The end of the year is the perfect time to get your firm’s compliance filing and processes in order. To help, we put together a list of important year-end compliance tasks. You can also download a one-page form for easy reference.
❒ Fund IARD for Your Renewal Fees
Complete funding before December 17, 2019. Many states will terminate your registration within the first couple of weeks of January if your fees are not in the IARD account.
❒ Code of Ethics
If registered with the SEC, you must have a Code of Ethics. Some states also require a Code of Ethics. Make sure the Adviser’s supervised persons have reviewed the document and your Code of Ethics are in compliance. Annual attestations are required.
❒ Annual Amendment
File your required Annual Amendment to your ADV Parts 1 and 2 and send out a copy of the annually amended ADV within 90 days of your fiscal year end.
❒ 13 Filings & Form PF
If registered with the SEC, keep tabs on your 13 Filings. These should be done quarterly, but check to see if you need to file 3rd quarter 2019 and 1st quarter 2020. For those managing private funds with an AUM of $150 Million or more, remember to file your annual Form PF. For those managing funds with AUM of $41.5 Billion or more, you should file quarterly.
❒ Third Party Review
Perform due diligence on all third party money managers, custodians, broker dealers, alternative investments, and primary vendors
❒ Review Contracts
Review your contracts to see if any changes need to be made. Remember, contracts and ADV Part I and 2 must match.
Review and update all reps/advisor’s U-4s.
❒ Compliance Certifications
Collect annual compliance certifications from all “supervised persons” and “access persons,” certifying that each has read and understood the compliance policies and procedures.
❒ Review Compliance Violations
Review any compliance violations or incidents that occurred in the prior year. Determine the effectiveness of your compliance policies and procedures in discovering and addressing each violation or incident. Revise your policies and procedures to the extent reasonably necessary to prevent such incidents in the future.
❒ Written Supervisory Procedures
All investment advisers, whether registered with the SEC or any of the fifty states, are required to maintain and enforce Written Supervisory Procedures. These must be reviewed annually. The procedures are designed to ensure compliance with statutes, rules, and regulations. Please note, the procedures can’t just regurgitate the rules. They must describe the policies and procedures of the adviser that are in place to ensure compliance with the rules.
❒ Best Execution Review
Although it doesn’t have to be done at year end or beginning, it’s a good time to conduct a Best Execution Review as a requirement of your fiduciary duty. The SEC recommends (which means you should) registrants conduct a review at least quarterly.
❒ Independent Third-Party CPA
If you’re deemed to have physical custody of client funds, this is a good time to ensure your agreement with the independent third-party CPA that conducts the Annual Surprise Audit is in good order.
❒ Business Continuity Plan
Test your plan. This is required to be performed annually and the results documented.
❒ Calculate AUM
Start the process to calculate your Regulatory Assets Under Management so you can report them in first quarter 2020.
❒ Personal Securities Holding Report
Obtain an annual personal securities holding report from each “access person.”
❒ SEC and Regulatory Reviews
Review any compliance matters that the SEC or other regulatory authorities have highlighted as areas of concern for the upcoming year (i.e., cybersecurity preparedness and anti-money laundering programs) or any changes in the laws or regulations that may require a revision to your compliance policies and procedures, such as the changes to Form ADV disclosure requirements. This includes preparing for Reg BI.
It’s essential to keep on top of your compliance program and be familiar with the rules and regulations under which you operate. If you have questions, please reach out to the Red Oak team.
About Red Oak Compliance Solutions
Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.