On October 7, 2013, the North American Securities Administrators Association (NASAA) released a report summarizing the results of state investment adviser examinations performed by 44 state and provincial securities examiners over the last two years. The report noted the differences in the type and frequency of exams since the switch of mid-sized advisers from federal to state oversight. The report compared noted deficiencies for advisers with less than $30 million in assets under management and those with more than $30 million. Notably, the findings were very similar with both categories having deficiencies in books and records, registration, and contracts.
Importantly though, NASAA issued a list of 14 “best practices” based on the 2013 report data that investment advisers should consider implementing into their compliance practices. These best practices include items such as:
- Preparing and maintaining required records
- Reviewing and updating Form ADV and contracts
- Reviewing solicitor agreements and disclosures
- Keeping accurate financials
- Ensuring client investment policy and suitability information remain current
- Implementing proper custody safeguards (requirements may vary by state)
These steps, along with the others in the NASAA report are of continued importance in helping state-registered investment advisers strengthen their compliance programs and avoid deficiencies.
For more information, or for assistance on other compliance topics, please contact us at (619) 278-0020 to schedule a consultation.