OCIE Issues Risk Alert on Advisers’ Oversight of Employees With a History of Disciplinary Events

The SEC’s Office of Compliance Inspections and Examinations (OCIE) examined more than 50 advisers in 2017 as part of an initiative to assess the oversight practices of advisers that employ individuals with disciplinary histories. OCIE recently issued a risk alert intended to raise awareness of certain compliance issues that OCIE staff observed in those examinations; to encourage advisers to reflect upon their practices, policies and procedures; and to help advisers consider ways to improve their supervisory practices and compliance programs. Although the initiative focused primarily on advisers with retail clients, the principles detailed by OCIE are equally applicable to private fund advisers. This article summarizes the key takeaways from the risk alert. See our coverage of OCIE risk alerts on the cash solicitation rule; fees and expenses; the advertising rule; compliance topics; custody; cybersecurity; and social media. See also our two-part series parsing OCIE’s advertising risk alert: “Identifying Advertisements and Common Deficiencies in Performance Advertising” (Jan. 4, 2018); and “Misleading Claims of GIPS Compliance, Past Specific Investment Recommendations and Results of SEC’s Touting Initiative” (Jan. 11, 2018).

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