Though the SEC has proposed requiring cybersecurity policies and procedures for investment advisers for the first time, it has also provided firms flexibility in addressing the general elements to be covered. “We recognize that there is not a one-size-fits-all approach to addressing cybersecurity risks. As a result, the proposed cybersecurity risk management rules would allow firms to tailor their cybersecurity policies and procedures to fit the nature and scope of their business and address their individual cybersecurity risks,” the SEC wrote in recently proposed cybersecurity risk management rules. Advisers and funds would also have to report any significant cybersecurity incidents […]
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SEC Examiners: Advisers Should Review Policies and Procedures for Calculating Advisory Fees
SEC examiners have recommended that investment advisers “review routinely, refine, and improve, as appropriate, their fee billing policies, procedures, and practices and address new risks as they are identified” to ensure that they are calculating advisory fees correctly. They also should review their disclosures to confirm that clients are aware of all fees and expenses and related material conflicts of interest, examiners have suggested. Examiners made the recommendations after identifying deficiencies related to the advisory fees charged by most of the approximately 130 investment advisers that it examined in a nationwide initiative. The deficiencies “often resulted in financial harm to […]
Continue readingMore TagSEC Urges Stricter Robo-Adviser Compliance
The SEC has suggested that investment advisers improve robo-adviser compliance by tightening policies and procedures for automated digital investment advisory services. The regulator gave deficiency letters to “nearly all” of the advisers whose robo-advisory services it recently examined, according to a new SEC risk alert regarding electronic investment advice. “The examinations conducted within the scope of this review resulted in a range of actions,” the SEC stated in the risk alert. “In response to the staff’s observations, some advisers elected to amend disclosures and marketing materials, modify or eliminate performance advertisements, revise compliance policies and procedures, improve data protection practices, […]
Continue readingMore TagSEC and FINRA Exam Priorities to Include Firms’ AML Compliance Programs, Including Policies and Procedures
SEC’s Office of Compliance Inspections and Examinations (OCIE) has issued its examination priorities for 2020. According to the document, OCIE will assess the adequacy of firms’ AML compliance programs, including relevant policies and procedures. AML Compliance was also cited by FINRA as an area of focus in its recent 2020 Risk Monitoring and Examination Priorities Letter. “The Bank Secrecy Act requires financial institutions, including broker-dealers and investment companies, to establish anti-money laundering (AML) programs. These programs must, among other things, include policies and procedures reasonably designed to identify and verify the identity of customers and beneficial owners of legal entity customers…Given the importance […]
Continue readingMore TagKey Takeaways: FINRA’s 2019 Report on Examination Findings and Observations
On October 16, 2019, FINRA published its 2019 Report on FINRA Examination Findings and Observations. This report is a useful resource for firms to leverage to improve their compliance and risk management programs. One of the findings in the report pertains to failure to effectively monitor for and react to regulatory changes. Firms are required to review regulatory changes against their supervisory systems, including their written supervisory procedures and training programs. FINRA found that some firms did not adequately respond to recent regulatory changes such as FinCen’s new Customer Due Diligence (CDD) obligations and requirements around Financial Exploitation of Specified […]
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