SEC Issues ComplianceAlert Detailing Investment Adviser Compliance Deficiencies and Best Practices

The SEC’s Office of Compliance Inspections and Examinations recently released a new ComplianceAlert outlining common deficiencies found among investment advisers in the course of examinations, and describing best practices that advisers can implement to address or preempt deficiencies.  Of particular interest to hedge funds, the SEC described deficiencies it found in soft-dollar practices and personal trading by advisory personnel, and also highlighted several effective compliance controls in both areas.  Compliance professionals surveyed by the Hedge Fund Law Report were consistent in their focus on the importance of enforcing policies.  One hedge fund compliance chief noted that a firm can have in place compliance policies consistent with best practices, but such policies can be rendered nugatory if they are not complimented by robust and regularly enforced practices.

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