The Division of Examinations in the Securities and Exchange Commission pushed out a new risk alert focused on Investment Adviser Annual Compliance Reviews. SEC-registered investment advisers have been required to
conduct a review of their compliance policies and procedures at least annually to assess their adequacy and the
effectiveness of their implementation pursuant to the “Compliance Rule” (Rule 206(4)-7) under the Investment Advisers Act.
Back in 2023, the SEC adopted revised the Compliance Rule and added the requirement that the annual reviews be written.
What are investment adviser not doing that’s annoying the DoE?
- Conducting timely annual reviews
- Adopting complete policies and procedures for conducting annual reviews
- Conducting annual reviews consistent with written procedures
- Ensuring compliance policies and procedures fully address and align with practices
- Maintaining documentation made regarding annual reviews
- Taking corrective actions for issues identified in annual reviews
One item that caught my eye in the Risk Alert was a statement that some advisers were taking the position that an annual certification of the policies by the adviser’s employees met the standards of an annual review. That’s a bold, and I’m sure losing argument to make with exam staff.
Sources:
- New risk alert focused on Investment Adviser Annual Compliance Reviews September 14, 2026