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SEC reminds investment advisers to review compliance policies annually

Posted on May 8, 2014 9:00am PDT

Norm Champ, Director, SEC Division of Investment Management, recently gave a speech where he reminded investment advisers to review compliance policies annually as required by SEC rules. He said “As you are no doubt aware, Rule 206(4)-7 requires advisers to adopt, implement and annually review compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and also requires that advisers designate a chief compliance officer. The rule, which was adopted against the backdrop of the late trading and market timing scandals, stresses the importance of strong compliance programs in preventing violations of law as well as the important role that compliance professionals play in ensuring a strong culture of compliance.”

Perhaps more importantly, Mr. Champ warned the audience about failure to implement adequate policies: “Compliance policies and procedures must be specifically tailored to your firm’s advisory business, and a few recent enforcement cases confirm this point . . . just last month, the Commission charged an investment adviser with issuing false and misleading advertisements. The Commission noted that the firm’s policies and procedures only parroted the Commission’s rule, and were not specifically tailored to prevent advertisements from violating the advertising rules.”
Categories: Securities Regulation
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