OCIE Issues Risk Alert On Common Deficiencies Observed In Adviser Compliance Programs

On November 19, 2020, the SEC published a risk alert providing an overview of notable compliance issues identified by the agency's Office of Compliance Inspections and Examinations ("OCIE") under  Rule 206(4)-7 (the "Compliance Rule") under the Investment Advisers Act of 1940 (the "Advisers Act").  The risk alert summarizes commonly cited concerns identified by OCIE examiners in deficiency letters after recent investment adviser exams.

This risk alert observes compliance deficiencies in six general areas:

• Inadequate Resources. Advisers that did not devote adequate resources, such as information technology, staff and training, to their compliance programs and, as a result:
  • Chief compliance officers ("CCOs") sometimes had numerous other professional responsibilities and were unable to devote sufficient time to fulfilling their compliance duties;