Risk Alert: OCIE Releases Risk Alert Targeting CCOs and Compliance programs


Coinciding with the SEC’s annual Compliance Outreach Program National Seminar, on November 19 the Office of Compliance Inspections & Examinations (OCIE) released a risk alert titled OCIE Observations: Investment Adviser Compliance Programs. This is the first risk alert in five years specific to Chief Compliance Officers (CCO), and comes at a time when compliance programs are uniquely stressed due to COVID-19.

The SEC has repeatedly emphasized that they are not scaling back examinations despite the pandemic. OCIE is performing exams with the expectation that advisers should have been prepared and adapted accordingly to such an event.

The Risk Alert points to several key issues of concern:

1) Inadequate compliance resources, including CCOs who perform more than one function internally, and insufficient policy and procedure implementation and tailoring due to failure to adapt to changes in firm size and complexity.

2) Insufficient authority of CCOs.

3) Annual review deficiencies, such as failure to maintain proof of the reviews and inadequate comprehensiveness.

4) Failure to maintain or establish reasonably designed written policies and procedures.

5) Failure to implement actions required by written policies and procedures.

6) Failure to maintain accurate and complete information in policies and procedures.

Even in normal circumstances, CCOs and compliance programs can struggle to meet their mandate. The COVID-19 era is a precarious time for CCOs who must now:

1) Educate themselves and the firm on how to ensure business continuity and protect client information while working remotely and with potential staffing disruptions; and

2) Review compliance policies and procedures to ensure alignment with an effective pandemic response, adopt and implement necessary changes, and train employees on updates.

Key Bridge Compliance, LLC is kicking off a blog series that will guide advisers through each of the risks identified in the alert in light of the pandemic-related compliance complications. Our first in the series will be published next week.

You May Also Like:

PART I: Addressing Recent OCIE Risks—Inadequate Compliance Resources

Dec 7, 2020

PART I: Addressing Recent OCIE Risks—Inadequate Compliance Resources

Author: Amy D’Avella This is the first in a series of blogs which will analyze the SEC’s Office of Compliance Inspections & Examination’s (OCIE) November 19 Risk Alert, titled OCIE Observations: Investment Adviser Compliance Programs.[1] I. Context Since requiring investment advisers...

Read More
Ten Steps for Safer and Secure Video Calls

May 29, 2020

Ten Steps for Safer and Secure Video Calls

Author: Alisha Dowell As we deal with current restrictions and personal distancing rules, it becomes more important than ever for investment advisory firms to connect with their clients and figure out how to best offer services moving forward. One way advisors are doing this is through replacing...

Read More
A Custody Rule Refresher

May 15, 2020

A Custody Rule Refresher

Author: Ashley Hatt In 2009, the SEC subjected advisors to a new list of Custody Rule requirements that sent the world of Registered Investment Advisors into a tailspin as they raced to understand the changes, how they affected their firm and how they could comply by the deadline. More than a...

Read More