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A guide for chief compliance officers of registered investment advisers on how to develop, conduct and maintain an effective and robust annual testing programme
Journal of Financial Compliance,
5
(1),
15-29
(2021)
Abstract
Every investment advisory firm is unique. Each has a different organisational structure, strategy and service offering and different operational approaches, personnel dynamics and company cultures. There is only one thing I can think of that is consistent from firm to firm: every investment adviser that is registered with the Securities and Exchange Commission (SEC) has to adhere to the same set of rules and regulations. Under Rule 206(4)-7 of the Investment Advisors Act, advisers are required to maintain policies and procedures, conduct an annual review to support those policies and procedures, and designate an individual at the firm as a chief compliance officer (CCO) to administrator the policies and annual review, often referred to in its entirety as a compliance programme. Accomplishing the task of this compliance programme can feel daunting considering that the SEC’s rules and regulations are vast, intricate and confusing. With this in mind, I developed a methodology for tackling the annual compliance review that — time and time again — has made my clients’ jobs easier. This approach is based on simplicity, practicality and customisation. I use it with every one of our clients. And it is my goal to share it with every new, newish and multi-hatted CCO to help make their lives easier.
Keywords: investment adviser compliance; policies and procedures; annual review; compliance programme; Rule 206(4)-7
The full article is available to subscribers to the journal.
Author's Biography
Elizabeth Cope CPA, CIPM, CSCP, began her career as a tax accountant and auditor. She quickly transitioned to the financial services space in 2002. She has been consulting with investment advisers on compliance since the Compliance Program Rule became effective in 2004. She founded SEC Compliance Solutions in October 2017 with the goal of creating a firm that cultivated an environment of finding practical, valuable solutions for investment advisers. She believes compliance does not have to be overly complicated or overwhelming and takes a pragmatic, educational approach with her clients. When not working, she can be found spending time with her husband and three kids, playing piano, reading a good book, running or riding her mountain bike.
