More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
While the chief compliance officer (CCO) should of necessity be the main player in the compliance review process, whenever possible I strongly recommend that at least one other firm officer be substantively involved in the review. It is imperative for senior management (an individual other than the CCO) to have a working understanding of the compliance processes and exam-related issues in the event of the CCO's absence or resignation or termination. The SEC is not likely to postpone an exam in the event of a CCO's extended absence or resignation/termination. Ultimately, senior management is responsible, and must be sufficiently prepared to step in if necessary. For these reasons, I strongly encourage senior management's participation in the compliance review process.