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The weekly news source for investment management legal and compliance professionals

Topic: Compliance Programs and CCOs

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 adviser’s 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 – and their individual audit team members – 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 SEC’s recent share class initiative – 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 – 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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Hedge Fund Compliance: Insider Trading, Allocation, Alternative Data, and More

January 5, 2018  Advisers managing hedge funds, to a large extent, face many of the same issues that advisers managing other funds do. Requirements regarding fees and expenses, custody, books and records and more must be met. There are other compliance issues, however, where the SEC can be expected to pay particular attention to hedge funds – and managing advisers would be wise to make sure they are on top of them.
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2017 in Review: A New SEC, Cybersecurity Threats and the Fiduciary Rule

January 1, 2018  The past year saw a great deal of change and development in the asset management community, but three loom larger than others: A new SEC with Jay Clayton at the helm, bringing different priorities than his predecessor; exacerbating cybersecurity concerns, with the SEC itself one of the victims; and the Department of Labor’s Fiduciary Rule and its exemptions, delays in their taking effect, and the increasing likelihood of SEC involvement in the process.
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2018: What Advisers Should Expect in the Year Ahead

January 1, 2018  Prognostication is always a bit of a guessing game. What may look like priorities in January may be replaced by other issues in the latter part of the year or may be driven by external and internal events, politics and the marketplace. Whatever may occur, 2018 is already marked as a year for change in the asset management industry.
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OCIE Turns the Spotlight on Municipal Adviser Compliance Failures

November 10, 2017  The SEC’s Office of Compliance Inspections and Examinations on November 7 issued a Risk Alert based on its observations from examinations of municipal advisers. The observations make clear that OCIE finds compliance lacking in at least three key areas: registration, recordkeeping and supervision.
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Chief Compliance Officers: Know When and How to Resign

August 18, 2017  Few chief compliance officers want to resign for any reason other than accepting a better offer at another firm. The reality, however, is that CCOs may find themselves in positions where, for compliance reasons and to protect their own career credibility, they have little choice but to consider resignation. The key is recognizing when those times arise and knowing how to extricate themselves from their errant firms safely.
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More Advisers, More Assets Under Management in 2017

August 4, 2017  2017, at least so far, has been a good year for the investment adviser profession. There are more investment advisers, more registered assets under management and continued job growth.
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Protect Your Firm and Clients Against MNPI Risks in Bank Loan Investments

July 20, 2017  Some advisers are expressing interest in investing fund or other client assets in bank loans. Such loans may pay higher yields than other fixed income investments – but they also may carry higher risks, including exposure to material non-public information and potential insider trading issues. If you choose to invest in these loans, know the risks and the best practices to keep your clients and your firm safe.
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Cybersecurity Hottest Compliance Topic among Advisers in 2017, Survey Finds

July 14, 2017  It was true for the past three years, and it’s true again in 2017: Cybersecurity is the hottest compliance topic among investment advisers, according to a nationwide survey released this month. Eighty-six percent of advisers think so. Custody is a distant second, with 26 percent of advisory firms ranking it as the most important compliance concern.
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High Court Will Review Protections for Whistleblowers Who Report Only Internally

July 7, 2017  Are whistleblowers protected from employer retaliation if they report wrongdoing to their employer but not to the SEC? The answer will depend on the U.S. Supreme Court, which this fall will review a lower-level court case dealing with that very question.
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Check on Disclosure Across All Firm/Client Interactions

April 14, 2017  There’s no doubt that disclosure is a major issue for the SEC – so much so that the agency is often referred to, perhaps somewhat inaccurately, as a "disclosure agency." Smart chief compliance officers would therefore be wise to monitor and enforce disclosure requirements horizontally across all areas where firm actions affect their clients.
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Electronic Communication Reviews Must Keep Up with Technology

March 31, 2017  Advisory firms need to stay up to date with technology when it comes to reviewing electronic communications. Gone are the days when email monitoring was considered cutting edge. Chief compliance officers that want to be effective today need to review communications sent by text messaging, on social media and on emerging electronic platforms, including apps.
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Advisory Firm Executives Optimistic About the Near Future

March 17, 2017  It’s good to be an investment advisory firm executive these days. The sun is bright, the sky is blue and the road ahead, while containing some hazards, looks relatively clear. That, at least, is one conclusion that can be drawn from the results of a survey of such executives released this month by the Investment Adviser Association.
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OCIE Identifies Top 5 Compliance Problem Areas Found in Exams

February 10, 2017  Advisers receiving a deficiency letter after an examination identifying certain compliance areas where the SEC found them lacking may take some comfort in knowing they are not alone – particularly if those areas involve the Compliance Program Rule, required regulatory filings, the Custody Rule, the Code of Ethics Rule or the Books and Records Rule. The agency’s Office of Compliance Inspections and Examinations on February 7 issued a Risk Alert, "The Five Most Frequent Compliance Topics Identified in OCIE Examinations of Investment Advisers."
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Keep Your Compliance Program Alive and Breathing

January 27, 2017  Many firms roll out formal changes to their Compliance Manual and Code of Ethics at the beginning of the year, often followed by employee compliance training. Firms may also distribute and collect questionnaires related to potential conflicts of interest, as well as an attestation of employees’ understanding of and compliance with the firm’s policies. Compliance programs should be reviewed and updated regularly.
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Meet These 2017 Regulatory Deadlines

January 20, 2017  It’s January and that means another year of potential to excel, increase returns, and be all you can be. Along with that, the start of 2017 means another year of meeting SEC and other applicable regulatory deadlines.
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Required Third-Party Compliance Assessments Not Likely

January 6, 2017  Don’t expect an SEC rule requiring third-party compliance assessments any time soon. Outgoing SEC chair Mary Jo White, in a recent letter to two Senate chairmen, put the kibosh on such a rule being pushed through in the remaining days of her term.
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Branch Office Examinations: What OCIE Wants to Know

January 1, 2017  When the SEC’s Office of Compliance Inspections and Examinations listed branch offices in its 2016 target list last January, it didn’t put much meat on the bones as to what examiners would be looking for, other than to say that they would "review regulated entities’ supervision of registered representatives and investment adviser representatives." A recent Guidance Alert from OCIE now spells out what advisory firms can expect.
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2016 in Review: Enforcement, New Rules and Cybersecurity

December 16, 2016  A lot happened in 2016, but the question hovers like a cloud over the asset management industry: Will Donald Trump change all that?
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