A Checklist for Evaluating Employee Disciplinary Policies and Procedures of Private Fund Managers

Properly disciplining employees when they violate an adviser’s policy or otherwise engage in misconduct is a necessary and useful part of remediation. Private fund advisers should have good disciplinary policies in place before misconduct or policy breaches occur to ensure that any discipline or penalty that is imposed is neither ad hoc nor arbitrary. When an employee does engage in misconduct or breach an adviser’s compliance policy, the investment adviser should proceed with care to ensure a just and defensible outcome. This checklist provides private fund advisers with questions to ask both about their policies and about specific procedures to ensure that their disciplinary processes are running as smoothly as possible. For additional insight on employee discipline, see our three-part series: “Best Practices for Fund Managers to Develop an Employee Discipline Framework That Fosters Predictability in the Face of Inconsistent Laws” (Feb. 8, 2018); “Best Practices for Fund Managers When Investigating and Documenting Employee Discipline” (Feb. 15, 2018); and “Best Practices for Fund Managers to Ensure a Fair Process When Disciplining Employees” (Feb. 22, 2018).

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