With respect to the code of ethics, the SEC requires a SEC registered investment adviser to maintain the following documents:
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Are there any specific requirements relating to violations of a SEC registered investment adviser’s code of ethics?
November 02, 2018
Pursuant to SEC Rule 204A-1, a SEC registered investment adviser’s code of ethics must require prompt internal reporting of any violations to the investment adviser’s code of ethics. Violations must be reported to the investment adviser’s chief compliance officer. However, an investment adviser’s code of ethics may require that violations be reported to another designated party if the designated party is then required to report it to the chief compliance officer. In order to promote the prompt reporting of code of ethics violations, an investment adviser must create an environment that encourages and protects any supervised persons that report a violation. An investment adviser must make sure that a supervised person feels safe and free to report violations without fear of retaliation. While SEC Rule 204A-1 does not require that the investment adviser impose certain fines or penalties, it is important that supervised persons of the investment adviser understand the emphasis that the investment adviser places on acting in an ethical manner and, therefore, many investment advisers choose to include some form of reference to disciplinary actions that may be taken if a violation occurs. An investment adviser must maintain a record of all violations of the code of ethics and the actions taken as a result of the violation.
Other than the requirements of the Rule, what else should be considered or included by an investment adviser when drafting a code of ethics?
November 02, 2018
The following are areas that should be considered when preparing a code of ethics for a registered investment adviser:
If a SEC registered investment adviser only has one access person, must the access person complete personal securities transaction and holdings reports?
November 02, 2018
If a SEC registered investment adviser has only one access person, the access person is not required to submit personal securities transaction and holding reports to this same access person for approval; however, this investment adviser must maintain copies of all personal securities transaction and holding reports as required by the SEC’s rule.
Can a SEC registered investment adviser accept confirmations and statements in lieu of a personal securities transaction report by the access person?
November 02, 2018
Confirmations and statements may be accepted in lieu of transaction and holdings reports so long as the confirmations and statements contain all required information and as long as the information is current within 45 days of reporting for holdings reports and so long as they are received within 30 days of the end of each calendar quarter for personal securities transactions.
Are there any exclusions to the personal securities holdings and transaction reporting requirements of access persons of a SEC registered investment adviser?
November 02, 2018
An access person of a SEC registered investment adviser is not required to report any personal securities held in accounts over which the access person has not direct or indirect influence or control and any transactions effected pursuant to an automatic investment plan.
The SEC rule does not require an investment adviser to obtain reports indicating that access person does not have any transactions or holdings to report. However, many investment advisers choose to require this type of reporting to ensure that all access persons are consistently aware of the personal securities holding and transaction reporting requirements.
What is a reportable security for purposes of a personal securities transaction or holding report of an access person of a SEC registered investment adviser?
November 02, 2018
A reportable security is any security defined in Section 202(a)(18) of the Securities Act of 1933. The Rule considers all securities reportable with the exception of the following:
What information must be included in the personal securities transactions reports of an access person of an SEC registered investment adviser?
November 02, 2018
All personal securities transaction reports must, at a minimum, cover all personal securities transactions during the calendar quarter for which the report is being completed. The following information is the minimum information that must be included in the personal securities transaction report for each reportable security:
What information must be included in the personal securities holdings report of an access person of an SEC registered investment adviser?
November 02, 2018
At a minimum, the personal securities holdings reports must contain the following for each reportable security that the access person of the investment adviser has any direct or indirect beneficial ownership:
