SEC Expectations and Compliance Best Practices


The SEC recently published a Risk Alert that provides an overview of certain compliance issues observed by the Office of Compliance Inspections and Examinations. The alert was created on the top of examinations of registered investment advisers, private equity and hedge fund manager examinations. 

According to the SEC, the risk alert has the intention to “assist private fund advisers in reviewing and enhancing their compliance programs, and also to provide investors with information concerning private fund adviser deficiencies”.  The focus of the alert was around three main areas of deficiencies identified during the examinations: Conflicts of Interest, Fee and Expenses and Policies and Procedures regarding Material Non-Public Information or MNPI. 


Regarding conflicts of interest, the SEC Risk alert highlights that it’s part of the investment adviser duty to make full disclosure of all conflicts of interest, as well as be specific. So its client can understand the conflict to make an informed decision. The regulator staff observed during the examinations several inadequately disclosed and deficiencies, including conflicts related to allocations of investments, conflicts related to multiple clients investing in the same portfolio company among others.  


Also, the findings covered investment advisers’ failures to establish, maintain and enforce written policies and procedures designed to prevent the misuse of MNPI, such as not enforcing trading restrictions or failing to submit certain personal securities transactions for preclearance as required by their policies or the Code of Ethics Rule.  


This Risk Alert makes clear that the SEC is concerned on the compliance governance framework of private fund advisers. 


If you would like to know more about the Risk Alert and how to comply with the SEC guidance, watch this webinar featuring Duff & Phelps and MyComplianceOffice recorded on September 10, 2020. The webinar agenda includes: 

  • How to identify and manage Conflicts of Interest 
  • Appropriate disclosures to investors 
  • Material Non-Public Information and Code of Ethics deficiencies 
  • Key learnings from SEC exams for foreign private fund managers 
  • Q&A Session with lots of insights at the end.


Watch the Webcast now!