Adviser Applications- Common Deficiencies Notice

The Texas State Securities Board, the regulatory agency governing state registered investment advisers, recently issued a notice advising of common deficiencies found in investment adviser applications. While this information was compiled and release by the state, the notice serves as a general reminder of the importance of the information included in the Form ADV Parts 1 and 2 as well as other documents such as the client advisory agreement. Per the notice, the most common deficiencies were related to inconsistencies between Form ADV Part 1 and the Part 2 narrative primarily in the disclosure of types of clients, methods of compensation and fee schedules, and services offered.

To read the notice, please click here.

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.

SEC Requires Adviser to Retain Outside Compliance Consultant

The SEC recently required a registered investment adviser to retain an outside compliance consultant for two years to help them build and implement a robust compliance program.

The registered investment adviser agreed to this to settle SEC charges that it failed to implement an adequate compliance program. The SEC alleges that two successive chief compliance officers were internal employees that had little compliance experience or training. The firm failed to conduct and document annual compliance reviews and tried to use written supervisory procedures from a predecessor broker-dealer firm as an adviser compliance manual.

Please click here for the full story.

SEC Initiatives Directed at Private Equity

The Chief of the Asset Management Unit in SEC Enforcement gave a speech on January 23, 2013 concerning their initiatives directed at private equity. The areas of concern discussed included valuation, insider trading and conflicts of interest that can lead to misappropriation, deal cherry-picking and other areas of misconduct. The SEC appears to have developed a level of expertise in the private equity space that was absent when registration requirements were introduced. The speech also outlined various cases the SEC has brought against private equity firms and other private fund firms that had similar issues. To read the full speech please click here.