SEC Releases Risk Alert on Compliance Issues, including the Custody Rule
Regulatory scrutiny of private fund advisors remains an important topic for the Securities and Exchange Commission (“SEC”). Following a press release last month detailing its 2017 exam priorities, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a risk alert on compliance issues that included the Custody Rule.
The risk alert listed the five most frequent compliance issues identified in OCIE examinations of registered investment advisors.
In the full report, the OCIE notes deficiencies in the following areas:
- the Compliance Rule,
- regulatory filings,
- the Custody Rule,
- the Code of Ethics Rule and
- the Books and Records Rule.
Of particular note are the failures to comply with the Custody Rule. According to the alert, many advisors did not realize they were deemed to have custody.
Learn more by reading the full report. The OCIE intends for the report to “assist advisers during their compliance reviews,” many of which occur during Q1. The purpose of the risk alert is to encourage advisors to examine their own practices, policies and procedures and take whatever actions are necessary to enhance their compliance programs.
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