Due Diligence Archives - MasterCompliance

Form ADV

Posted on March 22, 2021April 14, 2021 by admin

Form ADV is the uniform form used by investment advisers that manage at least $25 million in assets to register with both the SEC and state securities authorities. The Form ADV is divided into 3 parts. Part 1 is a fill-in-the blank form that contains information about the investment advisory business and how it operates. Part 2 is a brochure in narrative form that include plain English disclosures of the adviser’s business practices, fees, conflicts of interest, and disciplinary information. The last part is Part 3, which contains the relationship summary, which investment advisers are required to deliver to retail investors that discloses certain information about the firm.

FINRA Notice 21-03: Low-Priced Securities Fraud

Posted on March 15, 2021March 15, 2021 by admin

FINRA released regulatory notice 21-03, FINRA Urges Firms to Review Their Policies and Procedures Relating to Red Flags of Potential Securities Fraud Involving Low-Priced Securities, discussing issues with these securities offerings and fraud. Specifically, including those involving COVID-19 and cannabis related businesses, which appear to have been part of potential pump-and-dump or market manipulation schemes that target unsuspecting investors.

In the notice, FINRA states that “Low-priced securities tend to be volatile and trade in low volumes. It may be difficult to find accurate information about them. There is a long history of bad actors exploiting these features to engage in fraudulent manipulations of low-priced securities. Frequently, these actors take advantage of trends and major events — such as the growth in cannabis-related businesses or the ongoing COVID-19 pandemic — to perpetrate the fraud.”

Best Practices for Outsourced Vendors

Posted on October 8, 2020October 8, 2020 by SCM Communications

Does your firm know who its key outsourced vendors are? Does your firm perform ongoing due diligence that includes an assessment of risks? The answers to both questions may involve a huge undertaking for small firms that have limited resources. Read More…

On-Site Due Diligence for Product Sponsors

Posted on July 31, 2019September 16, 2019 by SCM Communications

Thanks to technology, a majority of the gathering and reviewing of information during the due diligence process can typically be done so remotely by officers or committees of the broker-dealer. However, an operational due diligence process is not complete without an on-site visit.

M&A Due Diligence Checklist

Posted on September 27, 2017 by SCM Communications

Critical in every M&A transaction is a comprehensive due diligence investigation. An acquirer/buyer should always have a complete understanding of the all the intricacies of the target company, from operations to financial to legal. Failure to conduct due diligence may lead to major unforeseen issues such as unknown liabilities or overpayment. A buyer should never rely solely on information that the target company has provided but should take the necessary steps to validate. It is important to have a M&A due diligence checklist to ensure that all major areas have been investigated and considered when making the decision to buy or not to buy a company. Read More…

Due Diligence and Registered Representatives

Posted on June 21, 2016November 2, 2018 by SCM Communications

The topic of due diligence is widely discussed regarding the financial services industry. Due diligence of products. Due diligence of potential employees. Due diligence of client suitability. But, what exactly does it mean when applied to financial services and what does it mean to representatives? Read More…