Episode 32: 2019 SEC OCIE Exam Priorities (Part 2)

On this episode of the CCO Buzz we are rejoined by Compliance Consultant Adam Stutz to continue our discussion on the newly released 2019 SEC Exam Priorities and consideration for CCO's in 2019.

 

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CCO Buzz: Hello and welcome back! We’re only on the second week of January, but we’re already looking forward to our next day off. Anyone else have that internal struggle coming off the holidays and start of the new year? Nope, only me? Ok, well let’s get started because we are rejoined by Core Compliance’s Adam Stutz.

Last week we said we were ready to hit 2019 running. So, for episode 32 of the CCO Buzz let’s jump right back to where we left off. Adam, understanding the conversation from last week and what we discussed regarding the SEC Exam Priorities, what are some suggestions you have for CCO’s to apply in 2019.

Adam Stutz: Well Aimee, considering OCIE’s exam priorities, here are some practical suggestions on how investment advisers’ Chief Compliance Officers and their staff can maintain and strengthen their compliance programs:

  • The first and most obvious step would be to review the SEC’s exam priorities report and review it for guidance and suggested compliance steps. Next would be to review your Firm’s written Policies and Procedures and perform a risk assessment and conflict inventory. Review surveillance reports, exception reports, and checklist for detection of any trends within your compliance program.
  • Concerning Cybersecurity, you should consider reviewing your Cybersecurity Incident Response Plan with your Incident Management Team and ensure vulnerability and penetration tests have been performed, as well as any risk assessments of your Cybersecurity Policy.
  • In addition to that, make sure the firm’s business continuity plan has been/will be fully tested and include both localized business disruptions and wide spread disasters.
  • Concerning AML, performing risk assessments of your AML programs and ensuring that KYC procedures are being followed and updated accordingly is of paramount importance.
  • With regards to marketing, confirm that all of your marketing collateral is being reviewed regularly.
  • For your Form ADV, review your Form ADV Part 1, Part 2A, and Part 2Bs to ensure that they are up-to-date and ready to file.
  • Sample test client files to confirm investment objectives have been documented and appear in-line with portfolios. In line with this, audit the billing process to ensure fees are calculated correctly.
  • If your firm utilizes solicitors, review solicitor arrangements to confirm that agreements are up-to-date and in compliance with Rule 206(4)-3 of the Advisers Act. Verify that solicited clients received a copy of the solicitor’s disclosure statement.
  • For books and records, review your controls. Including client, corporate and financial records, as well as performance advertising books and records requirements.
  • If your firm has branch offices, confirm all branch offices have and will receive a compliance review in accordance with firm policies.
  • Have your legal counsel review standard client agreement(s) for necessary provisions and consistency with disclosures in Form ADV Part 2A, as well as on the clarity of the services and fees associated with the servicing mandate. And, make sure to confirm that due diligence reviews of service providers have been performed and documented.

If you need help reviewing and understanding OCIE’s 2019 exam priorities or have questions or require assistance with reviewing and strengthening your compliance program, give us a call at 619-278-0020. Thanks!

CCO Buzz: Listeners, we also want to let you know that time is running out on the exclusive CCO Buzz discount code for the 2019 Annual Core Compliance Workshop. Don’t forget to use the code BUZZ2019 for $100 off your registration ticket. Thanks!

Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn or Twitter @CoreCLS. Thank you and we hope you tune into next week’s episode of the CCO Buzz.

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