For several years now, investment advisers have been hearing that they must create a “culture of compliance” throughout their firms. Understanding what a “culture of compliance” means is not always clear to many investment advisers. In a speech presented in October 2007 by Lori Richards, former Director of the Office of Compliance Inspections and Examinations for the U.S. Securities and Exchange Commission (“SEC”), she explained this concept in greater detail:
Category Archives: Compliance Program
Investment Advisers Should Utilize Risk Assessment Questionnaires to Determine Each Client’s Risk Tolerance
February 13, 2013
An investment adviser has a fiduciary duty to act in the best interests of its clients and must hold the client’s interest above the investment adviser’s own interest in all matters. Additionally, the U.S. Securities and Exchange Commission (“SEC”) has stated that “several obligations flow from an adviser’s fiduciary duties” including “… a duty to provide only suitable investment advice. This duty generally requires an [investment] adviser to make a reasonable inquiry into the client’s financial situation, investment experience and investment objectives, and to make a reasonable determination that the advice is suitable in light of the client’s situation, experience and objectives.” For the purposes of ensuring consistency and maintaining appropriate back-up documentation, an investment adviser should establish a standard method for gathering and documenting the minimum information that the investment adviser will require to be gathered from each client in order for the investment adviser to provide suitable investment advice.
Qualifications of a Chief Compliance Officer
February 12, 2013
Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Investment Advisers Act”) requires each investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) to designate a chief compliance officer (“CCO”) to administer its compliance policies and procedures. There are no specific exam, continuing education, or industry experience requirements outlined under Rule 206(4)-7 for an SEC registered investment adviser’s CCO. However, the SEC’s final rule release for Rule 206(4)-7 states, “An [investment] adviser’s chief compliance officer should be competent and knowledgeable regarding the [Investment] Advisers Act and should be empowered with full responsibility and authority to develop and enforce appropriate policies and procedures for the firm. Thus, the compliance officer should have a position of sufficient seniority and authority within the organization to compel others to adhere to the compliance policies and procedures.”
New Tool to Help You Review Your Compliance Program
February 07, 2013
Has your investment adviser conducted a review of its compliance program? Is a consultant led compliance review beyond your budget? RIA Express – Compliance Review is our online compliance tool that helps guide you through the process of reviewing the effectiveness of your investment adviser’s compliance program.
Compliance Is Not Just the Responsibility of the Investment Adviser’s Chief Compliance Officer
February 06, 2013
One of the requirements of Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Investment Advisers Act”) is that each investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) is required to designate a chief compliance officer (“CCO”) to administer the investment adviser’s compliance policies and procedures. While the CCO has the primary responsibility for developing and enforcing appropriate policies and procedures for the investment adviser, this does not mean that the CCO has to be the sole party responsible for making sure that all compliance functions within the firm are carried out. The CCO can delegate duties and supervisory responsibilities related to the investment adviser’s ongoing compliance responsibilities.
According to Rule 206(4)-7 of the Investment Advisers Act of 1940 (“Investment Advisers Act”), each investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) must adopt and implement written policies and procedures reasonably designed to prevent violation of the Investment Advisers Act and the rules that the SEC has adopted under the Investment Advisers Act. Rule 206(4)-7 also requires an SEC registered investment adviser to designate an individual to serve in the role as chief compliance officer (“CCO”). The investment adviser’s designated CCO will be responsible for administering the investment adviser’s compliance policies and procedures adopted pursuant to the requirements of Rule 206(4)-7.
An investment adviser is required to prepare and submit a completed Form ADV as part of the initial registration process. In addition to the review by the U.S. Securities and Exchange Commission (“SEC”) or state securities regulator(s) for purposes of determining whether to approve or deny an application for investment adviser registration, the Form ADV Part 2 is also used as the investment adviser’s disclosure document which is required to be provided to all investment advisory clients. The Form ADV must provide accurate, current, and consistent disclosures. The general instructions for the Form ADV provides the investment adviser with details regarding the frequency at which the investment adviser is required to update certain information in the Form ADV. At a minimum, an SEC registered investment adviser must file a Form ADV annual updating amendment at least annually within 90-days of the investment adviser’s fiscal year end. Most state securities regulators have similar requirements for a state registered investment adviser.
20% Discount on Self-Customized Written Supervisory Procedures and Code of Ethics Manual
December 28, 2012
RIA Compliance Consultants is offering a 20% discount now until January 04, 2013, on our self-customized written supervisory procedures and code of ethics manual prepared through RIA Express – Compliance Manual Drafter. Please use the code: RIA-Express2012 at checkout to receive this discount.
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.
RIA Compliance Consultants now offers an electronic compliance manual authorizing wizard, RIA Express – Compliance Manual Drafter, to allow your registered investment advisor to create a regulator specific, customized written supervisory procedures and code of ethics manual on your own. Even if your registered investment advisor already has in place a written supervisory procedures and code of ethics manual, our electronic drafter can be a great tool to strengthen your current procedures.
