A guide for chief compliance officers of registered investment advisers on how to develop, conduct and maintain an effective and robust annual testing programme

Elizabeth Cope
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Elizabeth Cope: Managing Member, SEC Compliance Solutions, USA

Journal of Financial Compliance, 2021, vol. 5, issue 1, 15-29

Abstract: Every investment advisory firm is unique. Each has a different organisational structure, strategy and service offering and different operational approaches, personnel dynamics and company cultures. There is only one thing I can think of that is consistent from firm to firm: every investment adviser that is registered with the Securities and Exchange Commission (SEC) has to adhere to the same set of rules and regulations. Under Rule 206(4)-7 of the Investment Advisors Act, advisers are required to maintain policies and procedures, conduct an annual review to support those policies and procedures, and designate an individual at the firm as a chief compliance officer (CCO) to administrator the policies and annual review, often referred to in its entirety as a compliance programme. Accomplishing the task of this compliance programme can feel daunting considering that the SEC’s rules and regulations are vast, intricate and confusing. With this in mind, I developed a methodology for tackling the annual compliance review that — time and time again — has made my clients’ jobs easier. This approach is based on simplicity, practicality and customisation. I use it with every one of our clients. And it is my goal to share it with every new, newish and multi-hatted CCO to help make their lives easier.

Keywords: investment adviser compliance; policies and procedures; annual review; compliance programme; Rule 206(4)-7 (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2021
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