Source Code

A Compliance Guide for Robo-Advisers

Blog Authors

Craig Foster

Josh Hinderliter

Marc Minor

Latest from Source Code

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Maintaining Effective Access Rights and Controls in Your Organization

By Josh Hinderliter

June 17, 2021

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You probably don’t need to be convinced that information security is critically important. But just in case you do, you should know that the U.S. Securities and Exchange Commission (SEC) continues to emphasize the importance it places on information security. In our last two posts, Marc and Craig began our discussion of the SEC’s Division of Examinations’ (EXAMS) 2021 priorities related to information security. In today’s post, we’ll continue that theme by looking at a 2021…

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Managing Cybersecurity and Privacy Risks in Vendor Engagements

By Craig Foster

June 2, 2021

As Marc mentioned last time, the SEC’s Division of Examinations’ (EXAMS) has made it a priority in 2021 to review the steps that firms take to ensure information security and operational resiliency. For robo-advisers, given that they conduct so much of their operations online, these steps are of paramount importance. In its report, EXAMS noted that it will scrutinize whether advisers have implemented appropriate measures to oversee vendors and service providers and manage the…

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Governance and risk considerations for information security and operational resilience

By Marc Minor

May 20, 2021

We continue our discussion of the SEC’s Division of Examinations’ (EXAMS) 2021 Priorities (see here) with an overview of information security and operational resiliency. The daily drumbeat of cyber-intrusion incidents is certain to keep cybersecurity at the top of EXAMS’ focus. In light of the pandemic forcing a shift to remote work, EXAMS has announced its focus on information security issues including: endpoint security, data loss, remote access, third-party communication systems, and…

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ESG Investing – Sustainable Compliance for Sustainable Investing

By Josh Hinderliter

April 28, 2021

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The market for investment products and services is very competitive. Consumers now look to their advisers to not only provide return on their investment but to do so in a way that is consistent with their personal ethos. To meet this demand, many investment advisers have turned to incorporating environmental, social, and governance (“ESG”) factors into their investment strategies. Arguably there is no hotter topic at present in the broader investment community than ESG, or,…

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Building Your Clients’ Portfolios – EXAMS Highlights Concerns for Mutual Funds and ETFs

By Craig Foster

April 14, 2021

Robo-advisory firms often build client portfolios with exchange-traded funds (ETFs) and mutual funds. This makes practical sense – these instruments allow advisers to efficiently meet a wide range of client investment objectives. Nevertheless, as mentioned in our last post, the SEC’s Division of Exams (EXAMS) has made it a priority this year to focus on advisers’ recommendations of these assets. Why? EXAMS recognizes the widespread use of mutual funds and ETFs by advisers for…

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Confused By The Signs? SEC Publishes Annual Guide to Examination Priorities

By Marc Minor

April 1, 2021

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Our recent posts have walked you through the SEC’s new marketing rule and discussed valuation and fee assessment. Now, with the ADV season, hopefully, in your rear-view mirror, we turn your attention to planning for the remainder of the year. Determining the most efficient use of a compliance department’s time and resources is essential. Fortunately, the SEC’s Division of Examinations (EXAMS) provides an annual publication of Exam Priorities that is extremely helpful in developing risk-based…

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Valuation and Fee Assessment – What Your Compliance Program Needs to Have

By Josh Hinderliter

March 22, 2021

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Over the last three posts to the blog (overview, performance, promoters), we’ve interrupted our previous schedule to provide insight into the U.S. Securities and Exchange Commission’s (“SEC”) recently adopted changes to the rules governing investment adviser marketing and advertising. In today’s post, we resume our previous topic thread focusing on the necessary components of an investment adviser’s compliance program. Specifically, we’re going to examine valuation and fee assessments. We’ve previously discussed…

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Posting or Paying for a Review – SEC Changes Game for Testimonials and Solicitors

By Craig Foster

February 24, 2021

Word-of-mouth is still one of the best ways to attract business. Investors, whether new or seasoned, consistently look to the experiences of previous customers or talk to someone they trust before they hire a financial adviser. As a result, posting great reviews and compensating others to make recommendations continues to be a key part of many robo-advisers’ marketing campaigns. As we noted in a prior post, you’ll want to be careful about using the…

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Proper Performance Promotion- The SEC’s New Advertising Rule: When Adviser Performance Marketing Goes Too Far.

By Marc Minor

February 15, 2021

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Today we continue our discussion of the SEC’s recent changes to the Advertising Rule. In our last post, Josh covered the general definitional changes and prohibitions. In this entry, we will highlight the new Advertising Rule’s impact on performance advertising. As we have discussed, the amended rule consolidates and supersedes former rules 206(4)-1 and 206(4)-3, regarding advertising and cash solicitation, respectively. Among other things, the new rule includes specific requirements and restrictions for advertisements…

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A New Approach to Advertising – the SEC Revises Investment Adviser Advertising Regulation

By Josh Hinderliter

January 27, 2021

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We interrupt our regularly scheduled programming to bring you this special update. Well, technically it’s the U.S. Securities and Exchange Commission’s (“SEC”) update and it pertains to the regulation of investment adviser advertising. On December 22, 2020, the SEC amended the current regulatory framework governing investment adviser advertising. In making these changes, the SEC incorporated and/or rescinded years of no-action letters that pertained to various aspects adviser advertising. These changes will become effective 60 days…

Source Code

A Compliance Guide for Robo-Advisers

Blog Authors

Maintaining Effective Access Rights and Controls in Your Organization

Managing Cybersecurity and Privacy Risks in Vendor Engagements

Governance and risk considerations for information security and operational resilience

ESG Investing – Sustainable Compliance for Sustainable Investing

Building Your Clients’ Portfolios – EXAMS Highlights Concerns for Mutual Funds and ETFs

Confused By The Signs? SEC Publishes Annual Guide to Examination Priorities

Valuation and Fee Assessment – What Your Compliance Program Needs to Have

Posting or Paying for a Review – SEC Changes Game for Testimonials and Solicitors

Proper Performance Promotion- The SEC’s New Advertising Rule: When Adviser Performance Marketing Goes Too Far.

A New Approach to Advertising – the SEC Revises Investment Adviser Advertising Regulation

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