Transcript Surviving in Today`s Regulatory Environment

2014 Regulatory Update:
Key Focus Areas for
Investment Adviser Compliance
Presented by:
Kelli A. Capitano, Esq.
561.330.7645 - extension 207
[email protected]
National Compliance Services, Inc.
Delray Beach, FL
www.ncsonline.com
Discussion topics
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SEC Examination Initiatives and Priorities
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Examination Priorities for 2014
New Initiatives and Emerging Issues
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Enhanced Examination Activity by State Regulators
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Key Focus Areas for Compliance Programs
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Suitability – One size doesn’t fit all!
Failure to Supervise – This can really get you in trouble!
ADV Disclosure – Tell it like it is!
Identity Theft – How to spot red flags…Don’t miss the signs!
Social Media – The Do’s and Don’ts…“Like” it or not!
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SEC Examination Initiatives
IA Examination Priorities for 2014
 Safety of Client Assets and Custody
 Marketing/Performance
 Allocation of Investment Opportunities
 Compensation Arrangements
 Filings & Disclosure
New Initiatives and Emerging Issues
 Presence Exams
 Never-Before Examined Advisers
 Wrap Fee Programs
 Alternative Investments
Request for Funding Via User Fees (11/22/2013)
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Enhanced Exam Activity by State Regulators
*NASAA 2013 Coordinated Investment Adviser Examinations, Investment Adviser
Operations Project Group, October 2013
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Suitability
Document the Investment Process
Maintain Documentation Evidencing Basis for
Recommendations Specific to Client
Incorporate Procedures for Initial and Ongoing
Assessments
Document Due Diligence for Alternative Investments
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Failure to Supervise
Duty to Supervise Under Section 203(e)(6) of the IA
Act of 1940
Increased Regulatory Action
Supervisors and Supervisory Process Should be
Accurately Identified in Policies and Procedures
IAR Supervisors Should be Identified in Form ADV Part
2Bs
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Form ADV Disclosure
Top Deficiency Area for Examinations
Disclosure Must Be Accurate and Consistent with
Marketing Materials, Agreements, Policies and
Procedures, etc.
Implement Policies and Procedures to Periodically
Review Disclosures
Pay Attention to Critical Focus Areas
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Identity Theft
April 15,
2014 SEC Risk
Alert: OCIE
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Advertising
Top Area for Compliance Deficiencies
Social Media Content Must Always Comply with
Advertising Standards
Recognizing False or Misleading Content
Prohibition on Testimonials
Incorporating Disclosures
Examples: Recent Advertising Deficiencies
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Use of Social Media
RIAs must consider antifraud, compliance, and
recordkeeping provisions
3/2014 SEC Guidance Update on Testimonial Rule and
Social Media
 Provides guidance on testimonial issues specific to:
 Third party commentary
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Advertisements on independent social media sites
IA references to commentary on independent social media sites
Client lists
Fan/community pages
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Use of Social Media
Non-exhaustive list of factors that RIAs should consider when
evaluating the effectiveness of its social media policies and procedures:
•Usage Guidelines/Content Standards
•Monitoring /Frequency of Monitoring
•Approval of Content
•Criteria for Approving Participation
•Training
•Certification
•Functionality
•Personal/Professional Sites
•Information Security
•Firm Resources
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Contact Information
Kelli A. Capitano, Esq.
561.330.7645 - extension 207
[email protected]
National Compliance Services, Inc.
Delray Beach, FL
www.ncsonline.com
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