Policies and Procedures Archives - Page 4 of 7

RIA Branch Audit Planning

Posted on April 21, 2021 by admin

Investment advisers should consider the need to perform a branch office inspection of branch offices pursuant to a branch office inspection schedule. Firms should consider whether a branch audit is warranted using factors such as nature and complexity of the branch’s business, volume of business, complaints, disclosures, number of registered persons, and other relevant factors determined by the firm. Firms are to document the exam schedules for each branch office including a description of the factors used to determine the exam cycle for such locations.

Various states require investment advisers to conduct regular inspections of their branch offices. For example, an investment adviser registered in Georgia is required to inspect each office location at least annually to ensure that its written policies and procedures are enforced. Even when an investment adviser is not explicitly required to conduct branch inspections, it should still implement a branch inspection program as part of its supervisory procedures. Also, investment advisers lacking an adequate branch office inspection program expose themselves to significant liability for failure to supervise in the event misconduct at the branch goes undetected.

Registering as an Agent for a Broker-Dealer

Posted on April 14, 2021April 29, 2021 by admin

The USA defines an agent as any individual who represents a broker-dealer or an issuer in effecting or attempting to effect transactions in securities for their clients. Agents are individuals in a sales capacity who represent broker-dealers or issuers of securities. As agents, they act, usually on commission basis, on behalf of others. Agents are often referred to as registered representatives, whether sell registered securities or securities exempt from registration. The use of the term individual here is important. Only an individual, or a natural person, can be an agent. A corporation such as a brokerage firm is not a natural person, it is a legal entity. The brokerage firm is the legal person, or legal entity, the agent, a natural person, represents in securities transactions.

Minimums for RIAs Policies and Procedures

Posted on April 12, 2021 by admin

All RIAs are required to register either with the SEC or a state securities regulator. In general, RIAs managing less than $100 million of assets register with their home state, while those managing more than $100 million register with the SEC. Both federal covered advisers and state registered advisers have requirements set for policies and procedures. While the requirements set are similar, some state regulations may be slightly different.

Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure

Posted on April 2, 2021 by admin

Any RIA compensated under a wrap fee program for sponsoring, organizing, or administering the program, or for selecting, or providing advice to clients regarding the selection of, other investment advisers in the program, does not use the normal brochure or Part 2A of the ADV. Instead, that adviser furnishes clients and prospective clients Part 2A, Appendix 1.

Part 2A of Form ADV: Firm Brochure

Posted on March 26, 2021March 26, 2021 by admin

Rule 204-3, the brochure rule, is a requirement under the Investment Advisers Act of 1940 that requires investment advisers to provide a written disclosure statement to their clients. The rule applies to all federally registered investment advisers and specifies times during the advisory process at which they must provide the materials. To satisfy this rule, adviser can either provide clients Part 2 of the Form ADV, or they can provide an actual brochure that contains the same information that would be found in Form ADV Part 2A and 2B.

Part 2 of the Form ADV consists of:

Form ADV Part 2A: Firm Brochure
Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure
Form ADV Part 2B: Brochure Supplement describing certain supervised persons.

This blog will cover Part 2A of Form ADV: Firm Brochure, for more information on Form ADV, check out our Form ADV blog now, or our Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure and Part 2A of Form ADV: Firm Brochure blogs being posted soon.

Message Archiving

Posted on March 17, 2021March 23, 2021 by admin

An important component of financial compliance for broker-dealers is establishing message archiving for all communications relating to its business. Not only is it required by FINRA, but it can protect your Firm if there is an employee conducting unethical or illegal business activities. In a communication from Smarsh, a participant in FINRA’s Preferred Pricing Program, they state that “Broker-dealers can avoid being penalized by regulators for wrong doing among individual professionals if they can clearly demonstrate that they are proactively and sufficiently capturing and monitoring all electronic communications.”