The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) released a risk alert today (the “Alert”) identifying various compliance problems that were uncovered among SEC-registered investment advisers (“RIAs”) in OCIE’s Supervision Initiative. The Supervision Initiative was a recent OCIE initiative related to retail-focused RIAs that previously employed, or currently employ, individuals with disciplinary histories.
While the Alert provides information specific to hiring and supervising representatives who may require heightened supervision, it also provides insights useful to all RIAs generally. For example, the Alert discusses techniques for ensuring adequate disclosure of disciplinary events and compensation arrangements (including forgivable loans), as well as advice regarding supervising representatives who work from remote locations and/or prepare their own advertising materials, monitoring the appropriateness of account types (wrap-fee versus SMA), and recording the identity of individuals who have access to sensitive client information.
The full Alert can be accessed here. If you have any questions about the Alert, the Supervision Initiative, or the regulation of RIAs generally, please feel free to contact us.
By the Investment Management and Broker Dealer Team at Kilpatrick Townsend & Stockton
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