FYI: Most Frequent Adviser Advertising Compliance Issues

Posted on Posted in Advisers, SEC

FYI: OCIE issued a Risk Alert today containing the most frequently identified advertising compliance issues reflected in deficiency letters from over 1,000 adviser exams and observed as part of OCIE’s “Touting Initiative,” nearly 70 adviser exams conducted in 2016 that focused on advisers’ use of accolades in their marketing materials. While it is sometimes helpful when OCIE identifies “top” compliance issues found on exams, this Risk Alert reads more like a catalog of the most difficult issues that advisers face in the advertising arena, along with one or two citations to previously issued cases or guidance to illustrate each topic. […]

FYI: 2017 Investment Management Compliance Survey

Posted on Posted in Advisers, Funds, SEC

FYI: The IAA has released its report on the 2017 Investment Management Compliance Survey. This year’s survey areas included: • Remote/Branch Office Supervision • Use of Automation • Fees and Expenses • Wrap Programs • Whistleblowing • Business Continuity and Transition Planning • Impending Regulations: Form ADV Part 1A and Liquidity Risk Management, and • International Regulation (MiFID II). Key findings included, among others: • Cybersecurity continues to be the hottest compliance topic in 2017 for the 4th year in a row. • Other hot topics included custody, regulatory reporting and disaster recovery planning. • Only about 21% of firms […]

FYI: SEC Personnel Changes

Posted on Posted in Advisers, Brokers, Funds, SEC

FYI: Dalia Blass has been named Director of the SEC’s Division of Investment Management. Although she is returning to the SEC from the private sector, she has more than a decade of prior experience in the Division of Investment Management, include serving as Assistant Chief Counsel. Blass announcement: https://www.sec.gov/news/press-release/2017-153 Nominations have also been made to fill the open seats on the Commission. Former congressional aide Hester Peirce has been nominated to fill the open Republican seat. Columbia University law professor Robert Jackson has been nominated to fill the open Democratic seat. If these nominees are confirmed by the Senate, the […]

FYI: Information Update on Form ADV

Posted on Posted in Advisers, SEC

FYI: The SEC Division of Investment Management issued an IM Information Update addressing glitches that could occur with the significant ADV form amendments coming into effect on October 1, 2017. You may recall that, as a result of amendments adopted last year, extensive new information is required to be reported on Form ADV by all advisers filing ADV amendments on or after the compliance date of October 1. This new information includes, for example, information about an adviser’s separately managed accounts and related information correlated to the end of the adviser’s last fiscal year. However, if an adviser determines that […]

FYI: OCIE Publishes Observations from More Cybersecurity Exams

Posted on Posted in Advisers, Brokers, Funds, SEC

FYI: OCIE has published a Risk Alert summarizing observations from its second cybersecurity initiative, which looked at cybersecurity preparedness at 75 more SEC-registered broker-dealers and investment advisers/funds. This second initiative built on OCIE’s first cybersecurity initiative conducted in 2014-2015, but included more validation and testing of firm controls and procedures. In general, OCIE observed an increase in cybersecurity preparedness since 2014, although continued weaknesses were cited in various areas, including: • policies and procedures not being reasonably tailored to the firm; • policies and procedures not being enforced or not reflecting actual practice; • software security patches not being installed; […]

FYI: Unregistered Adviser Integrated with Registered Adviser

Posted on Posted in Advisers, Funds, SEC

FYI: The SEC settled an administrative proceeding against an unregistered adviser to private funds that was found ineligible to rely on the exempt reporting adviser exemption because it and its affiliated SEC-registered investment adviser (an adviser to individuals) were under common control and operationally integrated. The SEC’s settlement order cited various factors for finding the two advisers integrated: they were both owned by the same owner, shared the same employees, operated in the same office, shared the same technology systems and failed to maintain policies and procedures addressing registration or exemption from registration as an investment adviser. Violations alleged included, […]

FYI: FAQs on Upcoming Fund Reporting Changes

Posted on Posted in Funds, SEC

FYI: The SEC Division of Investment Management has issued FAQs on the upcoming changes imposed by the investment company reporting modernization reforms adopted in October 2016. These FAQs will join the list of “must-read” items for funds subject to the new reporting requirements, which impact key areas such as portfolio reporting (will now be monthly on Form N-PORT), annual reporting (on new Form N-CEN), financial statement reporting (amendments to Reg. S-X, including derivatives reporting) and securities lending disclosures (on registration Form N-1A and shareholder report Form N-CSR). Note that the compliance date for some of these changes (such as Reg. […]

FYI: New SEC Guiding Principles

Posted on Posted in Advisers, Brokers, Funds, SEC

FYI: In a speech last week, new SEC Chairman Jay Clayton outlined the principles that will guide his administration. They include: Principle #1: The SEC’s mission is our touchstone. Principle #2: Our analysis starts and ends with the long-term interests of the Main Street investor. Principle #3: The SEC’s historic approach to regulation is sound. Principle #4: Regulatory actions drive change, and change can have lasting effects. Principle #5: As markets evolve, so must the SEC. Principle #6: Effective rulemaking does not end with rule adoption. Principle #7: The costs of a rule now often include the cost of demonstrating […]

FYI: Fund Sub-Adviser Retained Without Shareholder Vote

Posted on Posted in Advisers, Funds, SEC

FYI: Under a no-action letter issued this week, a fund will be allowed to retain an interim sub-adviser during an additional 60 days when, despite diligent efforts, the fund was unable to garner the requisite shareholder proxies to approve the sub-adviser during the 150-day period allowed under Investment Company Act Rule 15a-4. During the additional 60-day period, the adviser will be required to bear all proxy solicitation expenses and to waive a portion of its advisory fee equal to the fee payable to the sub-adviser under the interim sub-advisory agreement. No-action letter: https://www.sec.gov/divisions/investment/noaction/2017/nuveen-fund-advisors-15a-062017.htm. * * *

FYI: Updates to FAQs on Form ADV

Posted on Posted in Advisers, Funds, SEC

FYI: The Division of Investment Management has posted new or revised FAQs on the following items of Form ADV, many of which relate to ADV amendments being implemented starting October 1, 2017: Form ADV: Item 1.I (several questions relating to reporting social media) Form ADV: Item 1.J (new question relating to outsourced CCOs) Form ADV: Item 1.O (relating to advisers with over $1 billion in balance sheet assets) Form ADV: Item 5.D (relating to reporting categories of clients) Form ADV: Item 5.K (relating to new Item 5.K. reporting separately managed account clients) Form ADV: Item 7.B (relating to Schedule D […]