Firms Claiming GIPS Compliance Must File Notice with CFA Institute
The GIPS Executive Committee has approved the previously-proposed requirement that any firm that claims GIPS compliance must notify the CFA Institute, which will then publish a list of all firms claiming GIPS compliance. The CFA Institute promulgates the Global Investment Performance Standards as a standardized methodology for presenting investment performance. Each firm claiming compliance will need to file a notification including its name and basic contact information. The CFA Institute may release summary information and statistics. The filing requirement commences on January 1, 2015, and firms must file the notice by June 30. Failure to file would be considered a failure to comply with GIPS.
OUR TAKE: Firms may be less likely to make inadvertent GIPS compliance claims if a client or the SEC can check those assertions on the CFA Institute’s website. The SEC has brought enforcement actions against firms that claim compliance with GIPS but do not meet the standards (See http://blog2.cipperman.com/2013/04/sec-charges-adviser-for-misleading-gips-compliance-claims/).