SEC-Required Annual Compliance Program Reviews: What Investment Advisers Need to Know

‍

SEC-registered investment advisers are required to conduct an annual compliance program review. This annual review should include documentation of the process, ensuring that advisers are continually assessing the adequacy of their policies and procedures in light of any changes to applicable regulations or business changes.

Why This Review Is Crucial

Investment advisers must demonstrate that their annual review has been completed. Even in years where no material changes are made, thorough documentation is vital. This is crucial not just for compliance, but also to avoid penalties during regulatory examinations—one of the most common findings in SEC audits.

The scope of the review should be comprehensive, including:

• New regulations and business changes.

• Client agreements and disclosures.

• Advertising and marketing materials.

• Regulatory filings and compliance with applicable laws.

• Custody of client assets.

• Business continuity and disaster recovery plans.

• Cybersecurity measures.

• Conflicts of interest.

It is also important to evaluate any issues that arose in the past year, any changes in the business activities of the firm or its affiliates, and whether any revisions to policies are needed based on new or amended regulations.

Beyond Compliance: A Culture of Risk Management

The annual review is more than just a box to check. It's an opportunity for investment advisers to assess the effectiveness of their policies and procedures, ensuring that risks and conflicts are adequately managed. This review can help build a culture of compliance within your firm, instilling confidence in your clients and investors that their assets are safeguarded by robust, effective practices.

While SEC-registered firms must complete and document an annual review, it is also a best practice for other types of advisers, including state-registered advisers, private funds, and exempt reporting advisers.

How Coast to Coast Compliance Can Help

At Coast to Coast Compliance, we specialize in performing independent annual compliance reviews for investment advisers. Our thorough approach ensures that your firm's compliance program is up to date, adequate, and effective in addressing evolving regulatory requirements. We will provide you with a detailed written review report, outlining our findings and recommendations for improvements.

By partnering with us, you help your firm stay compliant, minimizes risks, and maintain a culture of transparency and accountability.

‍