Proprietary Trading – Follow the Golden Rule

Proprietary Trading – Follow the Golden Rule

October 14, 2020

When it comes to trading in your firm’s own investment accounts (proprietary trading), it’s never cherry-picking season. Instead, when allocating investment opportunities, you should follow the golden rule – treat your clients like you want to be treated. What does this mean? As an investment adviser, your fiduciary duty requires you to allocate securities and advisory recommendations among clients in a fair and equitable manner, with no particular group of clients or the adviser’s proprietary…

Personal Trading Policies

By Marc Minor

October 1, 2020

Our blog recently discussed how soft dollar arrangements can impact the bottom line for both advisers and investors, and therefore require adequate disclosure. Other compliance requirements involve non-client facing operations, but are equally important to monitoring and protecting against conflicts of interest. The Personal Trading Policy is one such requirement. The Investment Advisers Act and the Code of Ethics rules adopted thereunder mandate that advisers have a personal trading policy to protect against misuse of…

Soft Dollar Arrangements – What to Know

September 16, 2020

In our last post, Craig began our discussion of trading practices by examining an adviser’s duty to obtain best execution. This post continues our trading practice discussion with a focus on soft dollar arrangements. Soft dollar arrangements generally arise when an adviser receives research or brokerage products or services from a broker-dealer in exchange for placing securities transactions with that broker-dealer. Soft dollars arrangements can potentially provide significant benefits to your firm’s clients by generating…

Meeting Your Best Execution Obligation

August 19, 2020

So, let’s say your robo-adviser firm has created a brand new strategy that you think would be attractive to investors. You’ve registered your firm, licensed your personnel, built and tested the algorithm, and now you’re ready to bring your strategy to market. Now, all you need to do is find a broker who can help buy and sell the securities your algorithm recommends. Does it matter who you pick? You bet it does.…

Maintaining Compliance with Your Portfolio Management Process

August 3, 2020

In a previous blog post, we discussed an adviser’s fiduciary duty to provide advice based on the client’s financial situation and investment objectives. In today’s post, we’ll examine the practical implications of this requirement from a compliance prospective. Craig noted in our last entry that Advisers Act Rule 206(4)-7 (the “Compliance Rule”) requires that every investment adviser adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and…

Compliance 101 – Building Your Compliance Program from the Ground Up

July 1, 2020

To date, we have covered a myriad of topics designed to help you get your firm off the ground, focusing primarily on issues like registration, licensing, advertising, disclosure, and communicating and contracting with clients. These critical issues have one thing in common – they all involve working with folks outside your firm. Today, we kick off a new chapter of our blog, inviting you to turn your gaze inward and examine the key pieces of…

No Time Like the Present to Review Your Business Continuity Plan

June 3, 2020

To our readers, we hope this entry to our blog finds you and your family safe and healthy. As we all begin to envision a path forward following the unprecedented events caused by the COVID-19 pandemic, a focus on compliance for your firm should not be an overlooked task. For robo-advisers, this is an opportunity to analyze your compliance program with specific attention on policies that may have been trigged as a result of the…

SEC Announces Exams Will Focus on Compliance with Form CRS

April 15, 2020

Business audit. Magnifying glass on financial documents.

If you can believe it, May 1, 2020 is almost upon us. And if you don’t remember from our February post, that is the day when advisory firms serving retail investors may start filing client relationship summaries on Form CRS. As a reminder, Form CRS gives clients a quick summary of the key things they need to know about working with your firm, as it discusses types of services offered, fees charged, conflicts of…

SEC Extends Form ADV Filing and Delivery Deadlines due to Coronavirus

March 18, 2020

As Josh discussed earlier this week, the annual update to Form ADV is generally due at the end of March for most robo-advisers. However, we are interrupting our current discussion thread to make sure you were aware that on March 13, 2020, the SEC extended Form ADV filing and delivery deadlines for investment advisers whose operations may be affected by the coronavirus. The agency acknowledged that the impacts of the pandemic may delay or prevent…

The Secret Ingredient – Disclosure of Your Algorithm