White Papers and Resources for Financial Services Compliance

  • Cyber Security

    Appropriate cyber security measures are crucial to protect the sensitive company and client data advisers maintain. This comprehensive note walks through how to assess your cyber security measures and best practices to protect your network. It also reviews regulations around safeguarding assets and reporting breaches.

  • Advertising & Marketing Review

    In the summer of 2013 the SEC approved changes to Rule 506 to allow the use of general solicitation and advertising to offer securities. This note walks through those updates and their impact on Form D. It also summarizes the amendments the SEC made to its interpretation of past specific recommendations in a no-action letter issued to The TCW Group in 2008 and regulations around the sharing of consumer information with affiliates for marketing purposes.

  • Trade Management

    This note discusses the key trade management areas compliance policies and procedures should address.

  • Social Media

    While the Advisers Act does specifically speak to to social media, the SEC encourages advisers to include policies and procedures regarding its use within compliance programs. The SEC regards social media as an “umbrella term” for a multitude of activities and in 2014 offered guidance around the use of testimonials on social media platform. This note discusses this guidance set again statistical information about social media users and offers policy proposals.

  • Gifts, Travel, and Entertainment

    Abuse of gift policies is often a precursor to alleged conflicts of interest, increasing the importance of knowing what restrictions exist. This note discusses the various restrictions and guidelines posed by FINRA and the CFA Institute, the Foreign Corrupt Practices Act, and the Pay to Play rule.

  • Custody

    In a March 2013 Risk Alert, the SEC revealed that one-third of recent examinations had uncovered custody-related deficiencies. This note discusses the four most common problem areas turned up by these reviews. It also touches on new rules and amendments designed to prevent such issues and offers resources to help advisers keep current on additional custody rule.

  • Books and Records

    Maintaining proper books and records is a key component of compliance procedures. This note walks through recent amendments to Advisers Act 204-2 and expansions made through the inspections and examinations process. It also speaks to record retention policies and electronic recordkeeping.

  • Cost of Compliance Study 2014

    Even though highly affordable automated solutions exist, a great many compliance and risk tasks are still being performed manually and costs of risk and compliance are going up. Money managers, BDs and hedge funds globally could realize as much as $800 million in cost savings, and maybe more through automation of compliance, vendor consolidation and outsourcing of IT related to compliance. Report details cost of compliance in detail for 300 firms with AUM from $100 million to $900 billion.

  • Best Execution

    This white paper discusses the fiduciary obligation of advisory firms in seeking the best available execution of client trades even in illiquid securities. Other addressed topics include client directed restrictions, step-out trades, and forensic testing. This white paper offers a list of various factors existing at the time of the transaction which should be considered to provide the best qualitative execution.

  • Business Model Review

    In this white paper the importance of customizing the firm compliance program to be specific to the firm and its business practices is discussed. The impact of the high profile Ponzi schemes during the 2008-2009 financial crisis is sighted as the catalyst to the regulatory focus in this area. View this white paper for a list of significant factors that may impact a business model.

  • Conflicts of Interest

    Fiduciary responsibility is addressed in this white paper in relation to awareness and disclosure of conflicts of interest. Ensuring clients interests are always placed before the firms is the key to this requirement. View this white paper for common areas in which conflicts of interest are often found.

  • Distribution of the Policies and Procedures

    This white paper list the four key parts to the Compliance Program Rule and  what they mean to the firm as well as recommendations for best practice regarding Rule 206(4)-7 and 204-2.

  • Employee Training

    This white paper addresses the areas that should be included in employee training.

  • Insider Trading

    This white paper discusses the requirements of firms to establish, maintain, and enforce a written policies and procedures manual to prevent the misuse on material nonpublic information.  It also offers important safeguards a firm can use to prevent a violation of Section 204 of the Advisers Act and the Insider Trading and Securities Fraud Enforcement Act of 1988 (“ITSFEA”).

  • Information Technology Plan

    An adviser’s policies and procedures must govern the creation, maintenance, revision, and testing of the firm’s Information Technology Plan. This white paper provides a list of the objectives that should be met with an IT plan.

  • Pay to Play

    The 2010 pay to play rule was established to curtail the influence of registered investment advisers and their associated persons in the electoral process. The pay to play white paper provides a plain English break down of an advisers requirements regarding the pay to play rule, including considerations when drafting and maintaining a policy.

  • Performance Variation

    This white paper discusses the importance of an adviser to follow relevant regulatory guidance and policies regarding permissible performance variation across similarly managed portfolios.

  • Prospect Presentations

    This white paper discusses the testing of relevant advertising and marketing practices to ensure they are not in any way fraudulent, deceptive, and/or manipulative. Specific examples of advertisements that are prohibited are also cited.

  • Personal Securities Transactions

    It is a requirement of the firm to test the personal trading/investment activities of the adviser’s employees (and the reporting of such). This compliance action item is a primary focus of federal securities laws and industry regulation. This white paper offers detailed plain English description of the requirements surrounding Holdings reports and Transaction reports.

  • Role of CCO

    It is imperative that a CCO maintain independence in order to implement and oversee the adviser’s compliance program. This would include preparing, presenting and managing all compliance resources of the adviser. In this white paper readers will find key responsibilities of a chief compliance officer and preparing for an SEC exam.

  • Suitability

    SEC Rule 206(4)-7 of the Advisers Act necessitates compliance with the adviser’s policies and regulatory requirements that govern the acceptance of new clients and the adviser’s fiduciary duty to have a reasonable and independent basis for providing investment advice while ensuring that such investment advice is appropriate and suitable for each client’s objectives. In this white paper readers will provide suggestions on how to ensure suitability for your clients.

  • Vendor Due Diligence

    For Advisers to minimize the risk associated with the failure of service providers and/or vendors they must conduct due diligence reviews. This white paper offers a list of key vendor dependencies the SEC will focus on during an exam and the importance of maintain all information collected during the RFP process.

  • Wrap Program

    Wrap fee sponsors are required to disclosure in a brochure for their clients a response to Form ADV Schedule H. This white paper discusses the role of a wrap fee sponsor and their responsibilities to their clients. Including key points on contractual arrangements with advisers and wrap sponsors to ensure fiduciary obligations are met.