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August 2019

Risk Alert – Observations from Examinations of Investment Advisers: Compliance, Supervision, and Disclosure of Conflicts of Interest

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On July 23, 2019, the U.S. Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert to share its findings related to a series of examinations conducted to assess the oversight practices of registered investment advisers that previously employed, or currently employ, any individual with a history of disciplinary events.  These examinations, collectively referred to as the “Supervision Initiative” entailed examinations of over 50 registrants over the course of 2017.  Registrants collectively managed approximately $50 billion in assets for nearly 220,000 clients, the vast majority of whom were retail investors.  Advisers were identified for examination through a review of information about disciplinary events and other legal actions involving supervised persons, including legal actions that are not required to be reported on Form ADV (e.g., private civil actions).

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