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RIA Compliance Blog

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SEC Multi-Branch Initiative Results in Branch Office Risk Alert

Late last year, the SEC’s Office of Compliance Inspections and Examinations (OCIE), now known as the Division of Examinations, issued a compliance risk alert warning investment advisers to ensure that their compliance programs are uniform and are uniformly applied across all branch office locations. The alert summarized the findings from…

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SEC Modernizes Marketing and Solicitation Rules

The U.S. Securities and Exchange Commission yesterday issued long-anticipated changes to the rules governing marketing for RIAs, including managers of private funds. The changes are designed to modernize the rules to account for the era of digital communication and other marketplace “evolutions.” The rule changes also impact firms’ uses of…

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Growing RIAs Beware: SEC Issues Risk Alert Relating to Compliance Rule Failures

In conjunction with a speech delivered by its Director last month, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert discussing significant compliance deficiencies its examination staff had identified relating to Investment Advisers Act Rule 206(4)-7 (the “Compliance Rule”). The alert followed on…

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SEC Examination Director Discusses Importance of Empowering the CCO

In a speech last month, Peter Driscoll, the director of the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE), stressed that registered investment advisers must take steps to grant authority to their Chief Compliance Officers, pointing out that the failure to do so is often cited as…

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Possible Cognitive Decline of Investment Advisers Underscores Need for Succession Plan, Training

Earlier this year, the North American Securities Administrators Association (NASAA), through a working group within the Senior Issues/Diminished Capacity Committee, issued a report of findings and recommendations relating to issues of cognitive impairment or diminished capacity that may affect investment advisers and other financial professionals. The report summarized information received…

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SEC Updates Form CRS Disciplinary Guidance

Last week the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) released updated guidance to the disciplinary disclosures section of Form CRS. The purpose of Form CRS is to provide a succinct summary of the business of the Investment Adviser or Broker-Dealer to provide a retail…

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Cybersecurity: OCIE Warns Against Credential Stuffing

The Office of Compliance Inspections and Examinations (“OCIE”) published a Risk Alert highlighting the need for investment advisers to prevent unauthorized access to client data stored on websites. Recently, cyber attackers have used “credential stuffing” and other methods to breach web-based user accounts. Credential stuffing is when a hacker combines…

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SEC Amends Proxy Rule and Issues Supplemental Guidance to Investment Advisers

In July 2020, the Securities and Exchange Commission issued supplemental guidance relating to the duties of investment advisers with respect to proxy voting. This follows guidance issued in 2019, which we have discussed before. The prior guidance was issued in connection with amended rules finalized at the same time which…

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SEC Enforcement Continues to Sanction RIAs Over Excessive Fees

As illustrated in two recent cases, the SEC’s Enforcement Division continues to root out RIAs that receive excessive undisclosed fees, particularly 12b-1 fees and mutual fund revenue sharing payments. As we have noted repeatedly, the SEC has focused on this issue in the last several years. At issue is whether…

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