Investment Company Compliance Program Review
Given the current regulatory environment and heightened scrutiny, having a sound compliance program is more important than ever.
The NRS Investment Company review can help test the adequacy and effectiveness of your policies and procedures.
Investment companies are required to annually review their compliance programs under Rule 38a-1 of the Investment Company Act. NRS can help to ensure that your program meets the needs of your business and regulatory requirements.
The NRS review consists of three steps, designed to minimize the disruption of your operations and maximize results:
- Off-site Review
NRS will submit an initial document request list to your Fund for review prior to the on-site review. By requesting this information, the assigned NRS Consultants will establish an understanding of the types of business lines and practices your Fund is engaged in.
- On-site Review
The NRS Consultants will conduct an on-site review of your Fund’s Compliance Program including policies and procedures, books and records, and an evaluation and review of compliance practices and supervisory systems. Over the course of a few days, NRS consultants will be on-site at your location to conduct the review.
During the review, the NRS Consultants will examine:
- Compliance and supervisory policies and procedures
- Past regulatory issues or concerns and firm testing
- IC Act Rule 38a-1 compliance program*
- Advisory agreement and renewal process
- Annual Contract Review*
- Accuracy of disclosure and shareholder reporting
- Advertising and distribution of fund shares*
- Risk assessment processes
- Trading practices
- Best execution
- Portfolio management compliance
- Affiliated brokerage (rule 17e-1)
- Cross trading (rule 17e-7)
- Underwritings- purchase from affiliates (rule 10f-3)
- Portfolio holdings disclosure
- Valuation and pricing procedures for portfolio assets and NAV Calculations*
- Leverage and use of derivatives*
- Investment process documentation
- Fund Prospectus and SAI Adviser compliance with Fund policies
- Fund governance and review of Board of Directors composition for independence and possible conflict of interest*
- Litigation and shareholder complaints
- Service provider oversight*
- Insider trading and Code of Ethics (Rule 17j-1)
- Privacy/Information Security practices
- Sub advisory due diligence, if applicable
- Regulatory filings
- Business continuity/disaster recovery
- Compliance monitoring and process documentation
- Anti-money laundering program
- Political contributions
- Blue sky filings
- Recordkeeping (section 31)
Areas noted by the asterisk (*) are indicative of those identified within the SEC’s Never-Before-Examined Investment Company initiative. NRS, with the Fund's approval, may prioritize these areas higher as part of our overall testing methodology.
- Final Report Preparation
Upon completion of the on-site stage of this review, the NRS Consultants will return to their offices, conduct any additional research and document the review based upon the details discovered while on-site. NRS will prepare a review summary of findings and any recommendations for corrective actions. Finally, NRS will host a conference call with you to discuss the report, explain the findings and help you get started on any required actions.