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Benedicte Gravrand, Opalesque Geneva: In an SEC Risk Alert on Tuesday, the US Office of Compliance Inspections and Examinations (OCIE) provided a list of the five compliance topics most frequently identified in deficiency letters that were sent to SEC-registered investment advisers.
They are:
(1) Rule 206(4)-7 (the Compliance Rule) under the Investment Advisers Act of 1940 (the Advisers Act);
Typical examples of deficiencies or weaknesses:
Compliance manuals are not reasonably tailored to the adviser's business practices. The staff noted that certain compliance programs did not take into account important individualized business practices such as the adviser's particular investment strategies, types of clients, trading practices, valuation procedures and advisory fees. Moreover, examiners continue to observe that some advisers use "off-the-shelf" compliance manuals that have not been tailored to the adviser's individual business practices.
(2) required regulatory filings;
Typical example:
Inaccurate disclosures. The staff observed that certain advisers made inaccurate disclosures on Form ADV Part 1A or in Form ADV Part 2A brochures, such as inaccurately reporting custody information, regulatory assets under management, disciplinary history, types of clients and conflicts.
(3) Rule 206(4)-2 under the Advisers Act (the Custody Rule);
Typical example:
Advisers did not recognize that...................... To view our full article Click here
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