by Michael Osnato, Jr., David Blass, Allison Scher Bernbach, Meaghan A. Kelly, Meredith J. Abrams, and Manny M. Halberstam
Last month, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) published a Risk Alert (the “Risk Alert”)[1] providing an overview of registered investment adviser compliance issues identified by OCIE related to Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”).[2]
The Risk Alert identified a number of Compliance Rule deficiencies that OCIE staff observed in its recent adviser exams. One type of deficiency it discusses is failures by advisers to devote adequate resources, such as information technology, staff and training, to their compliance programs. OCIE staff also observed chief compliance officers (“CCOs”) who lacked sufficient authority within the adviser to develop and enforce appropriate policies and procedures. In addition, OCIE staff observed certain deficiencies pertaining to advisers’ annual compliance program reviews.