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News August 2, 2004 Issue

ICAA Releasing Compliance Program Guide

The Investment Counsel Association of America is in the process of releasing its members-only "Guide to Establishing and Implementing a Compliance Program for Investment Advisers." At press time, the following sections had been posted on the ICAA’s website:

  • registration;
  • disclosure;
  • financial and disciplinary information;
  • referral arrangements (solicitation);
  • brokerage and trading practices;
  • portfolio management processes;
  • codes of ethics and personal trading;
  • contingency planning; and
  • Exchange Act reporting.

The group plans to roll out the following additional sections over the next few weeks:

  • advisory contracts;
  • advertising;
  • fees/valuation;
  • insider trading;
  • privacy;
  • soft dollars;
  • proxy voting;
  • custody of client assets;
  • recordkeeping requirements;
  • reporting requirements;
  • annual reviews; and
  • compliance testing.

While each section briefly summarizes the relevant law, it does not recite the law at length or quote from SEC no-action positions. Instead, the guide focuses on providing "real procedures" that advisers can implement, explained ICAA general counsel Karen Barr. She noted that the guide discusses systems and protocols and addresses practical topics such as the designation of key personnel and applicable disclosure and documentation requirements. "It’s not a model," Barr warned, explaining that an adviser couldn’t simply take the document, put its name on it, and be done with it. The guide is expected to total roughly 100 pages.

For advisers looking for help in developing their compliance programs, the guide, and access to the ICAA’s legal staff, could be worth the cost of joining the ICAA. The group’s annual membership fee for advisers with $1.5 billion or less under management is $2,400 (the fees operate on a sliding scale and go up to $10,000 annually for the largest firms). Some advisers may find the $2,400 fee competitive to the cost of off-the-shelf compliance manuals.