Client Alert: Frequent Compliance Topics Identified in OCIE Examinations of Investment Advisers

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February 14, 2017

On February 7, 2017, the Office of Compliance Inspections and Examinations (the “OCIE”) of the Securities and Exchange Commission (the “SEC”) issued a risk alert entitled “The Five Most Frequent Compliance Topics Identified in OCIE Examinations of Investment Advisers” (the “Risk Alert”), which sets out the compliance topics most frequently identified in deficiency letters that the OCIE sent to SEC-registered investment advisers during the past two years. The frequently identified compliance topics relate to deficiencies or weaknesses involving: (1) Rule 206(4)-7 under the Investment Advisers Act of 1940 (the “Advisers Act”) (such rule, the “Compliance Rule”); (2) required regulatory filings; (3) Rule 206(4)-2 under the Advisers Act (the “Custody Rule”); (4) Rule 204A-1 under the Advisers Act (the “Code of Ethics Rule”); and (5) Rule 204-2 under the Advisers Act (the “Books and Records Rule”). 

Set forth in this Client Alert is a description of the deficiencies and weaknesses identified by the OCIE, together with some of our suggestions for registered investment advisers, particularly those that advise only private funds.