Investment advisers’ branch offices will be subject to heightened Securities and Exchange Commission (SEC) scrutiny according to a recent SEC Office of Compliance Inspections and Examinations (OCIE) Risk Alert.
OCIE’s Multi-Branch Adviser Initiative will focus examinations on advisers’ compliance programs and the oversight of investment advisory services at branch offices. The alert indicates that “additional focus areas may be chosen for review” based on a particular adviser’s activities or operations.
The alert outlines the main areas of focus as:
- Compliance programs
- Policies and procedures
- Risk-based supervisory structure
- Role of compliance personnel overseeing branch offices
- Adviser’s Form ADV disclosure of branch offices
- Fees and expenses calculations and communications
- Advertising review and approval
- Code of Ethics, especially regarding personal securities transactions
- Custody of funds
- Investment recommendations
- Conflicts of interest
- Allocation of investment opportunities