SEC OCIE Observations: Investment Adviser Compliance Programs


On November 19, 2020 the U.S. Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a risk alert discussing observations on Investment Adviser Compliance Programs.

The Risk Alert discusses notable, but not new, compliance issues identified by OCIE dealing with Rule 206(4)-7, the Compliance Rule.

What does this mean?

OCIE Staff commented on deficiencies and weaknesses in connection with the Compliance Rule that are most often cited.

  • Inadequate Compliance Resources
    • Advisers did not devote adequate resources to technology, staff and training.
  • Insufficient Authority of CCOs
    • CCOs lacked sufficient authority to develop and enforce policies and procedures for the adviser.
  • Annual Review Deficiencies
    • Advisers were unable to demonstrate that an annual review had been performed.
  • Implementing Actions Required by Written Policies and Procedures
    • Advisers did not implement or perform actions required in their policies and procedures.
  • Maintaining Accurate and Complete Information in the Policies and Procedures
    • Advisers’ policies and procedures contained outdated or inaccurate information.
  • Maintaining or Establishing Reasonably Designed Written Policies and Procedures
    • Advisers did not maintain policies and procedures or failed to establish, implement or appropriately tailor policies and procedures that were reasonably designed to prevent Advisers Act violations.
    • OCIE noted deficiencies in the following areas:
      • Portfolio Management
      • Marketing
      • Trading
      • Disclosures
      • Advisory fees and valuation
      • Safeguards for client privacy
      • Required books and records
      • Safeguarding of client assets
      • BCP

Click here to read more on the Risk Alert.

What should firms do now?

Contact us to engage with your firm’s compliance team to identify regulatory requirements, ensure accurate and adequate policies and procedures, and prepare for regulatory examinations.

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