SEC Publishes List of Most Cited Exam Deficiencies
The SEC’s Office of Compliance Inspections and Examinations has issued a Risk Alert listing the 5 most frequently identified compliance topics: weak compliance programs, insufficient and late filings, violations of the custody rule, Code of Ethics compliance deficiencies, and books and records. OCIE highlights specific compliance problems including untailored “off-the-shelf” manuals, weak or absent annual reviews, and failure to follow procedures. OCIE cited Form ADV and Form PF failures including inaccurate disclosures and late filings. Other common deficiencies include failures (i) to follow the custody rule due to lack of knowledge about its requirements, (ii) to identify access persons, and (iii) to maintain complete and accessible books and records.
OUR TAKE: Compliance with the Advisers Act is not intuitive. It requires a thorough knowledge of the specific requirements of the statute and all its rules. Firms must hire a regulatory professional or a compliance services firm to assist with compliance or face significant exam deficiencies or an enforcement action.