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.”