Episode 39: Verifying Personal Disclosures

On this week’s episode we discuss the art of verifying personal disclosures on episode 39 of the CCO Buzz Podcast.


CCO Buzz: Hello and welcome back, CCO Buzzers! I’m not quite sure if that name will work for our listeners because it doesn’t have the “ring” to it. Oh well, on this week’s episode we feature Core Compliance’s Senior Compliance Consultant. He’s here to discuss the art of verifying personal disclosures on episode 39 – so let’s get right into it!

So, we’re in the first quarter of the year and Registered Investment Advisory Firms should be preparing their Form ADV amendments. As a CCO, are the things that you recommend doing in the first quarter?

Sr. Compliance Consultant:  Oh yes, there are many vary important compliance planning functions that should be happening in this first quarter. However, there is one that I think is very important that is not always being performed and that is the verification of personal disclosures.

CCO Buzz: What do you mean when you say, “personal disclosures”?

Sr. Compliance Consultant: What I am primarily referring to is Form U4 for both Registered Investment Advisers and Broker-Dealers, and Form ADV Part 2B for Registered Investment Advisors.

CCO Buzz: So, you’re referring to verifying the information in those documents, I’m guessing?

Sr. Compliance Consultant: Exactly. I consider verifying the accuracy of those documents yearly a best practice. In fact, I would say, this is almost always results in some type of inaccuracy being found.

CCO Buzz: Really? Why is that?

Sr. Compliance Consultant: Well, mostly because personnel don’t particularly know what events necessitates an update to their forms like U4 and 2B.

CCO Buzz: Such as?

Sr. Compliance Consultant: Well, for example, changes of home address require Form U4 updates. Sometimes personnel forget that and neglect to inform their compliance department of the change.

Likewise, changes of outside business activities require changes to both Form U4 and Form ADV Part 2B.

Since we’re currently in the GIG economy, CCOs can expect to see changes in outside business activities more frequently. And of course, those things have to be annotated on both Form U4 and 2B.

Believe it or not, I have also seen instances where personnel thought they had particular registrations but didn’t and personal disclosure verification process can catch these items before they become a regulatory problem.

CCO Buzz: How do you go about this verification?

Sr. Compliance Consultant: Typically, I download these forms from each registered person. I distribute them to the particular registrant and I ask them for affirmation that the forms are accurate or need updating. If they do need updating, then I ask them to provide me feedback on what exactly is inaccurate. And then I go ahead and update those forms as needed.

CCO Buzz: Thank you for the suggestion on this best practice!

Sr. Compliance Consultant: Of course, and as always, if anybody has any particular questions or difficulties with this evolution – you can simply call us at Core Compliance & Legal Services. Our phone number is (619) 278-0020 and we can provide any assistance you might need with that endeavor.

CCO Buzz: 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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