An upcoming audit often causes sleepless nights for even the most capable professionals. With an increase of SEC exams, it’s not a question of if your firm will be audited but when. Be proactive and start to prepare now to feel confident that you’re fully ready for your next exam. The Audit Process Usually, firms receive a two-week notice before an exam. But, there are cases when an examiner shows up unexpectedly. It is important to remember that audits will
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Being a registered investment advisor isn’t easy. You may have chosen this profession because you have great business and investment sense, a drive to help others manage their wealth, and a desire to build a solid financial foundation of your own. But working in this industry also requires strict adherence to a slew of complex and exacting guidelines. And without understanding RIA Compliance 101, following those guidelines is more than challenging.
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On July 10, 2018, the SEC settled enforcement actions brought against two SEC-Registered Investment Advisers (RIAs), three Investment Adviser Representatives (IARs), and a marketing consultant, for their involvement in violating the Testimonial Rule using social media and the Internet. Rule 206(4)-1(a)(1) under the Investment Advisers Act sets forth what types of advertisements are prohibited. The rule prohibits express or implied testimonials. Although the word “testimonial” is not defined in Rule 206(4)-1, it has been interpreted as being a statement of
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Registered investment advisors must have someone in place to manage RIA compliance with SEC and state regulations, a position commonly known as the chief compliance officer. It’s a vital role, and finding the right fit for CCO could be the deciding factor that makes or breaks a firm.
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The Financial Industry Regulatory Authority, also known as FINRA, is not a governmental body like the SEC or state RIA regulators, but it still plays a major role in how RIA firms are run and overseen. FINRA is a private, non-profit, self-regulatory organization for broker-dealers. It operates on appointment by the SEC and can levy fines and other penalties on its members.
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It’s inevitable: your RIA firm will be audited. The SEC and state regulators have been steadily increasing the number of RIA audits each year, and if your firm hasn’t been visited yet, it’s only a matter of time. And whether it’s your firm’s first RIA audit or not, you need to be prepared.
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