This caught my eye.
The SEC staff just put out a Risk Alert highlighting deficiencies and weaknesses at investment advisory firms. Two stood out to me:
• Some advisers did not “devote adequate resources” to their compliance programs. In particular, the SEC observed dual-hatted CCOs who “did not appear to devote sufficient time” to fulfilling their obligations as CCO, and “did not appear to have time to develop their knowledge of the Advisers Act.”
• Some CCOs “lacked sufficient authority” to adequately fulfill their role, including instances “where senior management appeared to have limited interaction with their CCOs.”
Why it matters.
First, it echoes many of the themes I raised in an opinion piece this past summer. And expect these issues to become a greater focus of the SEC going forward.
Second, it fits within the bigger picture of an investment management firm’s operational side. As someone who has practiced and written about both compliance and, more broadly, effective management practices, guess what? If a firm can’t get this compliance stuff right, it’s got bigger issues. And that’s got to be a red flag.
~ Terrance O’Malley