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The weekly news source for investment management legal and compliance professionals

Topic: Compliance Programs and CCOs

Survey: Cybersecurity Again Hottest Compliance Topic, Custody Drops

July 19, 2019
Advisory firms nationwide continue to be highly concerned about cybersecurity, with approximately 83 percent of them naming it their highest compliance concern for the sixth year in a row. Concerns about custody compliance, however, are down from last year.

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SEC Staff Urges Market Participants to Begin Transition from LIBOR

July 19, 2019
The end of 2021 may still seem some far off, but in terms of advisers and other market participants that will need to transition from the London Interbank Offered Rate (LIBOR), it may be getting uncomfortably close. The SEC staff in July issued a statement urging all market participants using LIBOR to begin the process of moving away.

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SEC Scrutiny of Privacy Policies and Procedures Makes Implementation Essential

June 7, 2019
With SEC examiners increasing their scrutiny of how advisory firms protect privacy, now is the time for chief compliance officers to ensure that privacy policies and procedures not only exist, but are robustly implemented. The result will not only be an advisory firm with high confidence that private information is protected, but that its firmís privacy practices will pass muster the next time examiners come to visit.

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Survey Finds Advisers and Funds Making Liquidity Risk Management Choices

June 7, 2019
Investment advisers and fund complexes have begun to move past the stage of contemplating how they will comply with the SECís Liquidity Risk Management Rule and are making key choices on issues such as classification risk responsibilities, administration of their liquidity risk management program, and more.

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Put Best Practices in Place to Ensure Branch Office Compliance

May 17, 2019
Branch office compliance practices have long been high on the SECís radar. Its Office of Compliance Inspections and Examinations has listed branch offices among its priorities for several years running and issued a risk alert to let advisers know what its examiners found. But ensuring compliance at branch offices, particularly new branch offices following an acquisition, takes considerable time and effort.

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OCIE Director: CCOs Not Ultimately Responsible for Success of Compliance Programs

May 10, 2019
Itís the reassurance that many chief compliance officers want to hear. While SEC officials have provided that reassurance before, they really canít go overboard in confirming the following: CCOs, while key professionals for compliance success, do not bear the ultimate responsibility if a compliance program fails. Many will be pleased to know that a top SEC official recently reinforced this message.

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Monitor Disclosures – Even When They Come from the Top

April 12, 2019
Chief compliance officers should make every effort to review disclosures from their firms to the SEC, investors and others, even if those disclosures already have the blessing of top management. Failure to do so may leave the door open to potential fraud.

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SEC Alleges Adviser Ignored Compliance Responsibilities, Falsely Identified CCOs

March 15, 2019
Compliance and chief compliance officers are not just for show. Advisers that name CCOs but then fail to give them responsibility for administering their firmís written compliance policies and procedures may be called out by the agency for doing just that Ė as one advisory firm found out.

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OCIE Exam Priorities List is a Tool, Not a Compliance Blueprint

February 8, 2019
New chief compliance officers at small firms, as well as compliance professionals of all sizes of firms, should avoid the trap of regarding the SECís annual examination priority list as a template for their own compliance programs. The priority list, published by the agencyís Office of Compliance Inspections and Examinations (OCIE), is a valuable tool for compliance efforts, but those efforts need to address topics in addition to those highlighted in the list.

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Monitoring vs. Privacy: Best Practices to Stay in Compliance with a Shifting Line

February 8, 2019
Itís no secret that advisory firms need to monitor employee communications as part of their firmsí compliance efforts. Itís also no secret that advisers must make every effort to protect employeesí personally identifiable information (PII). How can advisers meet one priority without violating the other?

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GIPS: Adviser Association Urges Changes in Draft 2020 Standards

January 18, 2019
The Investment Adviser Association is concerned that the scope and breadth of the proposed 2020 Global Investment Performance Standards (GIPS) may make compliance with GIPS more difficult. It urged the CFA Institute in a recent comment letter to address this and other issues, including that the proposed standards take into account local regulation and the voluntary nature of GIPS.

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2018 in Review: Standards of Care, Cryptocurrencies, SEC Changes and More

December 21, 2018
With the past year almost over and a new one about to begin, itís time to take a look back and take stock of what was accomplished in 2018 and what issues remain. The past 12 months found major developments involving standards of care for advisers and broker-dealers, the emergence of an SEC strategy regarding cryptocurrencies, a full year in office for a new SEC team and philosophy, the rising challenges of cybersecurity, and more.

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Holiday Compliance: It’s Not Just Gifts, It’s Client and Vendor Parties

December 7, 2018
Every year at this time, advisory firms and their employees take a fresh look at their gift and entertainment policies to ensure that there are no compliance problems and that everyone knows what is expected. While many employees are aware of their firmsí dollar limits for receiving or giving gifts, there is another issue that draws less attention: employee attendance at holiday parties thrown by clients, prospective clients, vendors or other third parties.

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Delays in Providing Compliance Resources to Inexperienced CCO Detailed in Two SEC Settlements

November 16, 2018
The SEC this month reached a settlement with a former advisory firm over allegations that it failed to perform adequate due diligence and monitoring of key investments. Much of the paperwork in the settlement, as well as in a separate settlement with the adviserís former chief executive officer involving compliance issues, focused on allegations that the firm hired an inexperienced chief compliance officer and then repeatedly refused to provide him with the compliance resources he requested.

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Adviser Relationships with Sub-Advisers Draw Examiner Scrutiny

November 2, 2018
Advisers need to step up their game in terms of overseeing their sub-advisers. SEC examiners are scrutinizing the relationships between advisers and sub-advisers for conflicts of interest and to ensure that advisers are properly on top of what their sub-advisers are doing.

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Cybersecurity Again Top Adviser Compliance Topic

July 20, 2018
A recently released nationwide survey provides numbers behind what should not be a surprise conclusion for most asset management professionals: Cybersecurity remains far and away the hottest topic among investment advisers, dwarfing other concerns like advertising, custody, privacy and fiduciary duty.

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Check Out Audit Team Members before Retaining Firm

June 22, 2018
It is essential that accounting firms hired to perform audits Ė and their individual audit team members Ė have credibility, and that asset managers that hire such firms know they can rely on their work. Failure on the part of advisory firms and other financial institutions to ensure that those performing the audit are up to snuff may result in serious consequences.

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Self-Report or Not: Consider What’s at Stake

March 30, 2018
The SECís recent share class initiative Ė in which the agency promises not to charge civil money penalties to advisers that voluntarily report that they placed clients in certain share classes when less expensive classes were available Ė has cast a spotlight on the question of whether self-reporting is a good idea.

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Risk Matrix: Consider the Benefits of This Living Compliance Tool

March 9, 2018
Experienced chief compliance officers have a number of tools and practices at their disposal to ensure success at their jobs. One tool used by the savviest CCOs is a risk matrix: a continually updated, or living, chart that plots a changing list of compliance challenges against the risks they pose and actions taken to reduce those risks. If a CCO does not yet have a risk matrix in place, he or she would be wise to consider developing one.

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Multiple and Repeated Compliance Problems Likely to Draw SEC Action

January 12, 2018
Compliance is more than simply taking steps to satisfy regulators. If followed in spirit, with an eye toward ethics, compliance should be part of a culture where advisory firms do the right thing simply because it is right. In doing so, they will probably find that they are more likely to satisfy SEC requirements and thereby head off potential enforcement actions.

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