On August 23, the Securities and Exchange Commission (SEC) voted 3-2 to approve a set of rules for registered and unregistered investment advisers to private funds, with a goal of increasing transparency and investor protections in the fast-growing private fund market.
Don’t feel left out if you’re an investment adviser with no private fund clients, the Private Fund Reforms rules package includes a rule amendment that applies to all investment advisers.
SEC Private Fund Reforms Rule: The Impact on RIAs
The final rule included a Compliance Rule Amendments portion that requires registered investment advisers to document, in writing, the required annual review of their compliance policies and procedures. The rule does not mandate any specific content or format for such documentation, although whatever is used by the adviser will now be a required record subject to prompt production during an examination.
Accordingly, SEC Rule 206(4)-7(b), the Annual Review clause, will be amended to require investment advisers to “Review and document in writing, no less frequently than annually, the adequacy of the policies and procedures established pursuant to this section and the effectiveness of their implementation.”
The compliance date for this amendment will be 60 days from the date the rule is published in the Federal Register.
Most investment advisers, in our experience, already document their annual review. However, for those that do not, or those that want to increase the rigor of their process due to this amendment, it is important to keep track of this date. Any annual reviews completed in November or December of this year will likely need to meet this new documentation requirement.
Meeting the New Requirements with COMPLY
COMPLY is ready to assist our customers with the annual review requirement. Our Regulatory Services group will deliver new consulting services and educational programs to assist advisers to complete and document a robust annual review. In addition, our technology platforms, which have long facilitated the documenting of the annual review, will be enhanced to support any new written documentation requirements mandated by the final rule, with features that include:
- A configurable calendar with robust content library and task management
- Policy and procedure creation and management
- An Annual Review Tool that facilitates compliance policies and procedures testing and documentation
- A Risk Assessment Module.
COMPLY is here to help you navigate the changing regulatory environment. Interested in learning more? Schedule a time to speak with an expert today!