US SEC Publishes Risk Alert on Top Five Investment Adviser Compliance Issues Found During Inspections

February 15, 2017

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) issued a National Exam Program Risk Alert on February 7, 2017 (Risk Alert), highlighting the “five compliance topics most frequently identified in deficiency letters that were sent to SEC-registered investment advisers” in a sample of over 1,000 examinations during the prior two years. The deficiencies or weaknesses concerned requirements of the Investment Advisers Act of 1940 (Advisers Act) and rules thereunder related to: compliance; regulatory filings; custody; codes of ethics; and books and records. After identifying the topics, the Risk Alert provides examples of typical issues identified by examiners. The Risk Alert encourages advisers to review their compliance programs and states that “where appropriate, the staff referred examinations to the Division of Enforcement for further action.”

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