Read the Risk Alert here

  • Source: sec.gov

Treliant Takeaway:

Treliant works with clients to address the issues raised in the risk alert enabling them to avoid the exam issues and enforcement costs.  Here’s how we can help:

  • Our team of ex-regulators conduct a large number of mock reviews and annual examinations for investment advisers, private funds and broker-dealers. These reviews focus on identifying weaknesses in the compliance, risk and infrastructure, as well as recommending practical enhancements and improvement.;
  • We combine industry professionals and auditors to assist clients in developing and implementing quarterly and monthly testing programs targeted at satisfying the regulators and addressing the needs of risk management and audit;
  • Working with CCOs on the development of compliance programs, whether as part of a start-up or a large well-established firm is a core skillset for our team of ex-CCOs; and
  • Management often needs independent assessment and ongoing advice on regulatory issues and the quality of their compliance resources. Our experienced team of senior industry consultants will be there to provide the insights and benchmarking they need.

Risk Alert Highlights:

In November 2020, the SEC Division of Examination issued a Risk Alert documenting common compliance program deficiencies identified during their examination of Registered Investment Advisers. In a speech given on the release date by Peter Driscoll, Director, SEC Division of Examination, he highlighted the importance of the SEC Risk Alerts. These notices provide registrants and their CCOs with specific lists of items that many firms are frequently getting wrong, thus giving them notice and time to remediate them.    The Risk Alert focused on the requirements of the Compliance Rule 206(4)-7 and identified five main program deficiencies, including:

  • Inadequate compliance resources;
  • Insufficient CCO authority;
  • Failure to fully Implement the compliance program;
  • “Off the shelf” or inadequate compliance polies and procedures; and
  • Failure to address critical business functions.

The critical business functions that we omitted included:

  • Investment process and portfolio management;
  • Marketing;
  • Trading;
  • Disclosures;
  • Client privacy safeguards;
  • Books and records;
  • Custody and safeguarding of client assets; and
  • Business continuity plans.

Author

Alan Halfenger

Alan Halfenger is a Managing Director in Treliant’s New York office. A former Chief Compliance Officer from the securities and investment management industry with experience in Anti-Money Laundering (AML), anti-corruption, sanctions, and know-your-customer compliance, Alan advises clients on regulatory risks related to global securities and commodities dealings, as well as…