Is your Compliance House in order?

Saturday, March 10, 2012

As the first quarter of 2012 winds down, is your firms’ compliance house in order? Do you feel prepared to meet your compliance obligations or do you find yourself putting compliance planning on a back burner, intending to address items as needed with no clear plan in place? Running a financial services practice involves dedication, focus, and a vast time commitment, often times certain areas may not receive as much attention as others due to where resources are directed.

Creating and maintaining a compliance program is a key component of running your business and attention to this critical business area is necessary to mitigate risk, both for your firm and your clients. As Q1 closes and you head into April here are suggested areas to focus thought and create plans, as well as some key dates.

Compliance Calendar – Has your firm analyzed key compliance dates for 2012, such as regulatory filing dates or required annual mailings, internal risk management tasks, and annual review testing dates? Are those dates mapped out on a Compliance Calendar to guide your risk management process throughout the year?

Annual Review – Have you conducted an annual risk assessment of your firm, reviewed any previous year’s reports for risk items, findings, and a status check on how those items may be addressed? Have you taken action on any previous findings, both from an internal annual review and any regulatory reviews? Is there a testing plan created for conducting an annual review?

Form ADV Filing – Due to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Form ADV filing requirements have changed for 2012. Registered advisers are required to file an updated Form ADV with the SEC on an annual basis, within 90 days of fiscal year end. In 2012, ALL advisers registered with the SEC as of 1-1-12, must file an amended Form ADV with the SEC by 3-30-12. Advisers no longer eligible for SEC registration must still file the amended Form ADV, if they were registered with the SEC as of 1-1-12 and must start the state registration process. There is a 90 day window for filing with the state regulators and withdrawing from SEC registration, with a compliance date of 6-28-12.

Massachusetts Privacy Rules – As explored in a previous blog post, Massachusetts enacted new consumer privacy information, with a compliance date of 3-1-12. Has your firm examined its client list to identify any residents of Massachusetts and ensured your privacy policy and contracts with third-party service providers are in compliance?

Annual Mailings – Clients should receive, on an annual basis, your privacy policy and your Form ADV Part 2A Brochure as well as any supplements. Prior to the revised Form ADV Part 2 rule, advisers were only required to offer the Form ADV Part 2. Advisers are now required to deliver the Form ADV Part 2A Brochure, including or accompanied by a summary of material changes or a summary of material changes with an offer and instruction on how to obtain the Form ADV Part 2A Brochure.

Additionally, we recommend you annually review your compliance policies and procedures, your books and records maintenance system, and new regulations, keeping in mind changes to your organizational structure, business lines, and new products or services you’re engaged in or plan to add to your business.

The areas highlighted above are certainly not an all-encompassing example of a comprehensive compliance program, the list is intended to serve as reminders and triggers for thought as you look back on Q1 and forward to the remainder of a successful 2012.

Red Oak Compliance Solutions is available to help. We can provide guidance on all of your compliance needs. For more information or to request information on how we can help, please contact us.

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.