Planning for the Annual Review and Reporting

Rule 206(4)-7 of the Advisers Act and Rule 38a-1 of the Investment Company Act require an Investment Adviser and a Fund, respectively, to review policies and procedures annually to determine their adequacy and the effectiveness of their implementation.

The SEC highlights specific focus areas including portfolio management processes, trading practices, proprietary trading, disclosure accuracy, and records maintenance, among other things.

In 2006, then-OCIE Associate Director for Examinations Gene Gohlke listed nine questions that SEC examiners consider in scrutinizing an annual review. Those questions still resonate today and can inform your process.

They include:

  1. Who conducted the review?
  2. What was reviewed?
  3. When was it conducted?
  4. How was it conducted?
  5. What were the findings from the review work?
  6. What recommendations were made?
  7. What is the current status of implement recommendations?
  8. What documentation was created/retained to reflect the work done?
  9. What was the involvement of senior management in the review?

To be blunt, the process should be a team effort, with different departments “owning” their subject matters. Doing so allows the CCO to keep compliance on the radar for firm employees and sets the “culture of compliance” that the SEC looks for. It cannot be stressed enough that involving management and employees outside the compliance department sets a tone firm-wide.

In our recent ComplianceCast, “Planning the Annual Review and Reporting,” consultants Allison Fraser and David Lourie go in-depth on the complex topic.

Learning objectives include:

  • Planning and Documentation
  • Testing the Adequacy and Effectiveness of Policies and Procedures
  • Reporting Annual Review Findings
  • Responding to Issues Identified by the Annual Review
  • Common Deficiencies

To download this ComplianceCast presentation, please fill out our request form by clicking here.

Latest Content

Schedule 13D/13F Clarity on ETF Issues

Do I need to file a 13D or 13G if my client accounts hold in excess of 5% of an ETF? Generally, no. The SEC has granted no-action relief to ETFs with respect to compliance with Section 13(d) of the Securities Exchange Act. Section 13(d) was designed to require disclosure when holders begin to accumulate … Continued

New Remedy Coming for SEC’s Custody Rule?

The SEC’s Custody Rule continues to be a common source of confusion and a landmine for noncompliance. Custodial paperwork has caused huge headaches for investment advisers, who are not a party to the agreement and may not even have a copy of the custodial new account paperwork. The issue with existing guidance is that it … Continued

SEC Issues MiFID II No-Action Relief

Some industry anxiety was assuaged on October 26 with three no-action letters that offer relief for some US regulated broker-dealers and investment advisers regarding European MiFID II regulations. The letters followed consultation with the European authorities, and are designed to address concerns that investors could lose access to valuable research. MiFID II is a series of regulations … Continued

Regulatory Changes Impacting RICs and Service Providers

A year ago, the SEC adopted Investment Company Reporting Modernization Rules and Forms, as well as rules pertaining to liquidity risk management programs and swing pricing. New forms N-Port and N-Cen along with amendments to Regulation S-X significantly change the current reporting regime for most registered investment companies (RICs) because they require more comprehensive disclosure and … Continued

Publicly Available Information Heightens Need for Cybersecurity Vigilance

For any business, “ports” that allow for communication generally need to be open (for example, ports 80 and 443 for websites, and port 500 for VPN access). While most of these ports allow you to engage in critical functions, there are often ports that remain open despite being unneeded or unused. These available ports present … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.