Risk Alert: OCIE is Scouting Investment Advisory Branch Offices

By December 12, 2016New in Compliance, Risk Alert

December 12, 2016:  The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) announced via Risk Alert its new Multi-Branch Adviser Initiative. The initiative is no surprise given that the 2016 Examination Priorities published in January highlighted OCIE’s interest in examining advisers’ supervisory practices over advisory personnel located in branch offices.

OCIE’s interest is prompted by the fact that advisers are increasingly expanding their geographical footprints, staffing personnel in locations far removed from the adviser’s principal place of business. The Staff is worried about the risks of the “out of sight, out of mind” mentality.

Accordingly, OCIE has launched its Multi-Branch Adviser Initiative to examine advisers operating multiple branch offices to ascertain compliance with federal securities laws in view of the additional and unique risks that arise when operating in this manner.

The Risk Alert highlights several key areas of interest:

  • Implementation of policies and procedures in the main and branch offices;
  • Supervisory structure, including an assessment of how supervision is tailored to the unique risks in specific branches;
  • Role and empowerment of compliance personnel charged with overseeing branch offices, including their level of access to documents and relevant information; and
  • Accuracy of information on the adviser’s filings regarding branch offices, including Form ADV, as compared to actual practices.

OCIE is looking for evidence of testing and controls in many areas, especially those related to:

  • Fees and expenses
  • Advertising
  • Code of Ethics
  • Custody
  • Investment Recommendations (with emphasis on oversight, conflicts of interest, and allocations of investment opportunities)


OCIE’s parting message is: “In sharing the focus areas for the Multi-Branch Adviser Initiative, OCIE hopes to encourage advisers to reflect upon their own practices, policies, and procedures in these areas and to promote improvements in investment adviser compliance programs.”  This message is code for … pay close attention – we expect advisers to implement robust remote supervisory controls. Forewarned is forearmed. 

Follow this link to access the Risk Alert: https://www.sec.gov/ocie/announcement/risk-alert-multi-branch-adviser-initiative.pdf.

Betsy Rathz

Horrigan Resources, Ltd.

3000 Village Run Road | Building 103, #209 | Wexford PA 15090




Author admin

More posts by admin