OCIE Issues Risk Alert on Advisers’ Oversight of Employees With a History of Disciplinary Events

In 2017, the SEC’s Office of Compliance Inspections and Examinations (OCIE) examined more than 50 advisers as part of an initiative to assess the oversight practices of advisers that employ individuals with disciplinary histories. OCIE recently issued a risk alert intended to raise awareness of certain compliance issues that OCIE staff observed in those examinations; to encourage advisers to reflect upon their practices, policies and procedures; and to help advisers consider ways to improve their supervisory practices and compliance programs. Although the initiative focused primarily on advisers with retail clients, the principles enunciated by OCIE are equally applicable to private fund advisers. This article summarizes the key takeaways from the risk alert. See our coverage of OCIE risk alerts on electronic messaging; the cash solicitation rule; best execution; fees and expenses; the advertising rule; compliance topics; custody; cybersecurity; business continuity and disaster recovery plans; and social media. See also our two-part interview with former OCIE Deputy Director Jane Jarcho: “Relationship Between OCIE and Enforcement” (Mar. 28, 2019); and “OCIE’s National Exam Program and Annual Priorities” (Apr. 4, 2019).

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