sites.” Additionally, investment advisers have recordkeeping requirements that require certain communications made through social media sites to be retained. According to the Risk Alert “registered investment advisers that communicate through social media must retain records of those communications if they contain information that satisfies the recordkeeping obligations under the [Investment] Advisers Act.”
Rule 204-(2)(a)(7) of the Investment Advisers Act of 1940 (“Investment Advisers Act”) requires investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”), to preserve “all written communications received and copies of all written communications sent by such investment adviser relating to (i) any recommendation made or proposed to be made and any advice given or proposed to be given, (ii) any receipt, disbursement or delivery of funds or securities, or (iii) the placing or execution of any order to purchase or sell any security . . . .” The SEC has stated that electronic communications are considered written communications and are subject to the supervisory and record keeping requirements. Most books and records requirements for state registered investment advisers are the same as or similar to the SEC requirements, but each state registered investment adviser needs to make sure that it familiarizes itself with the requirements of its securities regulator.
Understanding the Provisions Required for Registered Investment Adviser Client Contracts
May 16, 2013
Under Section 205 of the Investment Advisers Act of 1940 (“Investment Advisers Act”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) shall not “enter into, extend, or renew any investment advisory contract, or in any way to perform any investment advisory contract entered into, extended, or renewed…” unless the investment advisory contract meets certain requirements specified under Section 205. Section 205(d) of the Investment Advisers Act defines an investment advisory contract as “any contract or agreement whereby a person agrees to act as an investment adviser to or to manage an investment or trading account of another person….”
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.
