The five categories with the greatest number of deficiencies were registration, unethical business practices, books/ records, supervisory/compliance and privacy. In the unethical practices area, NASAA found 198 advisors representing 318 deficiencies, including contract deficiencies, unsuitable recommendations, excessive fees, and misrepresenting qualifications, services or fees. To stay in compliance, NASAA suggests investment advisors:
- Review and revise the Form ADV and disclosure brochure annually to reflect current and accurate information.
- Review and update all contracts.
- Prepare and maintain all required records including financial records.
- Prepare and maintain client profiles that show suitability information.
- Prepare a written compliance and supervisory procedures manual relevant to the type of business.
- Prepare and distribute a privacy policy initially and annually.
- Keep accurate financials. File timely with the jurisdiction. Maintain surety bond if required.
- Calculate and document fees correctly in accordance with contracts and ADV.
- Review and revise all advertisements, including Web site for accuracy.
- Implement appropriate custody safeguards, if applicable.
- Review solicitor agreements, disclosure, and delivery procedures.
