Annual reviews are one of a CCO’s more daunting requirements, as they take considerable time, talent, and other resources to complete.
Through our participation in more than 100 regulatory examinations as Chief Compliance Officers, the Alaric team is in the unique position of understanding current regulatory trends and having the hands-on experience to help clients identify issues before they become violations.
The Investment Advisers Act of 1940 requires each Registered Investment Adviser to review its compliance policies and procedures annually to determine the adequacy and effectiveness of their implementation, consider new regulations and changes to the business that may impact the policies and procedures. Similarly, the Investment Company Act of 1940 requires institutions and funds to review their policies and procedures, as well as those of their service providers, at least annually.
Regulators also expect registered firms to document the results of these reviews, but while they provide broad guidance, they do not stipulate how the annual review should be conducted or evidenced. So, approaches to the annual review will vary depending on a firm’s size and resources.
Alaric employs processes and techniques frequently encountered in SEC Registered Investment Adviser inspections, but which are tailored to principally focus upon the most sensitive risk areas of a client.
Project Scope Alaric’s review may include, but will not be limited to, the following:
- Adequacy and Suitability/Customization of Compliance Policies and Procedures.
- Compliance Program Monitoring and Testing Activities.
- Conflicts of Interests.
- Portfolio Management Processes.
- Investment Opportunity Allocation; Other Trading Practices and Conflicts.
- Registration and other Regulatory Reporting.
- Safeguarding of Client Assets.
- Books and Records Maintenance and Retention Requirements.
- Private Placement Procedures.
- Investor Subscription and Redemption Processing for Private Funds
- AML/KYC Screening
- New Managed Account Processes and Agreements.
- Allocations of Fees and Expenses for Private Funds.
- Marketing and Other Promotional Activities
- Investor Disclosures, Communications and Complaint Handling.
- Valuation of Client Holdings
- Fee Arrangements and Calculations.
- Investor Privacy/Information Security Safeguards and Cybersecurity.
- Business Continuity and Disaster Recovery Planning and Testing.
Project Processes and Stages The assessment will be conducted according to the following stages:
Stage 1. Perform a thorough review of various documents and other information which the Firm will be requested to produce in response to a detailed request which Alaric will furnish before the commencement of the onsite portion of the engagement.
Stage 2. Perform interviews of the lead supervisors of and/or other appropriate representatives from all critical functional areas of the Firm.
Stage 3. Perform testing of such facets of the Firm’s compliance program, including those areas outlined in the Project Scope
Stage 4. Provide a draft and prepare the project deliverables, as described below.
Stage 5. Discuss and review, in detail, with members of the Firm’s management, Alaric’s findings and recommendations noted in the deliverables furnished at the conclusion of the project.
The material and information provided herein is for general informational purposes only. You should not rely upon the material and information provided herein as a basis for making any business, legal or any other decisions. Also note that actual proposals for Annual Review Services are customized based upon the specific needs of the client at the time of the request.