What Policies and Procedures are Advisers Required to Keep in Place?

By: Daniel A. Perry

This is a rather complicated question. If left unanswered, advisers may end up being held liable and subjected to fines before the various state and federal regulatory agencies. In addition, this also appears to be the area where advisers have the most difficulty in adhering to the various compliance standard.

What are the rules, policies and procedures that an adviser is required to keep in place?

First, an adviser is required to adopt and implement written policies and procedures that are reasonably designed to prevent violations of the Investment Advisers Act. So, what does that mean?

Pursuant to prior SEC advisory opinions, these policies and procedures must be designed to prevent, detect and correct violations of the Investment Advisers Act.

You may be thinking this sounds very confusing, and it absolutely is.  The Investment Advisers Act is long and complex. In addition, you are also required to review those policies and procedures at least annually for adequacy and effectiveness of implementation. Finally, must designate a Chief Compliance Officer (COO) who will be responsible for administering your policies and procedures.

Your failure to implement written policies and procedures that conform with the Investment Advisers Act can subject you to liability, fines, and regulatory investigations.

As you can see, the rules and compliance requirements are complex. Therefore, many people find a benefit in hiring our office as their General Compliance Counsel.

For more information

If you have a legal question regarding your investment adviser business, including any compliance related questions, please contact our office at (513) 241-0400. You can also fill out the contact form on our website, and one of our attorneys will respond shortly.