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SEC Won’t Allow Access Persons to Exclude All Third-Party Investment Accounts from Code of Ethics Reporting 

SEC Won’t Allow Access Persons to Exclude All Third-Party Investment Accounts from Code of Ethics Reporting 

The staff of the SEC’s Division of Investment Management has warned that delegating investment discretion over a personal account does not by itself exempt the account from Code of Ethics reporting.  To ensure that the access person does not have “direct or indirect influence or control,” the adviser must also adopt policies and procedures that (i) reviews holdings reports for impermissible transactions, (ii) collects information about the relationship between the access person and the third-party manager, and (iii) obtains periodic specific certifications about communications between the access person and the third party manager.

OUR TAKE: This guidance shows that the staff reads narrowly the “no direct or indirect influence or control” exception.  If the firm must periodically review holdings reports, the access person might as well treat the third-party account like any other personal account for reporting purposes.

http://www.sec.gov/investment/im-guidance-2015-03.pdf

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