Many investment advisers choose to engage third-party service providers to perform a number of important services for their firm and their advisory clients. There are third-party service providers offering a number of important services to investment advisers. Some of the services include client and portfolio management software systems, marketing of advisory services, referring clients to the investment adviser, calculating investment valuations, proxy voting, financial reporting, and maintaining required books and records. However, when a service provider is utilized, the investment adviser still retains its fiduciary responsibilities for the delegated services. As a result, investment advisers should develop strong compliance policies and procedures for performing due diligence when selecting and retaining third-party service providers.
Category Archives: Compliance Training
Under the anti-fraud provision of the Investment Advisers Act of 1940 (“Investment Advisers Act”) investment advisors registered with the U.S. Securities and Exchange Commission (“SEC”) must comply with the provision’s requirements concerning advertising and marketing materials. In efforts to prevent fraudulent, deceptive, or manipulative acts, your registered investment advisor should have in place strong supervisory and compliance policies and procedures designed to approve and monitor advertising and marketing materials. Federally registered investment advisors are routinely cited examination deficiencies for issuing non-compliant advertising materials. Much less, investment advisor firms have been cited for simply not establishing reasonably designed compliance policies and procedures for the creation, review and approval of advertising materials.
Complimentary Books and Records Documentation List
March 30, 2012
RIA Compliance Consultants encourages you to view our firm’s Facebook page to receive your complimentary sample Books and Records Documentation List. Our sample Books and Records Documentation List can serve as a log and a checklist to help your investment advisor make sure that it is properly maintaining required books and records. It can also be used as an internal auditing tool to help with proper storage of important documentation. Investment advisors may be overwhelmed by the amount of information and number of documents that must be maintained to meet the minimum books and records requirements; RIA Compliance Consultants encourages your investment advisor to utilize this Books and Records Documentation List to foster increased organization and proper storing practices.
An Investment Advisor Should Test Periodically Whether It Is Maintaining the Required Books & Records
March 29, 2012
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 this rule 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 each investment advisor needs to make sure that it familiarizes itself with the requirements of the appropriate governing authority.
Massachusetts Releases Social Media Guidance
March 02, 2012
The Massachusetts Securities Division recently released a report providing guidance on social media use by investment advisers. As we wrote earlier, the Massachusetts Securities Division has been investigating social media use by investment advisers. This investigation has resulted in the Massachusetts Securities Division issuing this report to provide guidance on the most common issues identified during their investigation.
Compliance and Ethics Are Not Solely the Responsibility of an Investment Adviser’s CCO
February 08, 2012
On January 31, 2012, the U.S. Securities and Exchange Commission (“SEC”) held a Compliance Outreach Program National Seminar in Washington, D.C. for investment advisers and investment companies. In the past, these seminars were generally referred to as “CCO Outreach Programs.” During the introductory remarks for the seminar, Carlo V. di Florio, Director, Office of Compliance Inspections and Examinations for the SEC, explained the reason for the changed program title. Mr. di Florio indicated that the change is based on the SEC’s desire through both its outreach programs and its examination program to “elevate the role of compliance by underscoring that it is not a responsibility that stops at the desk of the CCO” and that the SEC’s intention is to continue its outreach and support for investment adviser’s chief compliance officers (“CCO”).
The Benefits of Implementing a Compliance Calendar
November 29, 2011
For many registered investment advisers, the task of determining ongoing compliance requirements can seem overwhelming. Carrying out an investment adviser’s ongoing compliance duties can be a very manageable process if the investment adviser is aware of its requirements and organizes and assigns responsibilities for the various compliance functions. A compliance calendar can be a valuable tool to assist investment advisers in carrying out their ongoing compliance duties throughout the year. Developing a compliance calendar can help strengthen an investment adviser’s compliance program that must be developed to detect, prevent, and correct possible regulatory violations that can occur throughout the year.
Broker Dealers and Investment Advisers Need to Have Policies and Procedures in Place for Social Media Use
October 04, 2011
A recent FINRA enforcement action highlights the need for broker dealers and investment advisers to implement policies and procedures for social media use. FINRA alleged the registered representative created websites related to her firm without obtaining firm approval, on several occasions she falsely stated online that she was not affiliated with any broker dealer, and she was using her Twitter account to give stock recommendations without making the necessary disclosures. As a result of this alleged conduct, FINRA fined her $10,000 and suspended her from associating with a broker dealer for one year.
The Use of Social Media Sites Can Create Compliance Problems for Registered Investment Advisers
September 27, 2011
Social media sites such as Facebook, Twitter, and LinkedIn can be useful business tools for investment advisers. However, there are several compliance issues that social media sites present.
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.
