Advisers

FYI: OCIE Issues Top-5 Compliance Topics List for IAs

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FYI: On February 7, 2017, OCIE issued a Risk Alert listing the five most frequent compliance topics identified in OCIE examinations of investment advisers. The list included noncompliance with the following: • Compliance Rule • Regulatory Filings Rules • Custody Rule • Code of Ethics Rule • Books and Records Rule The list was compiled on the basis of deficiencies found in more than 1,000 IA examinations over the last two years. Instead of providing fresh insights or examples of deficiencies under these topic areas, the Risk Alert largely cites back to prior Risk Alerts addressing deficiencies, or to the […]

Advisers

FYI: Adviser and Fund Reporting Guide Issued

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FYI: The Financial Services Group of Dechert, a major law firm, has issued an alert for investment advisers and funds regarding various US reporting obligations entitled “Reminder: Certain U.S. Reporting and Compliance Obligations for Investment Advisers and Funds” (January 2017). This is a useful guide as to what types of reporting requirements apply to advisers and funds, along with pertinent information such as reporting deadlines. The alert can be found on Dechert’s website under the Publications section. *  *  *  

Advisers

FYI: Enforcement for Overbilling / Custody

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FYI: The SEC has brought and settled an enforcement proceeding against Morgan Stanley Smith Barney (MSSB) for violations in 3 areas: (1) overbilling advisory clients, (2) custody rule violations for failing to have a surprise exam done on certain accounts over which it had custody, and (3) books and records violations. According to the SEC’s order, the overbilling violations occurred primarily due to coding and other errors in its billing systems and processes. The custody rule violations appear to have occurred largely from failures in recordkeeping and communications with outside accountants relating to legacy accounts that were brought over from […]

Advisers

FYI: OCIE’s 2017 Examination Priorities

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FYI: On January 17, 2017, OCIE announced its 2017 examination priorities. Among the noteworthy areas listed were: Retail Investors: • Robo-advice. • Wrap fee programs. • ETFs. • Never-before examined advisers. • Recidivist reps and their employers. • Multi-branch advisers. • Share class selection. Seniors: • ReTIRE Initiative. • Public pension advisers. • Senior investors, including efforts to identify senior financial exploitation. Market-wide Risks: • Money market funds. • Cybersecurity, including compliance procedures and controls, and testing. • AML. Other: • Muni advisors. • Transfer agents. • Private fund advisers, especially conflicts. The announcement also states that the SEC has […]

Advisers

FYI: New SEC Chair Nominated

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FYI: On January 4, 2017, Walter J. (“Jay”) Clayton was nominated to become Chairman of the Securities and Exchange Commission in the in-coming administration. Clayton is currently a securities lawyer in the New York law firm of Sullivan and Cromwell. Clayton’s nomination is subject to confirmation by the Senate. *  *  *  

Advisers

FYI: “Clean Shares” Interpretive Letter

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FYI: On January 11, 2017, the SEC issued an interpretive letter under Section 22(d) of the Investment Company Act confirming that brokers may charge commissions on transactions in certain mutual fund shares when the broker is acting as agent for its customers and the share class is sold without any front-end load, deferred sales charge or other asset-based fee for sales or distribution (so-called “Clean Shares”). This letter clears up one of the significant concerns uncovered recently as funds envision new models for share sales prompted largely by the pending DOL fiduciary rule. Many funds are considering new share class […]