Published on Nov 9th, 2020 |

The Office of Compliance Inspections and Examinations (OCIE) conducted examinations focusing on SEC-registered investment advisers operating from multiple branch offices and with operations geographically dispersed from the adviser’s principal or main office. The assessment of the compliance and supervisory practices relating to advisory personnel working within the advisers’ branch offices was the general focus from this examination.. This Risk Alert contains observations resulting from the examinations under the Initiative, including nearly 40 examinations of advisers’ main offices combined with one or more examinations of each adviser’s branch offices.

The main focus behind this multi-branch initiative was on investment advice, compliance programs and supervision.

Below are going to be key takeaways from the compliance program-related shortcomings in Compliance Programs and Supervision:

  • Custody of client assets
  • Fees and expenses
  • Oversight and supervision of supervised persons
  • Advertising
  • Code of ethics

Below will be key takeaways from the compliance program-related shortcomings in Investment Advice:

  • Portfolio Management
  • Oversight of investment recommendations
  • Mutual fund share class selection and disclosure issues
  • Wrap fee program issues
  • Rebalancing Issues
  • Conflicts of Interest Disclosures
  • Trading and allocation of investment opportunities

OCIE encourages advisers to consider the unique risks and challenges presented when employing a business model that includes numerous branch offices and business operations that are geographically dispersed and to adopt policies and procedures to address those risks and challenges.

Want to look more in detail regarding this SEC Release? Click HERE.